EBRD: measures Belarus takes to improve business climate are substantial

The measures Belarus takes to perfect the business climate are extremely substantial, said Varel Freeman, EBRD First Vice President, as he met with Prime Minister of Belarus Sergei Sidorsky. Varel Freeman remarked, the Belarusian government has been taking significant steps lately to improve business operation conditions. “We are ready to respond with additional support for private business and cooperation with larger companies with a view to developing small and medium business,” he added. The official remarked, the Belarusian Small Business Bank was opened in Minsk on October 6, with the EBRD contributing ?3.5 million into its authorised fund. Along with the EBRD another seven financial institutions took part in forming the bank. “We are talking about eight major votes of confidence acknowledging the good business development climate,” explained Varel Freeman. He also remarked, the bank was opened as logical continuation of Belarus’ long-term cooperation with the EBRD in developing the domestic small and medium business. As part of the efforts the EBRD financed around 14,000 loans. The borrowing is expanding fast as new business development opportunities emerge, with the demand for finance ever on the rise. Speaking about Belarus-EBRD relations over the entire course of partnership, Varel Freeman said it has been long open and sincere relations. “We highly appreciate the spirit of such relations,” he added. In 2007 Belarus-EBRD cooperation took place in line with the Directive for the strategy of Belarus’ cooperation with the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development and the EBRD’s strategy for Belarus in 2006-2008 (a programme document outlining major avenues of Belarus’ cooperation with the EBRD). The strategy provides for scenario-based or phased financing depending on Belarus’ compliance with EBRD criteria. At present the cooperation follows the basic scenario. The bank implements existing projects: a credit line aimed at developing small and medium business, microlending against guarantees of the Belarusian government (1994) and without the guarantees (a syndicated loan for Priorbank in 2003 and 2007), “Belarus: Small and Medium Entrepreneurship Financing and Microlending Scheme” (2004), and the EBRD Trade Promotion Programme. The bank provides new credit resources only for developing Belarus’ private business. The project “Belarus: framework agreement for financing small and medium corporations II” is effective for existing clients (Priorbank and Belgazprombank) and other private banks (Minsk Transit Bank, Belrosbank, ITI Bank, RRB Bank). In February 2007 Minsk Transit Bank (MTB) became the EBRD’s third partner bank within the framework of the credit line for small and medium business. The bank was granted a $4 million loan. In line with an additional agreement signed in December 2007 MTB also received $10 million as part of an EBRD credit line. The money will be used for extending small and medium business lending according to existing terms, namely for providing subloans of under $100,000 for up to five years to micro and medium businesses and under $1 million for small and medium private businesses (with the private capital share over 50%). In December 2007 RRB Bank became the EBRD’s fourth Belarusian bank partnering within the credit line framework. The bank received a $3 million loan for five years. Apart from that, within the framework of the same credit project the EBRD signed an agreement with Belrosbank, granting a $4 million loan earmarked for issuing subloans under $300,000 to micro, small and medium businesses. In September 2007 an agreement was signed with Belgazprombank. The bank was granted an additional ?3.5 million. In December 2007 Priorbank signed a credit agreement for $15 million for four years. The EBRD also okayed a $50 million syndicated loan for Priorbank without specifying purposes of the loan. The credit line for private Belarusian banks is a practical example of support for private investments and aid in developing the private business in accordance with the EBRD strategy for continued operation of the bank in Belarus. Cooperation conditions determined by the utilisation of the credit line provide for perfecting the mechanisms of lending for small and medium businesses for the sake of increasing the financing demand among small and medium businesses. The creation of the Belarusian Small Business Bank (BSBB) is another major project of the European Bank for Reconstruction and Development in Belarus. The BSBB foundation documents were inked on December 12, 2007 and the bank with the authorised fund of over ?7 million was registered by the NBRB resolution of August 28, 2008. There are plans to open seven branch offices and four processing centres in all oblasts of Belarus within five years. The project is supposed to increase the affordability of financing for small and medium private companies of Belarus, especially in provinces. The BSBB plans to provide commercial loans under ?200,000, focusing on microcredits under ?10,000. In 2008 the BSBB plans to form a credit portfolio of ?7-8 million and increase it up to ?40 million in 2010, securing a 10% share of the Belarusian small business lending market. Four major projects have been implemented in Belarus using the EBRD aid and government guarantees. Such projects as the development of Belarus’ electric communications, creation of a horticultural products wholesale market in Minsk, modernisation of the Orsha cogeneration plant, reconstruction of M1/E30 motorway Brest-Minsk-border with Russia have been accomplished. The loans are being repaid (except for the projects for developing Belarus’ electric communications and modernising the Orsha cogeneration plant as the money has been repaid already). The EBRD credit line implementation continues. In January 2007 the credit line was expanded by another $25 million as part of the EBRD strategy for Belarus in 2006-2008.

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