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China to grant $5.7bn loan to Belarus

30 December 2009

China is ready to grant a $5.7 billion loan to Belarus, Deputy Prime Minister of Belarus Andrei Kobyakov told a governmental session on 28 December.

“Chinese partners offer Belarus a $5.7 billion loan. This loan is a potential investment in the fixed capital. The relative agreement was signed in China last week,” the Vice Premier said. Preliminarily, the Chinese side has accepted 14 projects including 3 projects in the transport industry, 8 projects in the energy, 2 projects in the telecommunications and a project to construct various facilities ahead of the IIHF World Championship in 2014.

“How fast we attract these funds depends on the efficiency of the borrowers and readiness of projects. It is not sufficient to secure foreign investments. What needs to be done is to come up with options of how to show them on a company's balance sheet. Only then, we may consider them as capital investments,” Andrei Kobyakov said.

According to the Deputy Prime Minister, in 2010 capital investments are expected to increase by 23-25% as against 2009. All in all, around Br61 trillion worth of investments are expected in the Belarusian economy. The 2010 national budget will assign Br2.15 trillion for the state investment programme, Br2.9 trillion - for housing construction, around Br3 trillion – for innovation funds. Belarusian companies are projected to inject Br21.3 trillion of their own funds. Banks’ loans are expected to reach Br14 trillion.

As a source of capital investments, taxpayers’ money is expected to total Br4.6 trillion. This figure is based on the fact that in 2009 the taxpayers directed Br3.7 trillion for these purposes and the increase in the real earnings is projected at 14% in 2010. The volume of other investments is predicted to amount to Br2.3 trillion. It is, primarily, leasing. This source of capital investments is practically assured. “What is not being calculated is the source of Br7.7 trillion of foreign investments. It is the exact volume of deficient resources that is necessary to achieve to make sure that the target to increase capital investments by 23%-25% is met,” capital investments by Andrei Kobyakov said.

He also said that all the agencies and bodies assure that the tasks that had been set were feasible. Yet, the interdepartmental working groups found out that there is a real deficit of sources to implement the targets. “Only several government bodies have reported that they have enough investment projects and sources for their implementation. These are the Ministry of Construction and Architecture, the Forestry Ministry, the Trade Ministry, Bellegprom, Belgospischeprom, Bellesbumprom, and Belbiopharm concerns. The other government agencies and executive committees are not able to provide full implementation of the projects. The capital investments that were confirmed can provide the growth by 10%, and at the cost of the internal sources only,” said Andrei Kobyakov. In order to achieve the capital investment target that was set by the Belarusian President, we need to raise Br7.7 trillion or $2.7 billion. It can be done only by attracting foreign investments,” said Andrei Kobyakov.

He also paid a special attention to the need to use the reserve which is foreign credit lines. This is not only traditional German (?100 million) and Italian (?67 million) credit lines. “A real opportunity is Finnish tied loans for construction of heat power plants running on local fuels. In 2010 these plants can be built in the regional centers. Taking into account the cost of a heat power plant (Br95 billion), it can bring more than Br10 trillion or $3.5 billion of capital investments,” said Andrei Kobyakov.

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