COMMERCIAL SECTION

FOREIGN CREDITS

In 2000, the total amount of foreign credits transferred to the Republic against guarantees of the Government was equivalent to $US 152.97 million which is 2.6 times more than in 1999 ($US 59.38 million). The amount repaid on the main debts and interests on credits totalled $US 226.9 million.

Significant increase of received credit resources was due to implementation of projects aimed at updating the operating production facilities (reconstruction of the PA "BelMAZ" using Czech credits, Zhlobin Belarusian Metallurgy Plant using credits of the Beierisch Landsbank (Munich), Mozyr Oil Refinery using credits of Austria) as well as of projects aimed at agricultural goals (purchase of grains using credits of the Czech Export bank, grain and fodder harvesters using credits of Germany and Poland). Positive tendencies are also connected with the measures taken to transfer to a more rigid budgetary and monetary policy and activating the dialogue with the IMF.

In 2000, for example, financing was started for pilot projects using credits of Poland, reconstruction of the Mozyr Oil refinery using Austrian credits, Belarusian metallurgy Plant using credits of Germany with the insurance cover provided by the Austrian Control bank; also work was continued for involving the credit line of the AKA/Hermes so as to complete reconstruction of the OJSC "Gorodeya Sugar Plant", supply of components for manufacture of grain harvesters at the "Lidagroprommash", as well as of the Eximbank, Turkey, for implementing the project of reconstruction of the Minsk Hotel facilities.

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Financing was completed on a number of projects: reconstruction of operation and resuscitation cardiology block of Hospital # 4 of Minsk (Austrian credits), supplies of 230 grain harvesters of New Holland Bison by the project of the Minsk Oblast Executive Committee (credit provided by the Polish Bank Consortium); supplies of 25 grain harvesters of Keis company (the credit line of AKA/Hermes); purchase of grains sold by the CJSC "Belagrointorg" (Ministry of Agriculture and Food products) (credits from the Czech Republic). At present, other projects are going on, including reconstruction and updating of PA "BelAZ" (credits from the Czech Republic), development of forestry and energy saving (IBRD), purchase of equipment for the SE "National Airport Minsk-2" (AKA/Hermes), reconstruction of the Zhlobin Belarusian Metallurgy Plant (credits provided by the Beierisch Landsbank (Munich), and the project of development of small and middle businesses implemented by the EBRD.

Data on involved foreign credits that form foreign debts of the Republic of Belarus

(as for 01.01.2001, $US million)

Creditor	Amount	Actually received
Creditor	Amount	total	Before 1995	1995	1996	1997	1998	1999	2000
Russia	751.17	704.77	586.10	34.51	0	52.00	28.97	3.14	0
Germany	326.89	291.71	273.90	85.77	12.24	11.01	11.17	31.62	25.50
IMF	430.45	243.31	98.00	175.93	0	0	0	0	0
EBRD	163.30	153.52	9.70	25.10	32.44	49.97	37.97	4.82	4.14
IBRD	163.17	149.52	100.20	9.84	13.74	12.82	4.09	1.27	6.00
EAN	86.78	86.78	121.50	0	0	0	0	0	0
USA	85.89	85.62	56.00	20.00	10.0	0	0	0	0
Japan	45.72	45.72	50.00	0	0	0	0	0	0
Taiwan	35.0	35.00	0	0	25.00	10.00	0	0	0
EU	47.49	25.90	0	0	37.20	0	0	0	0
Austria	35.93	28.95	17.40	9.03	0	0	4.37	1.36	6.87
Switzerland	6.62	6.62	0	6.64	1.10	0	0	0	0
Belgium	3.35	3.35	0	0	0	1.50	2.92	0	0
Spain	31.83	3.55	4.20	0	0	0	0.60	0	0
Czech Republic	171.51	108.60	0	0	0	0	0	7.17	91.40
Poland	19.03	19.03	0	0	0	0	0	0	19.00
Total:	2404.13	1991.96	1319.01	366.82	131.72	137.30	90.09	59.38	152.00

The total amount of foreign credits obtained by the republic Belarus for 1 June 2001 was $US 2,040 million. The main creditors are: Russia - $US 701.71 million (34.5% of the total amount); Germany - $US 302.66 million (11.6%); the IMF - $US 238.85 million (11.6%); the EBRD - $US 154.13 million (7.6%); the IBRD - $US 152.52 million (7.5%); Czech Republic - $US 111.89 million (5.5%). Borrowed resources have been used by the borrowers mainly for purchase of technological equipment and supplementation of current assets within the frameworks of export- and import-substituting projects implemented by them.

The procedure for obtaining credits against guarantee of the government

The general procedure for involvement of foreign credits against guarantees of the Government of the Republic of Belarus as well as the procedure for issue of guarantees by the Government is defined by the Regulation on involvement, use and repay of foreign state loans approved by the Council of Ministers and the national Bank of the Republic of Belarus (Resolution # 826/23 dated 01.06.1999).

Operations on involvement and repay of foreign credits are to be made on conditions defined by the inter-bank agreement, an individual credit agreement or any other document containing crediting conditions. In such case payment for a foreign credit includes:

payments in conformity with the credit agreement;

payment for the state guarantee and other payments to be paid to the guarantee fund for payment of foreign credits in accordance with the legislation of the Republic of Belarus;

commission fees and the margin of the bank authorised by the government to service foreign state loans, for involvement and repay of these loans;

payment to the bank issuing the guarantee (collateral) in favour of the Government on the foreign credit (to guarantor bank).

To have requests on the borrowers related to provision of foreign credits, the borrower should submit to the Ministry of Economics, the Ministry of Finances and the Ministry of Foreign Affairs the following documents for making the state expertise:

1. A request on the postal form of the borrower indicating the purpose of the credit, the amount and the term for which the credit is requested.

Legal entities of the Republic of Belarus, that are part of the Republic's property, shall submit the application through the relevant ministries, whereas other Republic's bodies of state governance and amalgamations subordinated to the Government of the Republic of Belarus.

Those that are not part of the state property - through the Ministry of Entrepreneurship;

2. The business plan for the investment project drafted in accordance with the operating recommendation of the Ministry of Economics and the conclusion for this plan made by the respective superior organisation;

3. Copies of contracts, pre-contract documents and other proofs of implementation of the project and sale of products;

4. A certificate (passport) of the project (a brief description of the project data);

5. A copy of the credit agreement or the draft credit agreement;

6. The guarantee by the bank with the conclusion made on it by the National Bank;

7. Proposals on giving to the bank of powers for services foreign state loans agreed with the National Bank;

8. Documents confirming commitments of the borrower to perform preliminary and mandatory payments for the foreign credit involved;

9. Accountancy (forms 1 and 2) over the last 3 years.

The Ministry of Economics, within the state complex expertise and on the grounds of documents submitted by the borrower, should make a conclusion on the project with due account of its economic efficacy, priority lines of development of the economic sectors and their structural reconstruction and should send this conclusion to the Ministry of Finance and the Ministry of Foreign Affairs.

If the conclusion of the Ministry of Economics is positive, then the Ministry of Finance, within one month after receipt of the said conclusion, should make analysis of the project feasibility, assess credibility of the borrower, consider opportunities for involving a foreign credit for implementation of the given project with due consideration of the limits of the foreign debts of the state approved for the next year, and should forward the results of the project consideration to the Ministry of Foreign Affairs.

The Ministry of Foreign Affairs, within one month after the receipt of the conclusion made by the Ministry of Economics, should make a through checking of all aspects of the project (technical, economical, financial and organisational) in conformity with the project selection criteria.

The project selection criteria used for financing are:

currency pay back of the project;

solvency of the borrower;

social and economic significance of the project.

If positive conclusions are made by the Ministry of Economics Ministry of Finance and the Ministry of Foreign Affairs should submit the project for consideration by the Currency Credit Commission of the Council of Ministers of the Republic of Belarus in accordance with its rules.

The Government's guarantee on execution of the borrower's commitments to the foreign creditor should be arranged on the ground of the Government's decision upon agreement with the President of the Republic of Belarus.

Resources of foreign credits may be used to finance projects having no currency pay back, but the implementation of which will be aimed at solving acute social and environmental problems, liquidating consequences of natural calamities, import of raw materials, energy resources and other required products and goods in case of a critical situation of the country in them, substituting import, supporting economic reforms, covering deficit of the state budget. When the issue on involvement of foreign credits for the above mentioned projects is solved, it is necessary to use for repay of debts for the projects the resources from the state budget as well as, when needed, the conditions and procedures of partial or full reimbursement to the state budget of the payments effected.

Projects that cannot be paid back in currency terms should be considered in conformity with the requirements and procedures of the regulation without giving guarantees by the guarantor bank and without consideration of selection criteria listed above.

Coordination council on foreign investment under the Council of Ministers of the Republic of Belarus