Belarus restores foreign exchange inflow
Photo: neg.by
The beginning of the year coincided in Belarus with the tightening of the sanctions regime, which significantly complicated the country’s foreign trade operations, as well as attracting and servicing loans due to external influences. Nevertheless, by the fourth quarter of 2022, the authorities had achieved cases of developing resistance to pressure.
Sanctions and countermeasures for major export commodities
Since February, the transit of Belarusian potash fertilizers to the port of Klaipeda has been widespread in Lithuania. The contract for the transportation of fertilizers between the Lithuanian Railways and Belaruskali provides for the transit and transshipment in Klaipeda of up to 11 million tons of Belarusian potash fertilizers per year. The Lithuanians justified their actions to seize secondary parties from the US. Anti-sanction actions were carried out quite quickly.
So, on March 31, the Resolution of the Council of Ministers dated March 29, 2022 No. 189 “On the consumption of exports of potash fertilizers” was published. In accordance with the specified regulatory legal acts, exports of potash fertilizers from Belarus, classified by the code 3104 of the TN VED of the EAEU, are carried out by Belaruskali, the Belarusian Potash Company and legal values under a license from MART at the initial values of the parameters. As a result, the circle of distribution of potash fertilizers outside the country was expanded. On June 15, Decision No. 203 “On the sale of potash fertilizers” was adopted, in accordance with the conditions for paying export duties on potash products produced at the choice of the payer in euros, US dollars, Russian rubles or Chinese yuan. Also, the government received the right in 2022-2023. decisions on setting export duty rates for potash emissions.
The events that began on February 24, 2022, are delayed by the loss of Belarusian oil refining access to the Ukrainian market and the EU market. Prime Minister Roman Golovchenko
declaredthat, as a result of sanctions pressure and an armed release into the volume of raw materials production at Belarusian refineries, it temporarily fell by about half compared to 2020. According to
Prime Minister in early April, Naftan loading is about 11.7 thousand tons. tons per day, Mozyr Oil Refinery – 13.7 thousand square meters. t per day. Golovchenko compared these results with the previous workload of the enterprise: in 2020, more than 8.99 million tons of hydrocarbons were processed, or 24–25 thousand tons per day.
In such conditions, the authorities reoriented the refineries to work in other markets, withdrawing supplies from Ukraine and devices. Already at the beginning of summer, the reorientation of the refinery began to yield results. Part of the loss in relation to oil refining losses was the indexing of retail motor fuel prices, which lasted from March to June. On June 28, the Belneftekhim concern raised the level of maximum retail prices for gasoline and diesel fuel, after which fuel prices in the country stopped growing.
August 10 CEO of Naftan Andrey Soiko
reportedthat the Novopolotsk Oil Refinery is starting to become profitable. According to the data, “since July, we have basically received a positive result … and we see that according to the results of 9 months, the enterprise will break even.” The head of the enterprise added that in the fourth quarter, Naftan plans to increase the volume of oil refining, taking into account the sale of finished products in Africa, Asia and the far arc regions.
On October 3, exclusion of Belarus and signing of the agreement At the conclusion of the government, the Prime Minister of the Republic of Belarus stated that “on the issue of tax maneuver, Russian colleagues agreed and now this problem, which for a long time created negative consequences for economic development, has also been resolved.”
Ultimately, Belarusian refineries receive the same working conditions on the Russian market as they are formed for oil refining in the Russian Federation. Recall that a few years ago the Russian government developed and implemented a mechanism for the so-called. a reverse excise tax that offset retail sales of refineries from offerings to the domestic market at commodity prices above a wide range.
Belarusian refineries could not use the reverse excise tax, which sharply limited the supply of domestic petroleum products in the neighboring market. Now, according to an expert in the field of energy Tatyana Manenokthe positive effect for the Belarusian refineries may take about 400 million US dollars.
Recovery of exports after the collapse in the first half of the year
On October 7, R. Golovchenko said that “due to the loss, we could lose about 20 billion US dollars.” According to his estimates, the volume of Belarusian exports subject to bans could reach $15-16 billion. In addition, according to the Prime Minister, 4-5 billion US dollars was exported to Ukraine.
Since March, consumption has increased sharply due to the reorientation of exports in Russian, Chinese and other directions in order to compensate for possible losses. In September 2022, Belstat often publishes operational data on exports and imports of goods by country. Available information is still limited to the 1st half of 2022. At that time, the volume of exports of goods from Belarus increased significantly in value terms.
The export of Belarusian goods to the Russian Federation in June 2022 was the highest in the history of foreign trade operations with this country. Judging by the statements of relevant officials, the June record was broken in August-August. Thus, on October 5, the Deputy Minister of Foreign Affairs Igor Nazaruk reported that according to the results of 8 months of 2022, exports to the Russian Federation grew by more than 30%. For comparison: Belstat’s latest data for 6 months of observation on the growth of exports of goods by 23.1%.
At the end of September, the Ambassador of Belarus to Russia Dmitry Krutoy noted that “according to the results of the year, we will successfully solve an increase in exports to the Russian Federation from 6 to 8 million.” According to him, “for 8 months, we added 28% in goods, and 22% in services.”
According to the results of June, the share of Russia in the foreign trade turnover of goods increased to 65.3%, with the usual share in 2019-2021. about 45–50%. The growth of consumption of Belarusian goods in Russia in the 2nd half of the year may increase the share of the Russian population in foreign trade up to 70%.
According to operational National Bank data on exports and imports of goods and services according to the balance of payments methodology, export deliveries from Belarus for 8 months of 2022 covered 29,319.2 million US dollars. Compared to the revised period of 2021, exports fell by only 4% in value terms. Such a low speed of exports with significant sanctions restrictions is associated with an increase in world prices for agricultural products, oil, oil products and potash commodities, finding alternative ways to supply foreign markets (Russian ports, railway transit through the Trans-Siberian Railway), as well as an increase in the exchange rate Russian ruble against the US dollar.
Income from international settlements between Belarus and turnover in national currencies. After April, the private weight of the national currency in the calculations approached 100%. energy payments were at risk on the path to full de-dollarization of trade in Russia.
According to the results of 8 months of 2022, the balance of foreign trade in goods and services amounted to USD 3,465.9 million (USD 2,427.6 million for the same period in 2021). A positive foreign trade balance requires the country to receive sufficient amounts of foreign currency for settlements under foreign trade contracts and loans. Having a positive balance is important when the Western financial market is closed to Belarus.
The state of foreign exchange reserves and the domestic foreign exchange market
For the period 2021–2022 Western sanctions have been consistently introduced against the National Bank of the Republic of Belarus and large banks. In particular, in March, the EU banned the growth of the Belarusian economy, euro banknotes, the European Union structure with the Belarusian regulator, and financing of trade and investment in the country.
For the first 9 months of 2022 gold and foreign exchange reserves (GFR) of Belarus registered for 921.7 million US dollars – up to 7503.3 million US dollars. In February and March (a period of volatility in the foreign exchange market), revenues in general fall into reserves in the amount of 952.1 million US dollars. However, since June, the fluctuation in the volume of gold reserves has been within ±100 million US dollars per month.
In part, the consumption of a strong stock of reserves is associated with the work of the National Bank and the stabilization of the domestic foreign exchange market, and in part – with a deferred payment for the loan turnover.
For the first time, the Minister of Finance of Belarus Yuri Seliverstov
reportedthat “in the Russian Federation, a deferral of payments was granted for a year, not even for a calendar year, but shifted for an annual period.” According to Yu. Seliverstov, “we are not meeting the payments of more than 1 billion US dollars that we needed to make.”
Based on the results of 9 months of the average year, there was a net supply of foreign currency on the part of participants in the domestic foreign exchange market. In January-September they sold USD 955.9 million to the banking system on a net basis. At the same time, for the period of 2021, the net supply of foreign currency showed 828.3 million USD.
See non-resident participants for the main foreign exchange inflows in the domestic market in 2021–2022. During the 9 months of the collection of the year, non-residents sold to banks 403.8 million US dollars, due to the period of interest of the year – 1576.7 million US dollars.
Significant debt repayments to come in 2023
In September, the National Bank updated data on upcoming payments of sectors of the economy by gross external debt. During 2023, the volume of the share of the general government sector, excluding trade loans and advances, as well as debts with no expiration date, is estimated at $5,180.7 million.
The expected volumes of payments by depository organizations and medium-sized sectors are less – USD 462.7 million and USD 1,023.2 million, respectively. The total payments of sectors of the economy for 2023 can take 6666.6 million US dollars.
In anticipation of 2023 in 2017 in the amount of USD 80 million. Also, if the priority measures of Belarus and Russia do not agree on an exchange, in 2023 the exclusion of the summation of debt to the Russian Federation deferred for a year, which Yu. Seliverstov is estimated at the parameter “more than 1 billion US dollars”, will begin to be excluded.
On June 28, the National Bank and the Council of Ministers are recommended to adopt resolution No. 413/15 “On the use of the appointment of ministers of the Republic of Belarus and the National Bank of the Republic of Belarus” dated April 6, 2022 No. 212/10. This decision provides for the transfer by the Ministry of Finance as part of the payment of Eurobonds at the expense of funds in foreign currency, the summation in Belarusian rubles on accounts specially opened with Belarusbank.
According to the Ministry of Finance, since the end of June, payments on Eurobonds of Belarus have been executed in accordance with the new procedure established by the named NLA. During the summer and September, Belarusian rating agencies S&P Global Ratings and FitchRatings responded to these legal liability actions with Eurobond issue ratings up to ‘D’.
In September, First Deputy Prime Minister Nikolai Snopkov
reported on the conversion of the currency of conclusion of obligations in relation to the reserve of Belarus. According to him, “despite the fact that the loans were originally denominated in dollars, we will pay in yuan.”
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