Experts: Lukashenka-Style Economy Downing Banks

The ‘bad debts’ issue should be solved via drastic reforming of the state sector.

The solution to the problem of non-performing debts, which tend to increase on the balance sheets of banks, should be sought for in the real economy. The Belarusian economists expressed such opinion, commenting on the situation in the banking sector to the BelaPAN news agency.

‘The reasons for appearance of the ‘bad debts’ are not the banks or the value of loans, but the real economy sector of the enterprises which found themselves non-competitive with their production at both domestic and external markets,” — expert of the Belarusian Economic Research and Outreach Center (BEROC) Dzmitry Kruk said.

The economists think it is necessary to conduct reforms at the level of the state-owned enterprises sector — only in this case there is hope for eventual dissolution of the ‘bad debts’ problem.

‘Re-structuring of debt should be determined by the measures for re-structuring and raising the effectiveness of borrowers. This will create conditions for improvement of the financial situation at many enterprises,” — Director of the IPM research center Aliaksandr Chubryk thinks.

In his opinion, re-structuring should also include the measures on break-up of enterprises, so that the organizations which make profit would not bear the burden of loss-making directions and organizations.

‘It is important to break-up the standard-bearers of the Belarusian industry to raise their effectiveness. This will allow the state companies which are capable of competing to survive,” — Chubryk noted.

As it was previously reported, the volume of distressed assets on the balance sheets of the Belarusian banks in January-August of this year increased by more than twice. Thus, according to the National Bank, on September 1, 2016 troubled assets of banks amounted to Bn 6 billion, and to 2,65 billion rubles as of January 1. At the same time as of September 1 the share of problem assets in the banking system reached a record 14,8% (versus 6,8% at the beginning of the year).