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Debts Of Belarusian Enterprises On Loans And Borrowings Grow By 70,4%

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Debts Of Belarusian Enterprises On Loans And Borrowings Grow By 70,4%

Any devaluation of the ruble breaks through the solvency of the key Belarusian enterprises.

In 2020, these problems have taken on a gigantic scale, the website banki24.by writes.

In 2015, the National Bank pursues a policy of controlled floating of the Belarusian ruble exchange rate. This means that the NBRB allows foreign exchange interventions to smooth out exchange rate fluctuations that seem excessive to the regulator.

The authorities had plans to roll back interventions on the stock exchange to zero. But over the years, the National Bank has not abandoned foreign exchange interventions for a number of reasons.

One of these reasons is the low liquidity of the exchange currency market. The trading volume per session during quiet times usually does not exceed USD 50 million in the equivalent.

If a large buyer or seller of currency suddenly enters the exchange with orders of about 10 million USD, this can lead to a jump in the exchange rate by tens of kapeykas per day. The next day, the rate is likely to roll back, but high volatility will play a negative role in shaping the mood of enterprises and the population.

Another reason is the huge debt burden of the modernized enterprises. A significant part of such loans and loans for modernization were issued in foreign currency, and therefore any weakening of the Belarusian rouble exchange rate hard hit the debtor companies.

If we abandon interventions and switch to free floating of the Belarusian ruble, daily and weekly fluctuations in exchange rates against the background of panic may become very large and will put pressure on the weak public sector. State-owned enterprises simply will not survive, and will go to the bottom at an accelerated pace.

As of September 1, debts of large and medium-sized enterprises on loans and borrowings amounted to BYN 96.8 billion. In this five-year period, the liabilities of companies have already grown by 70.4%.

Characteristically, the fastest growth is observed in 2020. If in 2016 debts increased by 4.5%, in 2017 - by 11.5%, in 2018 - by 12.5%, in 2019 - by 5.3%, then in 8 months 2020 - by as much as 23.6%.

Of course, this debt dynamics is closely related to the devaluation of the Belarusian ruble. The largest surges in the rate in 2020 were observed in March and August. In March, the volume of liabilities of enterprises jumped by BYN 11.5 billion, in August - by BYN 6.7 billion. The main part of the increase was most likely due to exchange rate differences from the revaluation of foreign currency loans and borrowings in the ruble equivalent.

The bulk of the debts is formed by industrial enterprises - BYN 53.2 billion. Since the beginning of 2020, their liabilities have grown by 21.4%. Among the industrial sectors, the leaders in terms of loans and borrowings were woodworking and pulp industries (BYN 9.450 billion), food processing (BYN 7.916 billion) and mechanical engineering enterprises (BYN 5.750 billion).

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