Debt load of Belarusian enterprises deteriorates their financial performance
According to the National Statistics Committee, the profit from selling goods and services in January - October 2016, totalled BYN 10.5 billion, i.e. 0.2% more than in 2015. Profits grew slowly due to the high debt load on enterprises, which spent about one-third of their profits on servicing loans and borrowings. In the future, the state is likely to cut financial aid to troubled enterprises; bankruptcies among the state enterprises are likely to increase in number; layoffs will persist and bad debts in the banking system are likely to accumulate. Due to further reduction in interest rates in the economy, the debt burden on enterprises may somewhat reduce, which will reduce loan servicing costs for businesses.
According to Decree No. 221 of June 23rd, 2017, deadlines for the completion of foreign trade operations have been extended from 90 to 180 days for exports and from 60 to 90 days for imports. Delayed payments entailed a fine up to 2% of the transaction cost for each day of the delay, but could not exceed the total cost of the transaction. Most companies, when working with new counterparties, require a deferred payment for a period of three to six months. Due to the new regulation, violations are likely to reduce in number, so as the fines. Trade enterprises are likely to expand the assortment list due to the supply of new products in small lots, and the assortment list of exported Belarusian goods could expand, too. The new terms for completing foreign trade transactions would enable medium and small companies on the foreign trade market, exporters and importers are likely to grow in number and the geography of export-import operations could expand.