Indebted agriculture will require additional subsidies for Belarusian food industry
More than 400 agricultural enterprises will undergo a financial recovery procedure. Without state subsidies, as of September 1st, 2016, agriculture counted over 1000 unprofitable enterprises. The food industry will suffer most losses due to the writing off debts of the agriculture; moreover, some enterprises will require financial aid from the state.
According to the Ministerial Council Resolution No 889 of October 31st, 2016, the government put together two lists of state agricultural organisations to be subjected either to financial restructuring, or to bankruptcy. The bankruptcy list contains 102 enterprises, which have no business plan to restore solvency. 323 organisations will be subjected to financial recovery and will obtain interest-free instalments to repay the cost of loans, debts on taxes and duties and the resulting debt for natural gas and electricity. From July 1st, 2016 to 31 December 31st, 2017, the turnover of organizations subject to financial recovery will be excluded from VAT payments, sales profits will be exempt from tax, and revenues will not be taxed if simplified taxation is applicable.
The lists were created in an effort to normalize the situation with non-payments in agriculture. As of September 1st, 2016, 1010 companies or 71% of the total number were unprofitable without the state aid, and their overall losses totalled BYN 412 million. The share of overdue payables exceeded 32% of the total debt. Due to the lower grain yield as compared with 2015, many enterprises will continue being insolvent in the coming year and they will require financial support. Financial recovery measures in agriculture mean that creditors will write off losses of such enterprises.
Manufacturers of agricultural equipment leased their equipment and the state budget paid interest on leasing schemes. Major losses will occur in the food industry, at enterprises, which made advance payments on account of future crops, and provided loans, inter alia, to repay wage arrears. Food industry enterprises may receive stake shares of their debtors, which is hardly the best solution, as those enterprises require further infusion of funds to support operations of the loss making agricultural enterprises. In the given circumstances, the food industry may apply to the state for compensation. Highly profitable enterprises and private enterprises will be prompted to write off losses at their own expense, some less profitable enterprises may receive budget subsidies or soft loans from the state.
In sum, the Belarusian state aims to use bankruptcy in order to remedy the situation with agriculture’s debt at minimal cost. The food industry will be prompted to write off the bulk of debt, and some enterprises may be entitled to a budgetary compensation for their losses.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.