Market to determine the initial price of assets

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April 22, 2016 18:07

On March 29, the Government of Belarus issued a regulation No 285 legitimizing some requirements and approaches of Lukashenko to the sale of the state-owned assets, which essentially come down to maximization of profits from privatization.

Comment

The document contains several new and fundamentally important clauses. Firstly, new rules allow all joint stock companies to set the initial selling price of shares by their market, not book value. Previously, the initial price of shares was determined by the market only for banks and joint-stock companies owing land in Minsk and regional centers.

Secondly, it is regulated that the initial market price should be the highest. “The highest” implies that the authorities are preparing for numerous assessments of the market value of a given asset and want to protect their own assessments. That is, for instance, the Belarusian market value of an asset could be well above the market value as assessed by an international company and the initial selling price of shares will be tied to the highest assessment, even though it was not properly justified.

Thirdly, the regulation stipulates that the market price may not be below its par value. In other words, the Belarusian authorities refuse to apply special rules to companies with a number of nominal assets with low market value due to these assets being obsolete, unneeded, loss making or in debt, etc.

Fourthly, the new rules also require all companies to apply novelty of the past year – adjusting the initial price by price index for producers of industrial goods for technical and industrial purposes. That is, while defining the initial, highest, but not below par, price of a stock as of January 1st of the current fiscal period (or the first day of the month following the month of additional issue of shares), at the time of purchase (auction), the price should be increased in the future with adjustment for inflation.

 

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.