The economy has passed the test of strength

Alexander Chervyakov Minister of Economy of the Republic of Belarus

How the Belarusian economy has adapted to the new conditions, as well as the results of work in 2022, was told by the Minister of Economy Alexander Chervyakov in an interview with a BelTA correspondent.

“There were periods in the history of our country when we lived and worked under external pressure, but 2022 became exceptional. Starting from 2021, the aviation, potash, oil refining industries were subject to sanctions. Last year, restrictions were introduced for metallurgy, engineering, woodworking, construction materials. Sanctions for the it sector not only slowed down the growth rate, but also caused an outflow of IT specialists from the country. Logistical obstacles were created, access to the markets of the EU countries and Ukraine was closed or restricted. Difficulties arise in settlements with partners, "said Alexander Chervyakov .

"The scale of the sanctions imposed against us is enormous - 25% of the economy was directly affected by restrictions, and indirectly - affected all sectors. According to various estimates of expert economists, the" sanctions strike "should have led to a decrease in Belarus' GDP from 10% to 20% in 2022 However, thanks to the timely decisions taken by the HEAD of state and promptly implemented by the government, it was possible to prevent the development of the situation according to the most negative scenarios," the minister said.

According to him, during the first half of the year, the economy adapted to the changed external conditions. "The decline in GDP reached its greatest depth in January-July 2022 - minus 5.3%, after which the effect of the decisions taken to support industries affected, and the recovery stage began," the head of the Ministry of Economy said.

"A good harvest and well-coordinated work of farmers have allowed agriculture to steadily increase since August - GVA of 104.4% (plus 0.3% in the country's GDP). This has become a significant contribution to the country's food security and has made it possible to increase exports of products. In the third quarter, to a sustainable The recovery dynamics came from the industry. This trend continues for the fifth month in a row," the head of the economic department said.

As Alexander Chervyakov noted, the systematic work of the government, industries and businesses to adapt to external conditions improved the financial performance of enterprises. The return on sales for the economy as a whole amounted to 8.6%. Revenue is growing faster than cost. As a result, the number and proportion of unprofitable organizations continue to decrease. The level of debt burden at the beginning of 2023 compared to the beginning of 2022 decreased by 1.2 percentage points.

On the qualitative side, the work of the economy in 2022 is characterized by GDP growth in DOLLAR terms by 3.9% (from $69.7 billion to $72.4 billion).

"The successful 'export maneuver' helped ensure the supply of goods and services in 2022 for $46.8 billion. The balance of foreign trade in goods and services was positive, which ensured the inflow of foreign currency and became an additional factor in the stability of the financial market," the minister noted. were more susceptible to the negative impact of sanctions restrictions.But even here we are seeing a recovery.Transport was well supported by the intensification of passenger traffic (103.9%), and "construction" - by the implementation of the annual target for the commissioning of housing (100.6%). throughout the year were in the growth zone.

Negative dynamics in the IT sphere remains a serious deterrent. "Since the second quarter of 2022, the industry has been steadily decelerating, ending the year with a GVA value of 97.8% (against 108.6% in the first quarter). Negative trends are due to the relocation of IT professionals and companies due to counterparties refusing to cooperate with residents in Belarus and difficulties in making international payments," he explained.

The decline in trade is associated with a change in the behavioral model of people: in unfavorable conditions, they traditionally tend to spend money more carefully.

At the end of 2022, all regions, except for MINSK, reached a positive trend in terms of gross regional product compared to January-July last year and reduced the gap to the level of 2021. "The main drivers in all regions, except for the Gomel region and Minsk, were agriculture, forestry and fisheries, information and communications, and in Minsk - industry, where, by the end of 2022, an increase in production volumes was ensured. A positive contribution to the GRP of the Mogilev region and the capital was made by the energy sector , Vitebsk region - wholesale and retail trade," the head of the Ministry of Economy said.

"A negative impact on GDP was made by industries directly affected by the impact of sanctions: industry (94.6%, contribution minus 1.5%), wholesale and retail trade (87.6% and minus 1.2% respectively), transport activities ( 83.2% and minus 0.9%) and construction (88.6% and minus 0.6%) As a result, the GDP growth rate for 2022 was at the level of 95.3%, the minister said. "The economy is in a balanced, stable state. Maintaining macroeconomic stability has become a hallmark of the past year."

Supported the rhythm of investment work

"The strategic goal of the initiators of the sanctions was to stop our economy and, as a result, the outflow of foreign investment. The volume of investments in fixed assets really decreased last year, amounting to Br27.8 billion, or 81% by 2021. The main reasons are the fall in funding for bank loans (attraction of foreign credit lines), own funds of enterprises, suspension of a number of investment projects," Alexander Chervyakov said.

However, the majority of foreign investors continued their activities. "Following the results of 2022, foreign direct investment on a net basis amounted to $1.5 billion, an increase of 15.3% compared to 2021. Last year, work was carried out to implement about 1,000 commercial investment projects, 175 of them were completed. Investments these projects amounted to about Br1 billion. In 2023, we also plan to implement about 1,000 projects with a total investment of almost Br6 billion,” the head of the economic department said.

"Our preferential regimes are successfully functioning. In 2022, 53 new residents came to the FEZs, the Great Stone Industrial Park and Bremino-Orsha. They will implement business ideas in woodworking, agriculture, the chemical industry, mechanical engineering, pharmaceuticals and others 2.7 thousand new high-performance jobs will appear," the minister stressed.

The state continues to invest in the construction of housing and social infrastructure. "Last year, more than 4.2 million square meters of housing, 29 healthcare facilities, 4 schools, 11 kindergartens, and other infrastructure facilities were built. In total, more than 530 infrastructure projects were implemented under the national infrastructure plan with funding of Br3.2 billion," he stated.

Business activity is growing

"Timely anti-crisis measures contributed to the formation of positive expectations of the business community. As a result, starting from April 2022, there has been a positive trend in the emergence of new commercial organizations on the market. The level of business activity increased by 11% compared to 2021. Quantitative growth parameters proportionally improve the qualitative indicators that characterize the contribution of the sector to the overall economic results," Alexander Chervyakov emphasized.

The stable activity of SMEs contributes to their significant contribution to the budget revenues. "SMEs account for more than 36% of tax payments. The state continues its course to reduce the administrative burden on entrepreneurs, transferring interaction between the state and business into a digital format. All regulatory bodies, as well as a specialized organization based on Development Bank," he said.

Now about 600 existing administrative procedures have been analyzed, more than half of them have been excluded or optimized in terms of timing or list. This is a real time and money saver for your business. "We will continue to improve the instruments of non-financial support for SMEs by developing a system of support centers and business incubators on the ground, in the regions," the head of the economic department stressed.

Particular attention is given to small manufacturing businesses that are ready to participate in import substitution programs. Systemic work is built and carried out using three mechanisms.

The first is financial support for import-substituting projects. "The country's banking system offers a wide range of affordable products. The Development Bank supported 325 projects for a total of Br98.7 million through the Stabilization product. Beneficial loans for micro and small enterprises are provided by the Belarusian Fund for Financial Support of Entrepreneurship," the minister said.

The second is building communication between government organizations and private manufacturing businesses. “This task was set before us by the head of state at the VI All-Belarusian People’s Assembly. To this end, the Ministry of Economy, together with the Belarusian Fund for Financial Support of Entrepreneurship, organizes contact and cooperation exchanges at large state-owned enterprises. A total of 33 events were held with the participation of more than 500 SMEs,” said Alexander Chervyakov.

The third is electronic trading platforms. "In May, the Belarusian Universal Commodity Exchange created a digital platform for import substitution. We see that interest in this platform is growing: in seven months of 2022, more than 20,000 transactions were concluded for a total amount of about Br212 million," he added.

"The high effectiveness of these mechanisms will significantly accelerate the introduction of domestic analogues of foreign components, increase the degree of localization of Belarusian goods and stimulate the creation of new import-substituting industries," the head of the ministry concluded.

Implemented "export maneuver"

"The effective decisions taken by the government to diversify trade directions and reorient logistics schemes helped to achieve a record foreign trade balance - plus $4.3 billion in 2022. A surplus is observed both in trade in services (plus $4.1 billion at the end of the year) and in trade in goods (plus $172.4 million). Losses in the markets of Western countries and Ukraine were compensated by more than 80% with deliveries to friendly countries," Alexander Chervyakov said.

According to him, the most capacious and promising markets for EXPORT reorientation are RUSSIA and CHINA . “Exports to Russia increased by almost 1.4 times. The share in Russian imports approached 9% from 5.5% in 2021. By the end of the year, we reached a record $26.1 billion in exports. Deliveries to China increased by 1.8 times , reaching a mark of $1.6 billion. We increased the export of potash fertilizers, poultry MEAT, beef, rapeseed oil, dairy products and other goods," the head of the Ministry of Economy said.

More than 170 Belarusian producers of dairy, meat, fish, confectionery, ALCOHOL and other food products are accredited to work on the Chinese market. Work is underway to obtain admission for new suppliers.

E-commerce tools are actively used. In July 2022, the first National Electronic Pavilion of Belarusian Goods was opened on the JD.com and Douyin platforms. More than 60,000 orders have been placed for over 50,000 buyers. The opening of our pavilions at another seven electronic sites in China has been agreed upon .

Undeniable merits of industrial giants

“Timely and prompt measures to support the economy allowed the country’s industrial complex to enter recovery dynamics in the third quarter. It is a huge merit of our flagships in mechanical engineering. Growth was ensured, among other things, through the production of high-tech innovative goods with high added value. The production of computers, electronic and optical equipment, machinery and equipment has increased, as well as the production of mining dump trucks, tractors, elevators, microwave ovens, washing machines and other products," said Alexander Chervyakov.

In 2022, the enterprises of the Bellesbumprom and Belgospischeprom concerns worked with an increase.

The efficiency of the industrial complex is confirmed by the financial results. "The profitability of sales in industrial organizations in 2022 amounted to 10.6%, which is 0.9 percentage points higher than in 2021. The number of unprofitable organizations decreased in the republic, net profit amounted to Br7.7 billion," the minister stated. .

"The results of market surveys of industrial enterprise managers conducted monthly by our NIEI indicate the sustainable nature of the recovery trend. According to December data, there is a positive trend in the index of industrial optimism. About a third of respondents indicated an increase in output, an increase in demand and a reduction in stocks in organizations. or an increase in employment in the industrial complex was indicated by 90% of the heads of enterprises participating in the survey," he noted.

Logistic "reversal"

"In 2022, the transport industry took on additional challenges related to increased external pressure: disruption of transport and logistics chains due to sectoral sanctions of EU countries, closure of part of Russian airspace, complete cessation of traffic in communication with Ukraine. This naturally required a rapid change in established and years of proven logistics links, developing new markets, as well as promptly taking measures to support the industry. At the same time, work continued to remove barriers to the movement of goods and develop transport infrastructure," said Alexander Chervyakov.

Thus, in September 2022, an intergovernmental agreement was signed on the transit of Belarusian goods through the territory of Russia. Today, Russian ports are actively involved in their processing, land routes in the direction of China have been worked out.

In terms of railway transport, schemes have been worked out for the delivery of export products in the east, including by accelerated container trains. "Belarusian Railways is attracting new and additional cargo, exploring alternative delivery options. Estimated over the past year, export shipments of containers with products of Belarusian enterprises to China have more than five times exceeded the figure for 2021," the head of the ministry stressed.

Photos of the Belarusian Railways

A lot of work has been done to stabilize the situation and preserve the potential of Belarusian road carriers. The reorientation of flows to the eastern vector (Azerbaijan, Georgia, Turkey and others) continues. To this end, negotiations are underway to develop a permit-free road transportation system. The abolition of the categorization of permits of the Russian Federation has expanded the capabilities of our carriers.

"As a mirror response to the sanctions imposed by neighbors, as well as to ensure the work of domestic carriers, restrictions have been introduced on the movement of vehicles registered in the EU states on the territory of the republic. So, today, on average, more than 1 thousand entering and exiting vehicles from the EU," the head of the economic department said.

From October 2022, permits for the international transportation of goods across Belarus for EU carriers are being issued. The registration fee replenishes the road fund.

Passenger turnover maintained a positive trend: at the end of 2022 -103.9%.

"Despite the pressure in the field of civil aviation, the fleet of aircraft is used to the maximum in all open directions, we are working on opening new flights, attracting airlines to organize passenger transportation. Today, Belavia carries passengers to 19 airports in nine states. To Minsk National Airport and from flights are operated by seven carriers," said Alexander Chervyakov.

Agriculture increases the pace

According to the minister, despite the negative external factors, a steady increase in output is taking place in agriculture: the growth rate for the year was -103.6%. The gross grain harvest increased by 18.9%, rapeseed - by 12.6%, potatoes - by 13.3%. In agricultural enterprises, the yield increased in all major positions: for grains and legumes - by 15.7%, for potatoes - by 9.9%, for vegetables - 17.6%.

The level of production for key products significantly exceeds consumption: for MILK - 2.6 times, meat - 1.3 times, SUGAR - 1.5 times, vegetable oil - 3.1 times. "This allows us to profitably sell surplus to foreign markets, the geography of sales is about 100 countries. If in 2021 we received $6.8 billion from the export of food products and agricultural raw materials, then in 2022 - $8.3 billion," he stated.

At the same time, thanks to the policy pursued by the government in relation to state orders for certain types of agricultural products, Belarusian processing enterprises are consistently provided with raw materials. "Now consistently, through the use of financial instruments and the creation of preferential conditions, the economic stability of organizations, the growth of production and the positive dynamics of exports are ensured," Alexander Chervyakov emphasized.

“Along with this, we are aimed at large-scale import substitution. Projects are being successfully implemented to produce domestic cheeses with white and blue mold, increase the volume of quick-frozen products, increase the production of rapeseed oil. Work is underway to create new production facilities in the pharmaceutical industry for processing raw materials of animal origin, expand for the procurement of raw materials for the production of medicines," he added.

The financial position of enterprises is being strengthened

"The performance of enterprises and the economy as a whole is assessed by financial results. It is important to note that in 2022 they show a positive trend. At the end of 2022, sales revenue increased by 9.3%, profit from sales - by 16.2%. Values profitability of sales steadily exceed the level of the previous year (8.6% in 2022). This is the highest figure in the last 10 years," the minister said.

The number and proportion of unprofitable organizations are decreasing (11.1% in 2022 against 12.4% in 2021). "The systematic work of government bodies, commissions for the prevention of economic insolvency under the regional executive committees for the financial recovery of enterprises contributed to a decrease in the level of debt burden. The ratio of total debt to annual revenue decreased by 1.2 percentage points by the beginning of 2022 and as of January 1, 2023 amounted to 50.7% This is the minimum figure for the last 8 years," said Alexander Chervyakov.

Social obligations - in absolute priority

"The state is fully fulfilling its social obligations: pensions, benefits, salaries to state employees are paid on time. The government is working purposefully to increase the income level of the population. In 2022, pensioners received significant support: labor pensions were increased three times, exceeding Br670 at the end of the year. As a result, the real size of the pension in December increased by 9.1%," the head of the economic department said.

To increase the level of wages for low-paid categories of workers, the minimum wage was increased from January 1, 2022 by 14.3% by January 2021 and amounted to Br457. Due to the rise in prices during the year, its size was indexed and exceeded Br483 in December.

For state employees, the base rate increased 6 times during the year. The one-time payment for HEALTH improvement has been doubled - from 0.5 to 1 employee's salary. Sectoral incentive payments have been established for teachers, doctors, educators, workers in culture, physical culture and social services.

"In December, the growth of real wages in the economy as a whole was restored - plus 0.6% compared to December 2021. That is, even taking into account high inflation, the purchasing power of people in general has not deteriorated," Alexander Chervyakov noted.

Managed the situation in the labor market. The unemployment rate according to the ILO methodology in the IV quarter of 2022 decreased by 0.2 p.p. compared to the fourth quarter of 2021 and amounted to 3.6%.

The state carried out measures to promote employment. In 2022, more than 478 thousand people were employed for vacancies included in the nationwide bank. 3.4 thousand people were sent for training, and more than 84% - with a guarantee of subsequent employment. Assistance in organizing their own business with the receipt of subsidies was provided to 1.2 thousand people.

“Thus, despite the ongoing sanctions pressure, the Belarusian economy is working steadily and balanced. And this contributes to maintaining social stability in society,” the minister concluded.

BELTA.