Business news

MINSK, 14 February (BelTA) – Belarus, in consultation with the IMF and the World Bank, will adopt a comprehensive strategy to improve the governance of state-owned enterprises in 2017, Sergei Kalechits, Deputy Chairman of the Board of the National Bank, said during a board meeting of the National Bank. The text of the statement was published in the January issue of Bankovsky Vestnik journal, BelTA has learned.

In 2017 the Belarusian authorities, in consultation with IMF and the World Bank, will adopt a comprehensive strategy for improving the governance of state-owned enterprises,” Dmitry Kalechits said. The strategy involves separating the functions of the state as regulator and as owner; development of a system for assessing and managing fiscal risks; strengthening the corporate governance of state-owned enterprises; improving the reporting of state enterprises; creating institutional environment to improve the efficiency of public sector enterprises.

A number of steps were taken in 2016 to improve the assessment of the public sector and its shortcomings. “We launched a phased reduction in directed lending, partially replaced the gross production targets with efficiency indicators, completed the initial diagnostic analysis of 106 large enterprises, and laid the foundation for improving the efficiency performance monitoring and risk analysis,” Dmitry Kalechits said.

He added that the share of distressed assets in the credit risk-weighted assets reached 12.8% in 2016. “Given the current state of economy, we monitored the possible impact of major borrowers on the stability of the banking sector. It was decided to consider the borrowers whose indebtedness equals to or is higher than 10% of the aggregate regulatory capital of the banking sector as systemically important, and to classify their indebtedness as Group VIII with the risk level of 150% in calculating the regulatory capital sufficiency. We analyzed the major borrowers with unsatisfactory financial performance and also the bank assets under the state guarantees to assess the potential fiscal risk of the liabilities to Belarusian banks. The risk made up 8-10% of GDP,” he said.

According to Dmitry Kalechits, in 2017 the Belarusian financial sector will be developing in three main areas. First of all, work will be continued to remove major imbalances. It will include efforts to provide assistance in settling distressed debts, to replace directed lending with the market one, change the mechanisms of state support, promote competition, and develop fiscal risk assessment and management systems. Secondly, the focus will be placed on accelerated development of non-bank participants of the financial market. This will lay the foundation for the construction of a more balanced financial sector, reduce the degree of dominance of the banking system, and promote the development of a wider range of financial instruments. Finally, efforts will be invested to improve the efficiency of financial institutions through active implementation of digital banking technologies.

“These efforts will result in a stable financial market, with better efficiency and improved structural balance, able to meet the clients’ needs in financial services without state support,” Dmitry Kalechits said.