10 Aug 2022 10:23

Draft agreement on Russian loan of $1.5 bln to Belarus in final stage - Belarusian PM

MOSCOW. Aug 10 (Interfax) - A draft agreement on the allocation of a $1.5 billion Russian loan to Belarus for the implementation of import substitution projects is in its final stage of preparation, Belarusian Prime Minister Roman Golovchenko was quoted as saying by government newspaper SB. Belarus Today.

"A draft agreement on a $1.5 billion loan with the Russian side is at the final stage. Seven projects, recognized by the parties as urgent and worth $330 million will be launched by the end of the year. The projects are aimed at import substitution in the Union State," Golovchenko said at a government meeting on the work of the economy under sanctions.

He said the potential for import substitution on the market of the Union State of Russia and Belarus amounts to $40 billion. The greatest potential for this is in manufacturing components for the auto industry, pharmaceuticals and the chemical industry, he added.

"Import substitution projects related to expanding the range of manufactured products at existing production facilities. This is a separate pool of projects," Golovchenko said, remarking that these are projects in processing and their implementation will make it possible to produce products with higher added value to replace imports. "These are plastics in primary forms, cleaning agents, surface abrasives and baby food," he said, citing planned projects.

There is significant potential to produce products to replace imports by deepening processing of local raw materials, he said. "In 2021, Belarusian organizations exported $400 million worth of butter, but exports of packaged butter amounted to only about 20%. And this while the price of butter in a small package is 10% higher - the potential losses are up to $40 million. There is a similar situation with rennet cheese, beef and rapeseed oil," Golovchenko said.

In light of this, sectoral ministries are working on plans to modernize dairy, meat and rapeseed oil production facilities, and the government is allocating funding for this, he said.

Overall, meeting the objective for additional production of specific goods within the context of import substitution will add more than $1.5 billion to GDP, and meeting the additional objective for exports will generate $1.7 billion of foreign currency revenue for the country, Golovchenko estimated.

The Belarusian ambassador to Russia, Dmitry Krutoi said in early August that the two countries' governments were discussing implementing up to 15 import substitution projects based at Belarusian businesses, and that Minsk was initiating the urgent preparation of a financial plan for cooperation.

President Alexander Lukashenko said earlier that Belarus had proposed a number of joint investment projects to Russia with the aim of replacing critical imports amid restrictions on supplies of high-tech equipment and components from the European Union and United States. He said that, under an agreement with President Vladimir Putin, Russia was prepared to allocate $1.5 billion for these projects.