EDB investment portfolio


26 projects

$982.7 million

16% of the total

EFSD investment portfolio


2 projects

$4 560 million

82.1% of the total

Belarus became a full member of Eurasian Development Bank in June 2010. Its contribution to the Bank’s capital is US $15 million.



The Belarusian economy demonstrated accelerating economic growth at the beginning of the second half of 2017, partly due to the low reference levels of 2016 and the gradual recovery in crude oil shipments from Russia. Preliminary Belstat estimates show annual GDP growth rose to 1.7% in January-August, from 1% in January-June 2017. A gradual recovery in economic growth has been discernible since the beginning of this year. Annual GDP growth accelerated to 1.7% in 2Q 2017 from 0.4% in 1Q 2017.

The key factors behind the growing economic activity in Belarus include:

  • In terms of income spending:

Household consumption demonstrated an upward trend in 2Q 2017, for the first time since 2015, up 2.7% from the comparable period in 2016 (vs. a 0.6% drop in 1Q 2017 y-o-y). This growth has been recorded against the background of retail sales volumes consistently rising since March 2017. Retail sales growth accelerated to 7.8% in August 2017 from August 2016, which is the highest level since 2014 and could indicate a continued recovery trend in household consumption through the end of 2017.

Consumer demand will be supported in 2H 2017 by growing real household disposable income against the background of an increase in the minimum wage for Category I employees in the third quarter and further government plans to raise nominal wages.

There are still no signs of a steady recovery in investment activity. Despite the upticks of investments in fixed assets in some months of this year, the overall reduction in January-August came to 0.1% from the comparable period in 2016 (vs. a 19% decline in 2016 from 2015).

Net exports of goods and services continue to make a positive contribution to GDP growth, fueled both by economic recovery in Russia and a generally favorable export market.

  • In terms of added value:

Manufacturing industry growth rates have been consistently positive since the beginning of 2017. After the 0.4% decline in 2016, industrial output increased by 4.3% and 7.9% in 1Q and 2Q 2017, respectively, from the comparable periods in 2016. A high growth rate is also expected in 3Q, with recorded July-August growth of 6.1% y-o-y. The recovery in external demand and gradual buildup of domestic demand have supported output growth in virtually all sectors of the manufacturing industry. In 2H 2017, industrial output growth also received support from the recovery of output volumes in the petroleum industry (up 16.3% in August y-o-y) against the background of low reference levels of 2016, when Russia scaled back its crude oil shipments.

Rescheduling of harvesting operations caused a great deal of volatility in agricultural output trends in July-August (25.1% growth in August y-o-y vs. a 14.5% decline in July y-o-y). Agricultural output in January-August 2017 increased by 3.7% overall from the comparable period in 2016.

The construction industry continued to make a negative contribution to economic growth, down 7.7% in January-August 2017 from the comparable period in 2016.

The output gap, or the difference between economic activity and potential GDP, remains negative at minus 0.8% in 3Q 2017.

The leading indicators calculated by the Eurasian Economic Commission signal that economic activity will continue toward the end of 3Q and at the beginning of 4Q 2017 at the level of June-July 2017. The trends in indicators including revenue from business and other activities, the fuel and energy price index, and anticipated changes in demand for manufacturing products, contributed to the unchanged outlook in the calculation of leading indicators.


Inflation continued to slow in 3Q 2017, decreasing to a historic annual low in September of 4.9% vs. the National Bank’s inflation target of no more than 9% at the end of 2017. Annual core inflation slowed to 4%. The share of goods in the consumer basket whose prices rose by less than 5% y-o-y continued to increase and stood at 67% in August 2017 (vs. 23% in August 2016).

Exchange Rate

The foreign exchange market demonstrated a reduction in the net supply of foreign currency in July-September 2017. The chief factors behind this trend have been the growing demand for foreign currency from businesses and a slight reduction in the volume of net supply from the population, which amounted to USD 453.7 million in July-September (USD 1,587.4 million since the beginning of the year) and is still supported by the willingness of the population to maintain a required level of consumption. Growing demand from businesses is partly due to the need to repay liabilities denominated in foreign currency (as of the start of October, banks’ receivables due from non-financial entities decreased by USD 461 million, or 4.1%, since the beginning of the year).

The real effective exchange rate of the Belarusian rouble in January-August 2017 decreased by 2.9% y-o-y. The primary factor behind this change was the reduction in the two-way real exchange rate of the Belarusian rouble to the Russian rouble by 8.5%, which has made Belarusian goods more competitive in the Russian market.

The current account for 2Q 2017 showed a surplus of USD 227.2 million (vs. USD 102.6 million in 2Q 2016). As a result, the current account deficit decreased to USD 614.7 million for January-June (vs. USD 1,378.1 million in the comparable period of last year). The balance of trade in goods and services, which stood at USD 412.7 million in January-June, made a positive contribution for the second quarter in a row. The balance of trade improved in 1Q 2017 both owing to the 12% reduction in the deficit of the balance of trade in goods and a 40.1% increase in the surplus of the balance of trade in services from the comparable period in 2016. Transportation services and services subsumed under the “telecom, computer, and IT” group remain the primary drivers behind the surplus, collectively accounting for over 64% of all service exports.

The National Bank continued to increase international reserves in July-September, which amounted to USD 7,266.7 million at the beginning of October. Reserves increased by USD 705.7 million in 3Q 2017 thanks to a sovereign loan from the Russian Government, export duties levied on oil and petroleum products, growing foreign currency balances in correspondent accounts of banks with the National Bank, as well as proceeds from the sale of foreign currency bonds by the National Bank.

Fiscal Policy

The surplus of the republican budget in January-August 2017 amounted to RUB 2.6 billion, or 3.9% of GDP (vs. a surplus of 1.5% of GDP in the same period of last year). Budget revenue was up 12.9% and spending decreased by 2.9% y-o-y. The republican budget surplus is planned at RUB 955.3 million in 2017 in order to service both domestic and foreign debt.

Therefore, a somewhat more expansionist fiscal policy is possible in the remaining months of 2017 against the background of the need to meet the 2017 budget targets, which will additionally support the economic recovery. Sovereign foreign debt in dollar terms increased from USD 13.9 billion as of June 1, 2017 to USD 15.7 billion as of September 1, or 30% of GDP. The government has mobilized USD 2.7 billion in external loans since the beginning of the year, primarily by offering eurobonds, mobilizing resources from the Eurasian Fund for Stabilization and Development, and the Russian government and banks. A total of USD 697.8 million has gone toward foreign public debt repayment since the beginning of 2017. Domestic public debt as of September 1 has decreased by 8.7% since the beginning of the year (taking into account currency movements) to reach RUB 9.3 billion. Overall public debt as of September 1, 2017 was 39.3% of GDP.

Source: The national statistical agency, EEC, estimates by the authors

Monetary Policy

The refinancing rate was yet again reduced, this time to 11%, on October 18, 2017 in light of the slowing inflationary processes. This was the eighth rate cut, from the level of 18%, since the beginning of this year.

The average interest rate on the overnight interbank market in the national currency declined from 9.8% in 2Q 2017 to 8.9% in 3Q 2017. The relatively low interbank lending rate is attributable to the continuing structural liquidity surplus in the banking sector.

Nominal interest rates on the banking services market also showed a downward trend. Average interest rates for new term deposits of private customers in the national currency decreased from 8.2% in 2Q 2017 to a historic low of 6.4% in July-August. Average interest rates on new bank loans to private customers in the national currency decreased to 12.6% in July-August 2017, from 14.4% in 2Q 2017. Loan rates for legal entities also decreased, from 13.9% in 2Q to 12.2% in July-August 2017.

The volume of lending in local currency continued to grow following the relaxation of lending terms in 2H 2017. As of October 1, the amount of banks’ receivables due from private customers in the national currency increased by 7.4% in 3Q (or by 15.6%, or RUB 1,129.3 million since the beginning of 2017). Banks’ receivables due from non-financial entities in the national currency increased by 8.9% in 3Q (or by 9.4%, or RUB 868.1 million since the beginning of 2017).

The National Bank continues to implement a set of measures aimed at reducing the dollarization of the economy. The share of foreign-currency deposits was 74.5% of the total at the beginning of 2016 vs. 70.2% at the beginning of 2017, and was down to 68.2% at the beginning of October 2017. The gradual stabilization of the foreign exchange market and a series of regulatory measures contributed to this positive trend. One of the latest measures was the decision to increase the share of remittances by banks and non-bank credit and finance institutions to the mandatory reserve fund from 11% to 15% of foreign-currency deposits. The situation in the credit market is similar. Banks’ loan receivables due from non-financial entities in foreign currencies have decreased by 2.6% as of early September since the beginning of the year, while those denominated in the national currency have increased by 5%. Foreign-currency loans are not extended to private customers. Additional measures are being implemented to limit the use of foreign currencies in payments within the Republic of Belarus, including payments for insurance policies under personal insurance contracts denominated in a foreign currency, or the use of foreign currencies to pay for air transportation or medical services provided to individuals.

EDB’s investment activities in Belarus in 2013-2017 included the following:

  • The Bank will continue to support the State Innovation Development Programme for 2011-2015.
  • The Bank will also continue to finance real sector enterprises with high export potential (transport and agricultural mechanical engineering, the chemical sector and food industry). It will also help to introduce lease products in order to promote Belarusian goods in the member states.
  • EDB will continue to invest in the power sector, including network development, efficient generation and other projects that will help to reduce the country’s dependency on imported energy carriers and improve its energy efficiency.
  • In addition, the Bank will support transport projects enhancing Belarus’ transit potential.
  • It will also continue to finance the banking sector within its targeted programmes for SMEs as an institutional basis of the market economy.

Minsk Representative Office

70 Myasnikov St., office 310, Minsk, 220030, Republic of Belarus