EDB investment portfolio


26 projects

$974.5 million

15.95% 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 recovering economic growth in the Republic of Belarus continued in April – May 2017. According to preliminary Belstat estimates, Belarusian GDP in January – May 2017 increased by 0.9% year-on-year, after an annual increment of 0.3% in 1Q 2017. The growth in economic activity was supported by a gradual recovery in both domestic and external demand amid continued easing of monetary conditions.

The key factors behind the positive economic trends in Belarus are:

on the use of income side: a gradual recovery in retail turnover, growth in which reached its highest value for several years in May at 2.9% compared with May 2016. Against that background, 2Q 2017 consumption expenditure is expected to turn positive after the decline slowed to 0.6% year-on-year in 1Q this year (versus a drop of 2.9% for 2016 as a whole). Recovery in retail is still held back by the continued reduction in real available monetary income of the population, which fell by 1.5% year-on-year in January – April 2017.

Fixed capital investments continued to show mixed trends in April – May 2017. The growth in investments was 0.1% YoY in May, after a 9.5% drop the month before. Such surges can be explained by the completion of projects in the energy sector and road construction, despite ongoing low industrial investment amid the high debt level and weak borrower solvency. Overall, fixed capital investments in January – May 2017 dropped by 5.5% year-on-year, after a drop of 22.4% in the same period of 2016.

Net exports of goods and services, where a considerable role is played by the economic recovery in Russia and the favourable external economic conditions, with growing goods and commodity markets, had a positive impact on GDP growth in 2017.

on the value added side: the greatest positive contribution to GDP in April – May 2017 was from the processing industry, where production volumes increased in May by 9.3% compared with May 2016 (up 7.9% in April 2017). The gradual recovery in the Russian economy helped the Belarusian processing industry to partially compensate for the losses from declining Russian oil supplies in January – April 2017.

The bad weather in May impacted agricultural trends, where the growth in March – April 2017 was replaced by a 5.1% year-on-year drop. At the same time, the weather factor resulted in high production growth in electricity, gas, steam, and hot water supply (8.1% year-on-year growth in May).

The high growth rate in freight turnover remained in April – May 2017. Overall growth for January – May was 4.4% compared with January – May 2016 (versus a drop of 0.3% a year before). The positive trend in the transport industry was driven both by an increase in the volume of cargo transportation due to resumed potassium fertilizer and energy resource supplies, and the overall economic recovery.

GDP continues to be negatively impacted by construction, which dropped 6.9% year-on-year in January – May 2017.

The output gap, i.e. the difference between economic activity and the potential GDP level, remains negative, at minus 0.8% in 2Q 2017.

The leading indicators calculated by the EEC testify to a continued recovery in economic activity in the Republic of Belarus in late 2Q- early 3Q 2017. The trends in freight turnover and fuel and energy commodity prices both contributed to the improvement in the leading indicators.


The slowing inflationary processes of early 2017 continued into the 2nd quarter. Inflation in June 2017 was 6.5% YoY, in line with the National Bank’s target for the December 2017 vs December 2016 level to be contained to 9%. Some pressure on the price level started to appear from consumer goods in June, however, amid the unfavorable weather conditions and growth in global food prices. The core inflation trend, which remains lower than the growth in the overall consumer price index, provides assurance to the National Bank that inflation will remain within target. Weak consumer activity, the relatively stable national currency and, according to the National Bank’s estimates, the gradual slowdown in inflationary expectations, remain the main factors stabilizing inflationary processes.

Exchange Rate

The forex market in January – June 2017 witnessed a slight excess of foreign currency supply over demand. The population continues to provide a net supply of foreign currency, amounting to USD 1,133.7 million in 1H 2017. The existing situation in the forex market was largely driven by reduced purchases of currency by the population due to falling real income, as well as their desire to maintain the required level of consumption by using savings.

The above situation in the Belarus forex market, in the absence of considerable external shocks, has contributed to stabilization of the BYR exchange rate. The real effective BYR rate in January – May 2017 dropped by 3.0% year-on-year. Moreover, the reduction in the real effective rate occurred mainly due to a combination of real depreciation versus the Russian rouble totalling 10.8% and strengthening against the EUR and USD, by 17% and 12%, respectively. The reduction of the real effective exchange rate of the BYR calculated from the industrial producers price index was stronger in the same period, at 8.6%, which accords a greater competitive advantage to domestic producers versus foreign enterprises. The slowdown in inflationary processes considerably supported a reduction in the real rate.

The current account showed a deficit of USD 867.9 million in 1Q 2017 (versus USD 1,482 million a year before). The goods and services balance grew in January – March to USD 210.6 million, from minus USD 68.8 million in January – March 2016. It was mainly driven by growth in the net export of services, which increased by 40.4% in 1Q 2017 compared with the same period of 2016. Additionally, we highlight the improvement in trading conditions: the export price growth rates were considerably higher than the import price rates, including for non-energy goods. Compared with January – March 2016, average export prices grew by 21.5%, versus import prices rising by 13.8%. At the same time, 1Q 2017 saw growth in physical volumes of imports (7.4% YoY) at a rate exceeding the export increment (1.6% YoY).

Despite the considerable obligations of the National Bank and the Government of the Republic of Belarus to service forex debt, the National Bank is managing to gradually build up international reserves. As of early July 2017, international reserves amounted to USD 6,561 million, increasing by USD 1,544.9 million in the 2Q. The main increase in the reserves occurred in June 2017, which was due to the receipt of funds by the Finance Ministry from the sale of Eurobonds totalling about USD 1,400 million, as well as the receipt of the fourth tranche of the EFSD facility, totalling USD 300 million.

Fiscal Policy

The Belarusian government continues to run a national budget surplus. In January – May 2017, it amounted to BYR 1,393.2 million, or 3.6% of GDP, almost twice the level of the same period in 2016. This was driven by 9.6% YoY revenues growth in the reporting period (mainly VAT and income from foreign economic activities), with expenditures growing by 0.1%. The authorities plan to keep the Republic’s budget in surplus in 2017, at BYR 1,483.7 million, so that payments on both domestic and external liabilities can be made.

State external debt in dollar terms increased from USD 13.6 billion as of 1 April 2017 to USD 13.9 billion as of early June, amounting to 27.7% of GDP. Overall, Belarus has procured state loans totalling USD 595 million since the beginning of the year, mainly by borrowing from EFSD, the Russian government and banks, as well as the IBRD and Chinese banks. Alongside that, despite the payments under external obligations, the Finance Ministry’s USD 1,400 million Eurobond placement and receipt of the USD 300 million fourth tranche of the EFSD facility in June will result in considerable growth in state external debt, which will exceed 30% of GDP. Domestic state debt as of 1 July dropped by 8.7% since the beginning of the year as a result of exchange rate changes, reaching BYR 9.3 billion. Overall, state debt was 37.6% of GDP as of 1 June 2017.

Monetary Policy

The slowdown in inflationary processes and the need to maintain financial stability drove the National Bank to reduce the refinancing rate to 13% in 2Q 2017. It then decided to decrease it further – to 12% from 19 July.

Amid a structural liquidity surplus in the banking sector and weak demand for loans, the average one-day interbank market rate in the national currency remained at 10.4% in April – May. In June, the interbank lending rate was 8.7%, while interbank loan and deposit volumes in the national currency dropped significantly.

Moreover, nominal interest rates in the loan and deposit markets decreased. The average interest rate for new term bank deposits of individuals in the national currency dropped from 12.3% in 1Q 2017 to 8.7% in April – May. The average interest rates for new bank loans to individuals in the national currency dropped from 17.1% in 1Q 2017 to 14.7% in April – May 2017. The same rates for corporate loans saw a greater decline: from 17.7% in 1Q to 14.2% in April – May 2017.

The falling loan rates stimulated lending in the national currency, mainly due to individual consumer lending. As of 1 June, bank lending to individuals (including in foreign currency) had grown by 3.3% since the beginning of the 2nd quarter (and by 5.3% since the beginning of the year), or by BYR 244.7 million (versus growth of BYR 140.4 million in 1Q).

As of early June 2017, the share of currency deposits in the overall structure (including the population) dropped to 69.6% (the retail figure was 74.1%), from 70.2% (the retail figure was 76.3%) as of the beginning of the year. In order to strengthen the measures aimed at further dedollarization of the economy, the National Bank has decided to increase the deduction requirement for both banks and non-banking financial institutions to mandatory reserve funds from funds raised in foreign currency, from 11% to 15% as of 1 July 2017. The changed reservation requirement will help increase the attractiveness of savings in BYR compared with foreign currency savings, and reduce excessive liquidity in the banking system.

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