Privatization in the Republic of Belarus in July-December 2009: Monitoring of Major Changes

By Alena Rakava

Belarusian Institute for Strategic Studies prepared a monitoring legislation and major changes that have occurred in the area of privatization in 2009

In 2009, the government confirmed its reluctance to say good bye to the state property and control over key financial and resource flows, and is still considering the privatization from the purely fiscal point of view, seeking investors for the assets at higher, pre-crisis price, or putting forward special conditions to investors. The sale of the most attractive assets in country remains to be not transparent and governed by Presidential Decrees, in spite of the commitments to make it more transparent and competitive.

. In 2009, receipts from privatization of the Republican property decreased in comparison with 2007 and 2008 and amounted to USD 1.006 billion for the whole year was registered only one new transaction - the sale of Bank of Russia's Sberbank BPS for USD280 million, which has shown a new trend - lower prices for assets to be sold. During the year, no minority stakes had been sold, which shows the ineffectiveness of government efforts to develop capital market and improve the investment climate. Sale of the shares of enterprises of communal property invigorated a bit in 2009, though.

The state retained major assets in 2009. The possibility of continuing this policy is limited, however - both because of commitments to the IMF, and the pressure of Russia.

The year 2010 should bring about adjustments in the privatization process. This primarily concerns the increase in sales. The increased demand for external financing in order to reduce the trade deficit (against the background of the reluctance of authorities to increase the national debt and the changing conditions of supply of Russia's oil), may intensify the processes of selling strategic companies to foreign investors. If the optimistic expectations of the Government for the improvement of external trade conditions in major export markets of the country is not fulfilled, foreign investors will be offered large packages of shares of joint stock companies on more favorable terms. Major transactions are expected to be concluded in the second half of the year, since July, authorities will be to fight for the revision of petroleum agreements.
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