OREANDA-NEWS. June 26, 2009. The goals set out in the social and economic development programme for 2006-2010 are met ahead of schedule, First Vice-Premier Vladimir Semashko said when speaking in the House of Representatives of the National Assembly, reported the Official website government.by.

The industry and fuel-economic complex have laid down all necessary conditions to come out of the crisis with minimum losses, the First Vice-Premier said. In January-June this year, the industrial output is expected at 98.2% as against the same period last year. In January-May this index was 96.6%, which was 0.2% up from January-April. The Belarusian industry is looking for the ways to decelerate the rate of decline in the production. The fall is sharper in the neighboring countries.

The global crisis has affected mainly the export-based sectors. In January-April 2009 the industrial output growth in the engineering and metal processing industries totaled 76.8% on the same period last year, in the forestry, wood-working, pulp and paper industries – 75.8%, construction materials – 91.8%. Several industries have continued steady trend with a 34% growth in the chemical and petrochemical industry, a 14.9% increase in the fuel industry and a 0.9% rise in the food industry.

According to Vladimir Semashko, the country mainly benefits from the companies which have diversified their markets and suppliers of component parts, upgraded production and used state stimulus packages. Among those who enjoy quite a stable position on the markets today are BelOMO, Gomselmash, Lidselmash, Rechitsa Hardware Plant, Dolomit, the Belarusian Cement Works. In January-May the output growth reached 32.5% in the Mozyr Refinery, 17.8% in Naftan Company, 7.2% in the Gomel Chemical Factory.

In his words, the biggest output decline was registered in the engineering industry in January-May – by 23.2% to 76.8%. The industrial output made up 63.3% in BelAZ, 57.6% in MAZ, 65.2% in Amkador and 82% in MTZ.

There is a need to advance actively into the sales markets we have never been before. The course of events has showed that this is quite a feasible task, First Vice-Premier of Belarus Vladimir Semashko said when speaking in the House of Representatives of the National Assembly.

On the instruction of the Prime Minister, a task group was set up to prepare the draft document on system-based measures to balance out the economy. The task group led by Andrei Kobyakov is expected to submit the document to the government by July 20. These measures provide for increasing the Belarusian export, on the one hand, and reducing import, on the other.

“The crisis spurs us to act faster to address the issues that have been there for years. The formula is simple: buy less, sell more,” Vladimir Semashko said.

Belarus has had good trade with Venezuela, Vladimir Semashko noted. In January-April 2009, the export to Venezuela increased two times over the same period last year to US181 million. Belarus exports MAZ vehicles, tractors, farm machines, potash fertilizers, dried milk to Venezuela. The two countries have launched projects to construct assembly facilities of MAZ chassis-based vehicles and BelAZ dump trucks and mining equipment. “There are plans to implement similar projects in Kazakhstan. There is some progress in this direction in cooperation with Ukraine. The talks are underway with the countries of Northern Africa and the Persian Gulf. Belarus has been expanding its sale promotion network and assembly facilities in the European Union,” Vladimir Semashko said.

“The prohibitive measures on the sale of Belarusian machinery in Russia are still in force,” Vladimir Semashko said. According to him, the sides are developing the mechanisms of mutual subsidizing from the budget to purchase motor-and-tractor, road and construction equipment. “It may seem that there are no problems with advancing our machinery to Russia. But, it is not true,” Vladimri Semashko said. Russian Government issued a resolution in December 2008 to remove some restrictions on purchases on a regular basis. For example, the resolution canceled a 15% extra charge that was applied before. Thus, this extra charge is not applied to Belarusian goods imported by Russia.

“According to official statistics, 85-90% of the products (tractors and farm equipment) are bought in Russia by individual consumers via the Rosselkhozbank. The customers make use of the preferences and subsidies from the federal budget. It is clear that only Russian products are sold,” Vladimir Semashko said.

“We suggest Russia subsidizing purchases on the parity terms. We suggest Russia subsidizing Belarusian and Russian products in Russia and Belarus giving the same subsidies to Belarusian and Russian products in Belarus. More so, subsidies in Belarus are much bigger that those in Russia,” Vladimir Semashko said. He further explained that Russia subsidies two thirds of the interest rate on loans. Belarus subsidies 50% of the purchase of expensive equipment and full interest rate of a banking loan. “We are ready for such expenses and offer these parity relations to Russia,” the Vice Premier said.

The protectionist policies applied by Russia and Ukraine hamper the development of Belarus’ foreign trade, First Vice-Premier of Belarus Vladimir Semashko said when speaking in the House of Representatives of the National Assembly.

The problem is in the solvency of a customer, the First Vice-Premier said. The price factor has always played a certain role in trade. “The protectionist policies that have been introduced in the two neighboring countries, Russia and Ukraine, on the priority of purchasing indigenous equipment, play a crucial role here,” Vladimir Semashko.

The export of Belarusian petrochemical industry has fallen amidst lower demand in the international market. This has affected the sale of chemical fibres. The demand for potassium chloride has decreased. As a result, in January-May the production of potash fertilizers made up only 40% as against the same period last year.

The Russian side has confirmed its readiness to finance the construction of the first Belarusian nuclear power plant. The Russian loan will make up US 9 billion, First Vice Premier of Belarus Vladimir Semashko noted.

According to Vladimir Semashko, on June 22, 2009 the Belarusian Government received a message from Russian Prime Minister Vladimir Putin. The message says that the Russian side “is considering the possibility to provide financial assistance” in regard to the proposal on granting the \\\\$9 billion state loan for Belarus to construct a nuclear power plant in 2010-2018.

The sum of the loan has been determined in line with the development of the infrastructure of Ostrovets and its neighboring areas. “There is a need to build a town for 30-35,000 residents. At present, the population of Ostrovets is 8,000 people,” Vladimir Semashko noted. The funds should be assigned not only for the social infrastructure but for the production infrastructure as well, the official said.

The contract with the Russian company Atomstroiexport on the construction of the nuclear power plant in Belarus will be signed in late 2009, First Vice Premier Vladimir Semashko said. The contract will be signed by the directorate of the future nuclear power plant and Atomstroiexport, the main constructor.

In September 2009 Belarus and Russia will sign an intergovernmental agreement on cooperation in the nuclear power plant construction.

Within the next few days Belarus is supposed to receive a draft contract for building the nuclear power plant from Russia, First Vice Premier of Belarus Vladimir Semashko told parliamentarians.

“Belarus has chosen Russian VVR-1000 power units for building the nuclear power plant. At present the unit is one of the safest ones,” said Vladimir Semashko. “It is a 3+ generation product. The fourth generation will emerge only in 20 years”.

According to the First Vice Premier, the power unit is fitted with the necessary passive and active safeguards. VVR-1000 units are utilised in Russia, China and nuclear stations, which use such units, are supposed to go online in Iran and India. “It is a very polished design. All in all, there are about twenty such units used around the globe,” stated the First Vice Premier.

Russia is interested in building the Belarusian nuclear power plant as much as Belarus is, First Vice Premier of Belarus Vladimir Semashko told media.

Vladimir Semashko reminded that on March 30 Prime Minister of Belarus Sergei Sidorsky sent a letter to Prime Minister of Russia Vladimir Putin suggesting financing the project for building the nuclear power plant. A letter of approval was received on June 22.

“Now we will think about how it will be implemented. The content of the project is being discussed. The sum (US 9 billion) may be reduced,” said Vladimir Semashko. The official added that Vladimir Putin suggested dividing the sum by project implementation steps.

A draft intergovernmental agreement on cooperation is being prepared as well as a contract. These documents should be inked virtually at the same time. When the contract is finalized, the cost of the station and the construction schedule will be revealed. “Then we will come up with definite figures,” said the First Vice Premier.

Now Belarus intends to work harder with Russia on the draft contract and the funding divided by years.

In H1 2009 Belarus decided not to import 2.5 billion cubic metres of Russian gas, First Vice Premier of Belarus Vladimir Semashko told media.

According to Vladimir Semashko, importing less than the amount specified by the contract is widespread around the globe. In particular, in Europe non-acceptance share is close to 30%, in Ukraine — around 40%.

Vladimir Semashko explained: “The formula we are using now has certain defects. The oil price went down in Q1 while the gas price went up as a result. Therefore, it was more profitable for us to burn cheaper fuel oil. As a result, we saved a considerable sum for the national economy”.

Belarus and Russia will start a new round of talks on the size of the duty on oil and oil products. The sides are set to negotiate the terms on oil import as the validity of the oil duty with coefficient of 0.356 expires this year.

“We need a new round of talks with Russia to search for new approaches to calculating the oil import duty,” Vladimir Semashko said. The issue was discussed by the Presidium of the council of Ministers. Certain approaches have been designed already. One of them is to stick to the scheme which is currently intact, the second one is to share the duty between the budgets, he said.

Vladimir Semashko expressed the confidence that the process will go smoothly. In October-November this year the problem should be solved.

Belarus will reap big export benefits from joining the WTO as the Customs Union member, First Vice Premier Vladimir Semashko said.

“Accession to the WTO as the united pool is good for us,” Vladimir Semashko said. Belarus is a country with an open economy. “We are totally dependent on the export. We need to know how to sell our products and earn money to pay for gas and oil,” Vladimir Semashko said. According to the experts, the Russian ruble will most likely strengthen after the crisis. “If we join the WTO alongside Russia, as part of the Customs Union, we will get big opportunities for export,” the First Vice-Premier said.

In his words, Belarus will unify customs duties with Russia by the end of 2009 and with Kazakhstan by mid 2010.

The process of the joint accession of Belarus, Kazakhstan and Russia as the single Customs Union to the World Trade Organization may take another 10-12 years. The duration of the process is accounted for the general rules of WTO accession, Vladimir Semashko explained. “A state announces its intention to join WTO, then all those WTO members that are interested in the market of this state, voice their readiness to take part in the discussion of the conditions this state has to meet in order to join this organization. And the country seeking WTO membership should reach an agreement with all the other states. This is why the process takes so much time,” Vladimir Semashko said.

He added that while holding these negotiations Belarus will try to advance its interests. On the other hand, this time span will give the country some time to retool its enterprises to become absolutely competitive, the First Vice-Premier underlined.

Belarus plans to set up a free trade zone with the European Union in 3-4 years, сreation of a customs union is not the idea, explained Vladimir Semashko. Belarusian products will be exported to the European Union with the least hindrances.

He also remarked that at present Belarus bears considerable financial losses due to its exclusion out of the generalized system of preferences in 2006. Starting 2010 Belarus will be able to regain its position in the system, said Vladimir Semashko.

From 2010 Belarus and the European Bank for Reconstruction and Development will work in line with the new cooperation strategy, First Vice Premier Vladimir Semashko told reporters.

According to Vladimir Semashko, Belarus and the European Bank for Reconstruction and Development are formulating the new cooperation strategy which opens up opportunities to cooperate with the European Investment Bank.

The First Vice Premier noted that during the previous Strategy period, EBRD applied a three-level scenario approach to cooperation with Belarus “During the recent talks with the EBRD mission, a statement was made that from 2010 to 2012 the Bank will follow the baseline scenario which provides funding for joint projects,” Vladimir Semashko noted. According to him, the amount of funding may vary from US 1 million to US 1 billion.