Questions and Answers
RESPONSE: The sources of financing for investment projects are determined depending on their classification.
I. Establishment of new production facilities at existing enterprises
Sources of financing – attraction of credit resources from OJSC "Development Bank of the Republic of Belarus" (hereinafter referred to as the Development Bank) and commercial banks.
Financing instruments of the Development Bank:
1.1. Loans from the Development Bank, provided for the implementation of import-substituting investment projects, with subsequent provision of state financial support to borrowers in the form of budget transfers (draft Decree of the President of the Republic of Belarus "On promoting the implementation of investment projects").
The draft Decree is under consideration by interested parties.
Procedure for allocation of funds:
1. Potential borrowers apply to the Development Bank with investment projects that meet one of the following criteria:
are aimed at the production of import-substituting products (increasing the level of production localization);
have high export potential.
2. The Development Bank conducts a competitive selection of investment projects and assesses the financial condition of the borrower, after which it makes a decision on financing. The interest rate for the use of loans is determined by the Development Bank at a market level.
3. Budget transfers are provided upon the fact of investment project implementation in three stages, and their amount depends on the share of Development Bank loans in the total capital expenditures (from 15 to 25% of the capital expenditures amount excluding VAT for the investment project).
For reference. Planned credit support – 60 million rubles annually. The interest rate for the use of loans is determined at a market level, the total amount of budget transfers in 2024-2029 – 75 million rubles.
Loans are provided to SMEs provided that they produce import-substituting products, or products aimed at increasing the level of production localization at other enterprises of the republic.
1.2. Creditproduct "Stabilisation", provided by banks using the resources of OJSC "Development Bank of the Republic of Belarus" (hereinafter – the Development Bank) within the framework of Decree of the President of the Republic of Belarus No. 93 of March 14, 2022.
Procedure for allocating funds:
2. Organisations apply to partner banks, which select borrowers according to criteria agreed with the Development Bank.
3. Partner banks assess the financial condition of selected potential borrowers and the projects intended for implementation, after which they make a financing decision.
4. Lending is carried out on the following terms:
financing in Belarusian rubles;
interest rate – 7.5% per annum;
maximum financing amount per client – 5.0 million rubles;
share of own participation in the project – determined by the bank.
For reference. The loan is provided only to small and medium-sized enterprises (hereinafter – SMEs) provided that at least 50% of their revenue is generated from the sale of import-substituting products.
1.3. Credit product "Import Substitution Support", provided by banks and leasing organisations within the framework of the Financial Support Programme for Small and Medium-sized Enterprises of OJSC "Development Bank of the Republic of Belarus".
Procedure for allocating funds:
1. The Development Bank provides financial resources to partner banks and leasing organisations by placing a deposit or purchasing bonds.
2. Organisations apply to partner banks and leasing organisations, which select direct borrowers according to criteria agreed with the Development Bank.
3. Partner banks and leasing organisations assess the financial condition of selected potential borrowers and the projects intended for implementation, after which they make a financing decision.
4. Financing through partner banks is carried out on the following terms:
interest rate – the refinancing rate of the National Bank of the Republic of Belarus, increased by 2 percentage points (14% per annum);
maximum financing amount per client – 5.0 million rubles;
share of own participation in the project – determined by the bank.
5. Financing through leasing organizations is carried out on the following terms:
interest rate – determined by the leasing organization;
maximum financing amount per client – 2.5 million rubles;
share of own participation in the project – determined by the leasing organization.
For reference. Loans (financing under leasing agreements) are provided to SMEs provided that they receive at least 70% of their revenue from the sale of import-substituting products.
1.4. Sectoral credit products of the Development Bank.
II. Modernisation of existing production facilities
Sources of financing – own funds of organizations, attracted and borrowed funds.
Financing instruments:
1. Own funds – share capital, cash flow generated during the enterprise's operations (net profit and depreciation charges), internal reserves (funds from the sale of retired equipment, disposal of unused property, etc.), additional share issuance.
2. Attracted funds:
- funds of the republican centralized innovation fund and local innovation funds in accordance with the requirements of Decree of the President of the Republic of Belarus No. 357 dated 07.08.2012 "On the procedure for the formation and use of innovation fund resources".
- funds of the Belarusian Innovation Fund, allocated in accordance with Decree of the President of the Republic of Belarus of 25.03.2008
No. 174 at 0.5 of the refinancing rate of the National Bank.
- funds of extra-budgetary centralized investment funds, allocated for purposes and in the manner determined by the Resolution of the Council of Ministers of the Republic of Belarus of 05.01.2013 No. 9.
3. Borrowed funds – bank loans and borrowings, commercial loans (provided by suppliers of machinery and equipment, as well as contractors).
Investment Stimulation Measures (including additional measures being developed within the framework of the Set of Measures for Launching the Investment Cycle and the Concept of the State Policy for Regional Development of the Republic of Belarus):
1. For all types of territories:
conclusion of investment agreements with an enhanced package of benefits for large-scale projects – based on a Government decision;
implementation of medium and small-scale projects with the provision of a basic package of benefits stipulated by the current Decree No. 10 – based on an executive committee decision;
introduction of the mechanism of special investment agreements providing for incentive measures for product sales (mandatory purchases).
2. In industrial centres:
apply the mechanism of an investment deduction(increased from 2022).
For reference: For buildings, structures and their reconstruction – 20% of the initial cost (cost of investment in reconstruction). For machinery, equipment and vehicles (except passenger cars) – 40% of the initial cost (cost of investment in their reconstruction).
3. In agro-industrial and agricultural regions:
a compensatory package of measures for investors carrying out the construction of infrastructure facilities at their own expense (reduction of tariffs for electricity and heat supply, utility services, and others);
grant "tax holidays" for newly established enterprises during the first 7 years.
For reference. For example:
exemption from profit tax and property taxes (on real estate and land tax, rent for land plots in state ownership);
non-accrual of mandatory insurance contributions to the Social Protection Fund of the Republic of Belarus (FSZN) on the part of income (payments) of employees of newly created enterprises exceeding one-time average wage of employees in the republic for the month preceding the month for which they are to be paid;
provision of state financial support to small and medium-sized enterprises to reimburse expenses incurred under a lease agreement, as well as subsidies to reimburse economic entities for part of the expenses related to product certification.