Page 41 - bneMag April 2022 Russia living with sanctions

bne April 2022 Eastern Europe I 41
economy adapt to the new international sanctions, which “will foremost concern sectors that have been most seriously affected by the negative factors.”
According to Interfax, the Belarusian government has now been given expanded powers on “determining the particulars for payment of value-added tax and excises on the sale of Belarusian oil and oil products; changing payment deadlines for taxes, fees, duties and other payments to the budget; the amount of payment for provision
of government guarantees on bank loans; the deferral of obligations on budget credit and loans due in 2022; and the execution of central and local government guarantees.”
What this means in reality is a further erosion of the stability of the financial system and a heavier tax burden on the population. It means the government won’t be able to guarantee the central bank’s loans to private banks, and most likely not the state enterprises’ repayments to private banks either.
To ensure the continued operation of state enterprises in order to avoid mass layoffs, the state enterprises can be exempt from different tax payments.
The funds for the state and regional budgets must, however, come from somewhere, and in February and March the regional council of deputies raised income taxes from 18 to 20% first in the Mogilev and later in the Vitebsk region.
Another measure taken by the Belarusian regime has been to allow the repayments on loans to “unfriendly” countries, i.e. those who imposed sanctions on Belarus, to be done in Belarusian rubles. In reference to Russia’s upcoming payment problems, Fitch ratings and Moody’s have deemed a repayment of loans in rubles to be
a cancelled repayment.
Moreover, the Belarusian stock exchange has begun trading in Chinese yuan. What this will mean practically for the Belarusian economy is so far hard to tell, but what’s sure is that a dedollarisation of the economy is under way.
Belarus’ economy is heavily dollarised, as most often house prices or rents are given in dollars instead of Belarusian rubles. However, several big property sales have already begun to be conducted in Russian rubles instead of dollars, most likely due to the lack of dollars in circulation.
The limited transport routes for potash and oil will have further effects on production; but there are also signs of slowed growth in the real economy in other sectors.
Last week, a major housing project was stopped in central Minsk and according to construction workers, there is not even a single worker on site. According to the company responsible, A-100 Development, work was ceased due to “the reconfiguration and improvement of supply chains” and “adaptation of changes and cost management.”
The sanctions have already begun
to affect the real economy, and the government has been forced to take rather drastic measures to ensure budget stability. In the end, these measures
will damage the stability of the private banking sector and raise the economic burdens of the country’s citizens.
What’s positive for Lukashenko is that Belarus isn’t as sanctioned as Russia is, yet. The Belarusian economy’s sectors’ relationships to western markets are not irreparable, and in the long run Belarus could stabilise its trade, state budget incomes and loan repayments.
Russian e-commerce keeps growing fast:
market leaders doubled sales in 2021
East West Digital News in Moscow
In January several top Russian e-commerce companies announced impressive results for 2021, even though brick-and-mortar retail fully reopened in the country. Market leader Wildberries, Nasdaq-listed Ozon, and international platform AliExpress Russia significantly outperformed the market, which grew by at least 40% according to preliminary estimates (InfoLine), reports East-West Digital News (EWDN).
Wildberries: +93%
Wildberries announced that the turnover of its marketplace increased by 93% to
RUB844bn (around $11.5bn), including a record RUB304.8bn in Q4 2021 alone. The marketplace has preliminarily estimated its yearly profit at around RUB18bn ($245mn) before taxation.
In 2021, Wildberries customers placed 808.6mn orders, up 146% on the previous year. Some 410,000 new merchants
– essentially small businesses and self- employed – got involved in the marketplace, up from 91,000 new ones in 2020.
Wildberries plans to invest further in new logistics capacities, service
quality improvements and additional assortment.
The company pursued its international expansion in 2021, launching sales
in France, Germany, Italy, Spain, the UK and the USA as well as Moldova, Lithuania, Latvia, Turkey and Estonia.
Ozon: +125%
According to preliminary unaudited results, Ozon saw its gross merchandise value (GMV) exceed RUB445bn (more than $6bn), up from RUB197bn in 2020 (+125%). The company delivered more
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