COVID-19: Monthly Digest on Impact on SMEs in EAP (7 October 2020)

Armenia

• Armenia has lifted the Covid-19 state of emergency and introduced a nationwide “quarantine” regime until January 11, 2021. It keeps requirements for wearing facemasks in all public areas and enforces social distancing and hygiene rules for businesses. Read more
• While various sectors of the Armenia’s economy are suffering significant disproportionate losses due to pandemic, a key role is assigned to a more stimulating fiscal policy. Therefore, the Central Bank is expedient to continue easing monetary conditions by another decrease in the refinancing rate from 4.5% to 4.25%. Read more
• Economic activity continues to rapidly decline in Armenia, according to the data of the Statistics Committee. Data shows that the economic activity in January-August 2020 deepened into recession even more – to 6.4%. Read more
• The newly launched “Armenian Wines in Russia” project will seed grounds for promoting Armenian wines in major cities of the Russian Federation through educational and marketing programmes to help winemakers overcome loses caused by Covid-19. Read more
• Between January-July 2020, Armenia increased the exports by 166% of strawberries, blackberries and currants grown in greenhouses against the backdrop of the coronavirus pandemic. According to the Prime Minister, the export of the mushroom-squash-spinach commodity group also increased by 62%. Read more
• The 25th programme of anti-crisis measures by the Armenian government aimed at neutralizing economic consequences of Covid-19 will support transport companies serving the tourism sector. These transport companies will be paid 75% of the interest unpaid since April 1, 2020 on pre-existing loans. Read more
• Over 800 economic operators have applied for the 23th anti-crisis programme of the government of Armenia. The programme provides monthly grant for travel agencies and economic operators of related sectors in the amount of 25% or 30% of the salary bill of the travel agencies. Read more

Azerbaijan

• Banks in Azerbaijan received applications for loan restructuring totaling 1.3 billion AZN ($0.77 billion), according to the Central Bank. As of September 30, 85% of this amount has already been restructured. The loan restructuring was envisaged as a measure to reduce the negative impact of the Covid-19 pandemic on the country’s economy till January 1, 2021. Read more
• From September 8, cafes, restaurants, teahouses and public catering facilities can receive customers indoors, according to the decision by Operational Headquarters under the Cabinet of Ministers. The working hours were extended till 00:00. Read more
• As of September 28, 23,188 Azerbaijani taxpayers received 104.1 million AZN ($61 million) within the second financial support package from the government. At the same time, more than 50,000 individual (micro)entrepreneurs received financial support in the amount of 13.3 million AZN ($7.8 million). Read more
• The volume of cargo transportations by all types of vehicles in Azerbaijan in January-August 2020 amounted to 126 million tons, which is 18.3% less than during same period of 2019, according to the State Statistics Committee. The decrease is associated with the coronavirus pandemic and subsequent measures to prevent the spread of infection. Read more

Belarus

• The Ministry of Antimonopoly Regulation and Trade has monitored compliance with the maximum trade markup for disinfectants. In some retail chains the trade margin (including wholesale) reached 97% instead of the allowed 15%. Read more
• The Ministry of Finance of Belarus expects to sign a loan agreement with the OPEC Fund worth $20 million. The money will go to replenish the costs incurred by the budget due to the spread of Covid-19. Earlier, Belarus has already received €90 million from the World Bank to fight coronavirus. Read more
• 74% of companies surveyed said the spread of the coronavirus had a serious impact on the financial performance of their enterprises. It got worse for the majority, but improved for 7% of enterprises. 15% of companies said they had to lay off workers due to the coronavirus crisis. Read more
• 4.3 million people were employed in the economy of Belarus in August 2020, which is 17,700 people less than before the pandemic (in February). Read more
• Closed borders have boosted domestic tourism, only the demand for guides’ services has decreased. Over the past year, 1,500 Belarusian travel agencies served 2.5 million tourists, with 88% being foreign tourists. The industry is unlikely to catch up with pre-crisis revenues. Read more
• Minsk authorities have reduced rent, land tax and property tax for 2,759 business entities for a total amount of 32.2 million rubles ($12.3 million). Just 5% of enterprises applied for support. Read more
• Lots of businesses are closing or relocating. The reasons are lack of state support during the pandemic, political unrest and inability to switch to online sales because of the Internet disruptions. Read more
• The business confidence index in the second quarter of 2020 dropped to a historical low – from minus 2 to minus 9. 70% of trade enterprises have seen the decrease in profitability. At the same time, 47% of respondents named Covid-19 among the constraining factors of trade development. Read more

Georgia

• Georgian economy shrinks by 12.3% in Q2 of 2020, the latest data from the National Statistics Office shows. Top-5 sectors with the decrease are wholesale and retail trade; repair of motor vehicles and motorcycles (-13.2%); construction (-24.5%); accommodation and food service activities (-40%); transportation and storage (-22.%); manufacturing (-12.1%). Read more
• Despite the increased number of reported coronavirus cases, Georgia is not going to declare a state of emergency or impose limitations on economic activities, which business owners and economic entities fear. Targeted and local restrictions are put in place in the regions, depending on the local epidemiological situation. A ban on regular international flights has been prolonged until October 31. Read more
• The state Agency Enterprise Georgia begins accepting applications for its Micro and Small Business Support Programme from October 5, aiming at developing MSMEs, establishing a modern entrepreneurial culture, creating employment opportunities in Georgia, and supporting the response to the economic challenges caused by the Covid-19 pandemic. The programme covers any economic activity, except for activities related to primary agriculture. The budget of the programme has been increased to 40 million GEL (about $12 million), and the maximum amount of grant increased to 30,000 GEL (about $9,160). Read more
• The Georgian government will continue subsidizing pre-existing bank loans for companies in the hotel industry over the next six months to stand by the sector most affected by the pandemic and support jobs. Enterprise Georgia is co-financing the servicing of loans of family-owned, small and medium-size hotels from commercial banks. Hotels with 4-50 rooms are eligible to receive co-financing of no more than 80% of the interest rate on loans denominated in the national currency, while the financing of no more than 70% in case of the loans denominated in foreign currency. Read more
• In order to minimize the negative impact of the Covid-19 crisis on the construction sector and to promote the stability of the real estate market, the Georgian government has announced a 100 million GEL ($32.46 million) tender to ensure the completion of unfinished construction projects. The government will then sign a sale option agreement with the winners of the tender and purchase no more than 30% of the total living space of each building. Read more
• The National Tourism Administration Launches the Hotel Promotion Programme 2020. The new project will help increase sales for small and medium-sized hotels with a maximum of 20 rooms free. The programme’s technical team will visit the hotels and assist the facility to better attract the tourists and improve online presence and sales. Read more

The Republic of Moldova

• Almost 70% of entrepreneurs in the Republic of Moldova experienced losses due to the pandemic. Half of them say it is difficult to pay salaries and complain about the lack of customers. The production sector, HoReCa and light industry sectors have suffered from the biggest losses. Read more
• The coronavirus pandemic has caused economic chaos in the Republic of Moldova. Data from the National Bureau of Statistics show that in the second quarter of 2020, the Gross Domestic Product decreased by 11.5% YoY – the largest economic decline in the past 10 years. Even under these conditions, almost 65% of Moldova's exports were to the EU market. Read more
• Travel agencies that offer accommodation services had fewer tourists during January-June 2020. Thus, 27,700 tourists benefited from these services, 75.3% less compared to same period last year. This is the effect of the travel restrictions imposed by several states, which led to the bankruptcy of many travel agencies. Read more
• The Council of Europe Development Bank will provide Moldova with EUR 40 million for the implementation of the “Emergency response to COVID-19 and support for micro, small and medium enterprises” project. According to the agreement, ratified by the Parliament, Moldova will contract a loan worth EUR 70 million to ensure an effective response in the fight against the COVID-19 pandemic. Read more
• Moldovan authorities allow organizing open-air exhibitions, festivals, and specialized agricultural fairs. In addition, authorities allow the holding events in theaters, concert halls and culture venues, provided that no more than 50% of the maximum capacity of these premises is filled and everything is done in compliance with the relevant instructions developed by authorities. Read more
• The Alliance of Small and Medium Enterprises of Moldova (AIM) has launched the first interactive map of SMEs. The map is the tool that offers the opportunity to see the live situation at the country level based on three components: the response of the authorities to the crisis caused by the pandemic, the current economic situation and future projections of SMEs. Read more
• Economic agents that have been affected by drought, pandemic or other cases of force majeure will be able to receive documents confirming the impossibility to fulfill contractual obligations. This will help them reach an agreement with creditors. According to the CCI representatives, over 200 economic agents have already shown interest in obtaining these documents. Read more

Ukraine

• Real wages in Ukraine in August 2020 increased by 8.6% in annual terms despite the pandemic (by August 2019), according to the State Statistics Service. It amounted to EUR 347, which is 2.4 times higher the level of the minimum wage (EUR 143). Read more
• Ukrainian agricultural producers experience drastic losses that have reached EUR 196.4 million due abnormal drought this year. The All-Ukrainian Agrarian Union announced fundraising for the purchase of seeds for SMEs from the Odessa region, has collected about EUR 45,300 and donated about 200 tons of seeds. Read more
• The “Diia. Business” project is to launch the new business support center for micro, small and medium businesses in Mykolaiv in the southern part of Ukraine. The new center is 100% funded by private investments without governmental support, according to the Ministry of Digital Transformation of Ukraine. Read more
• The office occupancy in Kyiv has dropped by 42% in the first half of 2020 YoY due to Covid-19 crisis, according to the report of CBRE real estate agency. Due to the pandemic, Ukraine’s GDP decreased by 9.9% in O2 compared to Q1, and by 11.4% YoY, which negatively affected entrepreneurial activity in the country, the report states. Read more
• The government will reduce the VAT rate to 7% for representatives of culture, tourism and creative industries as these fields mainly work offline and it is extremely difficult to switch online. Read more
• The government will allocate almost UAH 380 million (EUR 11.4 million) for the development of farms and decrease VAT for agrobusiness from 20% to 14% in 2020. This money will be taken from the budget worth UAH 4 billion (EUR 120.9 million) provided for the support of the agro-industrial complex this year. Read more

EU4Business Updates

• Belarusians laid off due to pandemic become eco-farmers with EU assistance
  Sergei Strok and the Nikolaychuk family are newly-minted farmers who started an agri-business during the pandemic with help from UNDP and EU4Business. They attended a series of workshops on farming technologies, principles of sustainable plant cultivation, sales, financial literacy, and received seeds and seedlings. After harvesting, they will get further assistance in processing and selling their crop. Read more
• Azerbaijani gourmet food brand grows from the ground up
  Zira Natural & Gourmet, a business in the premium foods segment, participated in a number of foreign exhibitions, revamped its website, and received ITC and EU4Business support for developing its business plan. Read more
• An innovative business centre in Armenia helps SMEs to grow
  The EU-supported Sevan Innovative Business Centre has become a hub for new business ideas and initiatives – more than 60 entrepreneurs have benefitted from the Centre’s services for developing a business plan and some 200 have gone through workshops. Alongside business support, training and assistance is regularly provided to job seekers, especially young people and women and disabled individuals, to enable them to get jobs as qualified professionals. Read more
• EU-supported business to boost tourism in northern Armenia
  On 15 September, EU Ambassador to Armenia Andrea Wiktorin visited the village of Krashen (north-west Armenia), where the EU4Business grantee Berlin Art Hotel plans to establish an eco lodge. The accommodation will allow guests to relax, eat organic food, hike, ski and work out in the open-air sports area. The lodge aims to promote Krashen as an all-year recreational destination. Read more