Budget deficit will be addressed through citizens and profitable enterprises
On September 5th, President signed Decree No 400, which reset the potash export duty as of December 31st, 2013.
Belarus has insufficient budget revenues. The difficult economic situation requires additional resources to support the real sector industries. Instead of an audit, by government programmes’ the government will seek funds in the most profitable enterprises and in citizens’ pockets.
In January – July 2013, the shortfall of state budget revenues was substantial: BYR 6 trillion from income tax (due to a significant deterioration in the economy’s financial performance in 2013), and BYR 3 trillion from foreign trade. Russia’s WTO accession has resulted in decreased import duty volumes and reduced amounts received by Belarus within the Customs Union framework. Exempting potash exports from export duty payments will increase budgetary revenue losses.
The decline in machinery exports required additional measures to support the manufacturers. The growing number of subsidized interest rates for businesses coupled with slower-than-planned discount rate reductions have resulted in funds allocated for 2013 being spent in seven months. Belarus needs an additional BYR 4.5 trillion before the year-end to comply with all the obligations under the agreed loan programmes.
Substantial budget adjustment is needed in order to have a deficit-free budget performance by the year-end. Increased excise taxes on fuel will earn additionally circa BYR 0.6 trillion in revenues, but that does not solve the problem. In addition, some profitable companies are required to transfer a certain amount to the national development fund based on performance results in Q1 2013. The Finance Ministry has little choice – it has to look for money where there still is some, i.e. in profitable businesses and the population.
The financial burden on the population will increase, presumably through the higher costs of housing services and transportation. The lists of those eligible for various kinds of social aid will be reviewed. Profitable companies will be obliged to ‘voluntarily’ provide some kind of financial assistance to the country.