Profitable businesses unlikely to make significant contributions to Belarusian budget in 2016
In 2015, profitable Belarusian companies listed BYR 479 billion to the National Development Fund. This amount was smaller than in 2014 due to the devaluation of the national currency and increased fiscal burden on Belaruskali. In 2016, if negative economic trends persist, Beltelekom and military-industrial complex’s contributions to the Fund may not be enough to fulfil the plan.
According to the Council of Ministers Regulation No 121, 29 most profitable enterprises are obliged to make monthly payments with annual total worth BYR 479 billion to the National Development Fund as of February 2016. Two taxpayers, Belaruskali and Beltelecom should make more than half of the total payments. In 2014, 36 enterprises were making such payments to the Funds with a total worth BYR 680 billion.
In 2015, payments to the Fund reduced due to the sharp deterioration of the financial health at enterprises and an increase in the tax burden on Belaruskali. In dollar terms, net profit in the Belarusian economy in 2015 decreased by 2.7 times, which was due to higher losses in the industry and the devaluation of the national currency. In 2015, the export duty on potash fertilizers was introduced – EUR 45 per 1 ton – enabling additional budgetary proceeds – over USD 200 million in H1 2015 alone, which at the same time reduced Belaruskali’s net profits. In 2016, the tax burden on Belaruskali will increase by a total of BYR 1.8 trillion – due to an increase in the export duty on potash fertilizers, regardless of the downward trend in potash prices on the world market.
The fall in oil prices has reduced Naftan and other oil transportation companies’ proceeds. In Q3 2015 Naftan’s net profit totalled BYR 15 billion, which was 70 times less compared with Q3 2014. Due to financial problems, oil transportation and refining companies have stopped making contributions to the Fund by late 2015.
Refinery modernization requires significant funds, which limits the ability of refineries to make additional payments to the budged, in particular in the view of low oil prices. Devaluation of the national currency will lead to the emergence of different exchange rates in companies with a significant amount of foreign currency loans and foreign currency prevailing in the production cost.
Among the most profitable businesses, which still could help the budget are: the defence industry, some Finance Ministry insurance organisations, and Beltelkom, the monopolist on the communications market. In 2016, payments to the Fund were projected at BYR 860 billion, however, if negative trends in the Belarusian economy persist, the amount may be revised downwards.
Overall, the deterioration of the financial situation in the economy in 2015 has led to reduced financial capacities of most profitable enterprises in supporting national development. Amid increased tax burden on the major contributor to the Fund, Belaruskali, the Fund may lower its appetite and revise the projected contributions downwards.