Budget surplus may not last until year-end
According to the Finance Ministry, in H1 2016, the plan for income tax on profit was implemented by 37% and for revenues from foreign economic activity by 48% of the planned annual volume. The overall budget surplus in H1 2016 totalled BYN 1 billion or 2% of GDP and was achieved due to containment of non-priority government spending. The state is likely to increase expenditure on stimulating economic growth, cuts in oil supply in July and August are likely to lead to an increase in the backlog between revenues from foreign economic activity and the projected targets for 2016 and the state is likely to require additional funds to repay public debt. The planned wage growth in education is likely to increase budget expenditure on social needs and is likely to be funded from the existing budget surplus. In H2 2016, budget deficit is likely to occur and current budget surplus is unlikely to cover all projected costs without further austerity measures.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.