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.