Changes in public procurement system in Belarus would reduce budget expenditure
In 2017, the parliament should adopt amendments to the Law "On Public Procurement" aimed at strengthening the competition in this area. Annually, the state spends at least 7% of GDP on state procurement orders and every other contract to supply goods and services for the state is carried out with violations of the current legislation. The proposed amendments envisage to reduce government spending on public procurement by at least 10% of the allocated budgetary funds. The state would use the saved funds to finance other needs.
In the autumn of 2017, the Belarusian parliament will consider a new version of the Law On Public Procurement in the second reading. It envisages new options for state procurement orders in construction based on the industry’s specifics. The procurement from one source will become fully transparent, full information about public procurement tenders and received quotes from counterparties will be published, and requirements for suppliers will be unified in order to exclude abuses. Any changes to the signed agreement will be prohibited and participation of affiliated structures in public procurement will be limited.
The amendments to the current legislation are long overdue due to significant financial resources used to purchase goods for the state needs and numerous abuses in this field. In 2016, state procurement totalled BYN 6.5 billion or USD 3.3 billion, which was about 7% of Belarus' GDP. In 2016, more than 800 complaints against violations in the procurement procedure were considered, 45% of them were upheld.
When adopted, the amendments would permit to reduce the share of purchases from one supplier, thereby increasing the competition for public procurement contracts and reducing the price. Suppliers, who would violate the contractual terms within the public procurement would be blacklisted, which would limit for two years their participation in public procurement tenders and enhance the compliance with the contractual terms. Unified requirements to suppliers would reduce corruption in the public procurement system, which often led to inflated prices and payoffs. Transparency in procedures and their automation would enable efficient assessment of the public procurement results and reduce violations and abuses when making contracts. The state aims to save some 10% on public procurement orders due to the enhanced competition and reduced corruption. The saved funds could be used on the social needs or on the support for the economy.
The number of violations in the public procurement system has prompted changes in the current legislation in order to strengthen the competition in this field. Due to the new public procurement regulation, prices on goods and services would reduce, corruption levels would lower and up to 10% of public procurement funds would be saved, which could be used to finance other state needs.
According to Decree No. 221 of June 23rd, 2017, deadlines for the completion of foreign trade operations have been extended from 90 to 180 days for exports and from 60 to 90 days for imports. Delayed payments entailed a fine up to 2% of the transaction cost for each day of the delay, but could not exceed the total cost of the transaction. Most companies, when working with new counterparties, require a deferred payment for a period of three to six months. Due to the new regulation, violations are likely to reduce in number, so as the fines. Trade enterprises are likely to expand the assortment list due to the supply of new products in small lots, and the assortment list of exported Belarusian goods could expand, too. The new terms for completing foreign trade transactions would enable medium and small companies on the foreign trade market, exporters and importers are likely to grow in number and the geography of export-import operations could expand.