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.
The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.