External creditors believe Belarusians should pay more for utilities and public transport
Performance assessment of Belarus’ fulfillment of its obligations within the EurAsEC loan made by the Eurasian Development Bank (EDB) jeopardizes the timely allotment of the following tranche from the EurAsEC Anti-Crisis Fund (ACF). The ACF rules, applied to Belarus, force Belarus to increase housing and transportation tariffs in the near future.
On 24 January the Eurasian Development Bank (EDB), fund manager of the Anti-Crisis Fund of the EurAsEC, issued a press release assessing cooperation with Belarus within the framework of crediting of the anti-crisisprogramme. At the same time the EDB refused to clarify the terms and conditions for the third installment of the loan for Belarus, referring to the fact that negotiations have just started.
Expert team of EDB mainly complained about the following: 1. as a result of 2011, one of the most important parameters concerning adjustment of the balance of payments and inhibition of inflation, namely, cost-cutting on state programmes, has not been met; 2. municipal services and transportation costs reimbursement rates have not been met.
According to provisional data, in 2011, funding of state programmes made up 4.5% of the GDP, which is by 0.5 % higher than the benchmark provided by the coordinated anti-crisis programme. The level of cost recovery for utilities is significantly below the stipulated 30% and for transport - 70%, envisaged by the stabilization programme. EDB experts in cooperation with the Government drafted a new agreement (a letter of intent), which takes into account the results of joint work in 2011, and amends the anti-crisis programme.
The Belarusian government hopes that the issue of the following installment of the ACF of the EurAsEC will be reviewed in February. However, it is likely that the ACF will delay the payment of USD 440 million, demanding the Government to increase housing and transportation tariffs.
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.