Funding of state programmes
The launch of the Development Bank should improve the effectiveness of state support programmes and, consequently, the macroeconomic stability in general. However, it is likely that industry lobbyists will accommodate the new rules of financing of state programmes to fit their needs.
A joint Resolution of the Government and National Bank No 14/1 of January 5, 2012 approved the terms and conditions of financing of projects, listed as state support programmes by the “Development Bank of Belarus”. The document stipulates the Development Bank will fund the state programmes on its own behalf and at its own expenses.
In this regard the statement of the Chairman of the Board of the National Bank Nikolay Luzgin speaks for itself, “Certain stabilization makes some business executives and government officials feel euphoria and complacency. They start applying for all sorts of programmes, construction sites, irrelevant of their cost recovery in foreign currency. They start applying for loans, naturally for preferential ones, via the state programmes. However the situation remains rather complicated”.
The Banks’ priorities include loans for state programmes for housing construction in rural areas, agricultural development, the creation or development of high-tech industries. The volumes of funding within these state programmes, and sources of funding are defined in the draft budget of the Development Bank in compliance with the annual plan of financing of state programmes, which is determined by the Government.
However, the document emphasizes that the decision on funding of projects listed in the state programmes should be taken directly by the Development Bank and in the case of an outstanding debt of an applicant to the Development Bank regarding loans issued previously, new loans will not be granted. The Bank also has the right to suspend loan transfers under previously signed contracts.
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.