Funding of state programmes
On 21 June Alexander Lukashenko has signed a Decree No 261 concerning the “Establishment of the JSC “Belarusian Bank for Development”. In 2011 – 2015 commercial banks of Belarus are asked to participate in the concessional lending to agricultural producers of Belarus (Decree No 256).
The government has taken a step forward towards formal implementation of obligations assumed within the IMF Stand-by Arrangements.
One of the conditions within the previous arrangements that were not fulfilled by Belarus was to set up a specialized agency for funding of state programmes (as well as competitive privatization of strategic assets).
Currently the two largest state banks: “Belarusbank” and “Belagroprombank” provide funding to state programmes.
With the creation of a new banking structure the entire system of financing of state programmes will be changed: the new institution will administrate all loans allocated for funding of state programmes.
The fact that commercial banks were invited to participate in financing of state programmes shows that the “Bank for Development” is a pro forma institution and that the government does not intend to cut down costs of the state programmes.
The decree neither lists banks, nor sets the amounts of loans to be issued by them. However, given the poor state of the majority of agricultural enterprises, commercial banks are unlikely to agree voluntarily on the participation in such programmes. Quite often “recommendations” bear obligatory nature in Belarus.
All in all, there is a significant progress in tightening of the monetary policy and in the desire to increase transparency and profitability of the state-owned banks.
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.