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 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.