Late start of growing prices for services for the population
Prices and tariffs continue growing in Belarus. On 4 August public transport fares were increased by 3% to Br 900, on average by 10% increased the tariffs for the population for heating, hot water supply and natural gas.
On 3 August the minimum purchase prices for 2011 agricultural crops purchased for state needs raised by 60% to 100%.
The expected increase in gas prices ($ 270 on average, against $ 185 in 2010), as well as the devaluation make the government increasing the tariffs for the population. At the same time, in the framework of the EurAsEC Anti-crisis Programme the government promised to cover 30% of the tariff’s costs (currently about 10% for the heating). Therefore in the autumn the growth of utility services rates will become one of the driving forces of inflation. Moreover, new crop production prices will affect prices for flour and bakery products, cereals, beer, sugar, meat and meat products (fodder). This means the country falls into an inflationary spiral “costs – prices”. The solution requires considerable political will at the cost of recession and significant reduction of incomes.
Experts’ expectations, including ones from the National Bank, who said that the devaluation would not be a panacea for solving the problems of the Belarusian economy, proved right. Inefficiency and unwillingness of producers to stop emissions completely translates into a new round of prices; the decline in real income the government is trying to compensate with increases in wages and pensions, which puts pressure on the costs. Given the circumstances, finding the guilty one (the National Bank) would have a propaganda effect only. However in order to achieve the real effect, competent, professional and independent monetary policy needs to be implemented.
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.