Tax inspection as a prototype of state collection agency
In January – September 2013, the situation with settlements in Belarus’ economy deteriorated. Companies have resorted to unconventional methods to coerce debtors to pay for the supplied products, inter alia, using tax inspections as mediators. Against the background of unaffordable loans, companies might resort to non-monetary settlements and mass offsets.
As of October 1st, 2013 overdue payables in the Belarusian economy were $2.7 billion.
In 2013, the situation with settlements in the Belarusian economy deteriorated considerably. On October 1st, Belarusian enterprises’ payable accounts were circa $2.3 billion – a 23.6% increase since early 2013. Overdue payables grew at a faster pace, and increased by 62.8 %, reaching $2.5 bln. These statistics do not fully reflect the whole picture. For instance, payment due dates under agreements are prolonged and payments are delayed for up to 120 days, and sometimes, in order to unload warehouses, payments are put off for over a year. Some debts cannot be recovered due to debtors’ insolvency.
Problems with payments in the economy have pushed enterprises to using various mechanisms from the early 90s to squeeze money out of debtors. For example, they started recovering debts through tax inspections. It works as follows: when a company is due to pay taxes, it shows the tax authorities that it has no funds on its accounts. At the same time, the company provides the tax authority with a list of its debtors. The tax authority then charges the due amount of taxes and a bit more from the debtors’ current account. Finally, the tax authority pays back the excess tax to the company or offsets it.
This scheme is an efficient way to fight against chronic non-payment by some enterprises. State-owned enterprises receive production plans, which result in overstocked warehouses, current accounts’ deficit and, hence the need for new loans.
Barter transactions have also become widespread. If this trend continues, enterprises might start using promissory notes (bills of exchange), which were popular in the late 90s.
All these settlement types are archaic, but help to ease the problems with mass defaults in Belarus’ economy.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.