Government meets the requirements of the ACF of the EurAsEC

The Belarusian authorities have fulfilled an obligation under the loan agreement with the Anti-Crisis Fund of the Eurasian Economic Community (ACF EurAsEC),

namely, reduced budget deficit via increased tax rates on oil extraction and potassium salt mining: up to Br 3130 and Br 12240 per ton respectively.

Minister of Economy Snopkov announced changes in the mechanism of providing state support to the real sector. The new mechanism envisages programmatic rather than individual approach based on principles of competition. Also Minister Snopkov promised to reduce the overall amount of state support.

Comment

Conservative policy of the authorities in fulfilling their obligations vis-?-vis the Anti-Crisis Fund of the EurAsEC, i.e. without causing significant damage to the standard of living of the population, envisages securing the autumn tranche of USD 400 million however, it will not result in substantial changes in the economic policy.

First of all, the Belarusian authorities are trying to fulfill those commitments of economic reforms that will not have an immediate impact on the living standards of the population (increments of utility services and public transport tariffs are still delayed). Given the critical level of the country’s gold reserves, Belarus cannot afford not to receive the second tranche of USD 400 million in November, or to provoke a new wave of distrust of the promises of the government.

However such cautious policy will affect the incomes of the population indirectly. Implemented policies will result in gradual contraction of the cumulative demand, as well as in adjustments of the basic principles of functioning of the Belarusian economy. Today state support plays crucial role in the real sector.

Approaching the autumn, in order to secure the third tranche, the authorities will continue fulfilling their commitments, i.e. to intensify privatization, to cut down state support programmes, to raise the refinancing rate and tariffs for the population, etc.