Ministry of Finances denies the renewal of crediting of the economy in 2012

There are no doubts about emission credits to be issued. Most likely, the emission volume will increase by the end of the year when both projected loan tranches will be received.

In 2012 the government has no plans to fund state programmes via emission. Deputy Finance Minister Mikhail Yermolovich said that total of Br 18 trillion will be allocated for lending to the government programmes in 2012, however the new funding – the so-called net increase in lending to government programmes – will be Br 7 trillion. Funds to support lending for the main activities will come from the budget reminders accumulated in previous years.

State programmes funding priorities remain the same: housing construction and financing of investment projects in the agriculture, namely, Br 6 trillion of new loans will go to housing, and Br 1 trillion to agriculture. Budget projects will be funded through the largest state-owned banks.

It is unclear to what extent the government will do what it says (regular practice), however there is no doubt that emission lending will be the case. On the one hand, Belarus is formally bound by the commitments to the ACF of the EurAsEC and it is likely that emission will increase closer to the end of the year, after the two projected tranches are received. On the other hand, sowing and harvesting campaigns will require subsidies in spring and summer. Moreover, the authorities’ intention to increase the salaries of state employees also has emission nature. Therefore it is clear that the statement of the Minister of Finance was purely pro forma, becoming a sort of required rhetoric.

There is another detail worth paying attention to. According to Yermolovich, 53% of the budgetary costs in 2012 are attributable to public sector wages, interest rate subsidies on loans and service of state and local debts. It means a significant part of the budget funds will be spent on current consumption. However, in the pre-crisis 2008 a huge share of budget funds was spent on investment. Without increased investment by the state, the quality GDP growth could not be achieved, however in times of crisis and budget deficit, such investments could only be of emission nature. Therefore, while trying to meet the projected targets at any cost and at the same time, raising incomes, the authorities increasingly drive into a trap.