Belarus’ 2014 budget: full of aspirations

Budget revenues in 2014 were projected based on the actual revenues in 2013. The government counts on additional revenues from the population and private sector, as well as on changes in the international trade situation. Overvalued revenues from international trade may result in significant adjustments to the budget in mid-2014.

On December 12^th, the 2014 draft budget was adopted in the first reading.

The government’s vision for 2014 is a deficit-free state budget, worth circa $11bln. Budget revenues in 2014 were projected based on the actual revenues in 2013. In 2014, budget revenues are projected at 19% higher than in 2013.

Analysing the draft budget helps to identify economic sectors on which the government is most reliant for increasing budget revenues in 2014. These include beefing up excise duties on alcohol and tobacco and excise tax on fuel. A fee for using private vehicles will be introduced with the target of raising $170m. In addition, a recycling fee for imported foreign cars will be introduced.

For 2014, projections for public property revenues were unchanged, implying that this economic sector would not see considerable performance improvements.

The main problem with the 2014 budget is that it has some overly ambitious estimates. For instance, the draft budget envisages sales of 6.6m tons of potash fertilizer at circa $306 per ton, which will be quite a feat.

The draft budget for 2014 also increases the burden on the population, which, coupled with restrictions on wage growth, might result in changes in consumption patterns. For reference, in 2013, budget revenue shortfalls were estimated circa $2bln and required substantial adjustments to the budget.

The government has once again filled the budget with hopes. If the Belarusian ruble is not devalued, the 2014 budget revenues will be downwardly revised a few times and by the year-end, a deficit is likely to be reported.