September 3 – September 9, 2018
Belarus-Russia relations

Belarus and Russia negotiate the compensation for the tax manoeuvre and restrictions on import of petrochemicals

The situation has not changed
Belarus and Russia negotiate the compensation for the tax manoeuvre and restrictions on import of petrochemicals

The new Russian Ambassador in Belarus, Mikhail Babich, has arrived, the Belarusian candidate to lead the Embassy in Russia has not been approved. Russia and Belarus hold talks on loans, negotiate restrictions on imports of Russian petrochemicals to Belarus and the compensation for losses from the tax manoeuvre in Russia.

Last week, in addition to the replacement of the negotiating teams, Russian Prime Minister Dmitry Medvedev appointed Asaul as the trade representative of Russia in Belarus. President Lukashenka met with Foreign Minister Makey, who presented the candidates for the post of the Belarusian Ambassador to Russia. The decision is still pending and the president said he was ready to consider other candidates.

Belarus and Russia are negotiating changes in the cooperation framework. Last week, the EDB deputy chairman said that Belarus would receive USD 200 million, one of the two final tranches of the EFSR loan, within the next month. The deadline for the final, the seventh USD 200 million tranche, yet has not been determined. Belarus has not fulfilled the Fund’s terms, such as assessing fiscal risks generated by state enterprises, introducing the ombudsman, and reducing the state subsidies to transport to 30%. In addition, negotiations to refinance the USD 1 billion debt within Russo-Belarusian cooperation are under way.

Belarus is also negotiating ways to compensate for her losses due to the tax manoeuvre in the oil industry in Russia. According to the Russian Taxation Minister Sazonov, should the decision on compensation be adopted, the volume of Russian subsidies would be transparent. The Belarusian Finance Ministry has estimated the country’s losses from the tax manoeuvre at USD 300 million in 2019. Simultaneously, Sazonov believes that the supply of petrochemicals to Belarus would be limited to 100,000 – 300,000 tons per year. The Belarusian Prime Minister, Rumas, believes that agreements will be reached by September 15th, 2018.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.

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