The Belarusian authorities are attempting to reduce budgetary spending through cutting subsidies to resource-intensive industries
The Belarusian authorities further seek opportunities to reduce public spending on construction and energy. However, the planned growth in tariffs for the population and the truncation of cross-subsidies is unlikely to be carried out as planned during the presidential and parliamentary elections in 2019/2020.
The State Control Committee has criticized the Energy Ministry for spending funds on building offices and buying expensive cars. Earlier, the president also harshly criticized power engineers for high tariffs and released Energy Minister Ozerets and director of Belenergo Shirma from their duties. The State Control Committee then started an inspection at the Energy Ministry. Apparently, the Belarusian leadership aims to boost the efficiency of power engineers before commissioning the Belarusian NPP, since some experts predicted a hike in electricity cost. In addition, Belarus would have to start repaying the Russian loan six month after the commission date of the nuclear power plant, and not later than April 1st, 2021.
In recent years the authorities anticipate to recover 100% of energy costs from the population. Currently, the population pays some 85% for electricity and some 16.5% for heating. A significant increase in tariffs could lead to the growth in tension in society and overall discontent of the population. The Belarusian leadership would be unwilling to see its popular ratings drop before the presidential and parliamentary elections in 2019/2020. Meanwhile, increased tariffs for the population would allow the authorities to reduce cross-subsidization and ease the burden on state-owned enterprises, which has long been insisted on by Belarusian economists and international creditors. Meanwhile, the authorities repeatedly announced and then delayed the terms of transition to full cost recovery.
At the presidium of the Council of Ministers, Prime Minister Sergei Rumas announced the intention to reduce the construction industry’s dependence on public funds. That said, soon after the presidium, he is set to meet with the president to discuss construction matters. Recent trend is that the president during his meetings with different sectors openly criticises officials and then orders inspections by law enforcers of the relevant state departments. Hence, inspections in the construction sector could be on the way.
Ever dwindling public funds are prompting the authorities to cut subsidies to the most resource-intensive sectors and implement some gradual reforms in the public sector.
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Situation in Belarus