MINSK - The Belarusian Finance Ministry plans to maintain a zero-deficit budget in 2012-2015, Deputy Finance Minister Maxim Ermolovich said on July 10 at the presentation of a World Bank economic memorandum on the country.
“The main aim of Belarusian budget policy is to ensure a balanced
budget. All budget policy to 2015 [inclusive] will be aimed at ensuring
revenue covers spending and that a deficit is not used to support the
economy,” Ermolovich said.
The deputy minister acknowledged that with a balanced budget the
sources for financing the economy were minimal. “We are constantly
asking ourselves about the contribution of the budget in economic
growth, and there really is no answer,” he said.
Tough budget policy will contain economic development, including in
terms of carrying out broad reforms. On the other hand, the need for
infrastructure development is constantly growing. However,
“opportunities for funding, with a balanced budget, are lacking.”
The dilemma arises between maintaining a balanced budget and the need
to fund infrastructure projects. The Finance Ministry proposes a
resolution by cutting current budget spending and then using the
available funds to increase government capital investment. “This issue
requires a solution, all budget reform will be tied to reducing public
sector spending and restoring budget investment to the level it was at
before 2009,” the deputy minister said. This can be practically
implemented by cutting budget spending on healthcare and education,
through bringing these sectors as close as possible to real economic
conditions and increasing their efficiency, he said.
There must also be a further cut in subsidies for the national
economy and the growing relevance of the Development Bank in the funding
of state programs. He pointed out the Finance Ministry’s position to
prevent a further increase in foreign debt. “The level of government
debt is optimum right now, we do not think it is a good idea to increase
it,” he said.
Talking about budget policy in the mid-term, Ermolovich said it
involved: “reducing current budget spending and increase capital
spending.”
Economy Minister Nikolai Snopkov said the Belarusian authorities are
willing to carry out deep reforms in the economy and have already begun
to do so.
Commenting on the Belarusian president’s directive to encourage
business, adopted at the end of last year, Snopkov said: This is a
signal that we are ready to carry out deep reforms, aimed at stimulating
development of the private sector in the mid- and long- term. This is
an important element for increasing the competitiveness of the economy
and a vital element of government policy – this is the initiative of the
government.”
Commenting on the significance of the memorandum for the Belarusian
authorities, Snopkov said this was “the start of a new phase in
cooperation with international organizations within the framework of the
institutional basis for promoting the approaches contained in the
memorandum.”
The minister added that it was impossible to make huge leaps in
carrying out reforms. He said the priority challenges for the Belarusian
government at this stage was to implement macroeconomic policy aimed at
domestic and foreign balance. Structural changes are needed in the
national economy that will encourage “more aggressive attraction of
foreign direct investment,” Snopkov said.
Discussions with international organizations, including the World
Bank, on the stages and speed of reforms in Belarus, need to answer
three dominant questions: the first – how to restructure government
companies; the second – how to increase the share of services in the
economy and the third – how to redistribute capital flows toward highly
productive sectors of the economy.
The 2012 budget plans revenue of 92.77 trillion Belarusian rubles and a zero-deficit.
The 2011 budget showed a surplus of Br 3.28 trillion rubles, or 1.2% of GDP amid a planned deficit of 0.3% of GDP.
