Finance Ministry seeks additional budgetary funds in car owners’ pockets

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April 22, 2016 18:33

The Finance Ministry has initiated a review of excise duties on motor fuels.

Budget tax funds fall short of the projected performance. National economy requires additional support measures, such as compensation for interest rates on export loans. The government is planning to find the missing financial resources in the most profitable areas, for instance, in petroleum refining.

Republican budget’s surplus in January - May 2013 was BYR 960.7 billion. The result was achieved thanks to cost-containment for nationwide activities: in the first five months expenses accounted for 30.9% of the annual total projected spending in this regard. The need to contain costs is associated with under-implementation of proceeds plan in some areas, firstly, on income tax - the annual plan was implemented at 22.3% only. Foreign trade revenues are also behind the plan, which is due to rates reduction for some products following Russia’s WTO accession.

Economic situation in 2013 requires the strengthening of measures to support domestic manufacturers – since the government insists on preserving the existing economy’s structure. To fulfill this task, the government was subsidizing interest rates on export loans. To improve the engineering products sales, agreements with several banks were signed envisaging partial budget compensations for the interest rates. Belarusbank will receive a compensation for the losses from providing a USD 89.3 million export credit at 1.4% pa for the purchase of MAZ machinery by foreign buyers. This requires additional budget revenues sources.

The majority of economic activities’ situation is poor, net proceeds in the economy in Q1 2013 decreased by 36.3% compared with 2012. Heading the list of the most profitable enterprises in Q1 2013 were two refineries, surpassing Belaruskali, which for many years was at the top of the list. Profitability from petroleum products supply to domestic market is high, but in the neighboring countries, fuel costs much higher, creating good incentive to export fuel using informal channels, creating a good source for budget replenishment. The government is considering possibilities to raise fuel excise duties, which will result in refineries’ lower profits if fuel prices remain unchanged. Therefore, it is likely that the rise in excise duties will be compensated with higher fuel prices. This measure will not stop individual fuel trade with Poland and the Baltic countries, but will allow compensating for pay-rises with higher fuel prices and will replenish the state budget with the necessary funds.

Thus, in crisis situations, the state implements its usual tactics: partially exempts growth in wages by rising liquid goods prices. However, the increase in fuel prices may be limited due to the need to comply with inflation regulations set by the Government.

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