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State support for Belarusian enterprises to be reduced

MINSK (BelTA) – The volume of state support available to enterprises in Belarus will be reduced. The relevant draft decree was discussed at the government conference held by Belarus President Alexander Lukashenko on 17 May, BelTA has learned.

Alexander Lukashenko noted: “The government has brought in a draft presidential decree, which suggests reducing money [by trimming assets of the central state budget] spent on compensating for the interest payments on loans taken out by enterprises. How much are we going to save by that? Is it a sound idea? Who will bear this burden? Enterprises or banks? I'd like to see a normal compromise in this matter.”

During the government conference Finance Minister Vladimir Amarin said that in line with Belarus president decree No. 78, which was adopted on 23 February 2016, the government is supposed to take exhaustive measures to optimize and reduce budget spending this year for the sake of balancing the state budget. The measures include lower state support in the form of compensations for interest payments on the bank loans granted to economic entities as part of government programs.

The government suggested reducing the compensations by two percentage points, with the borrowers left to pay more for the loans. As a result of the government conference on 17 May the President gave instructions to tweak the draft decree so that not only borrowers but also banks would bear the burden caused by the reduced state support. “We are going to adjust the draft decree in line with the instruction,” said the Belarusian Finance Minister.

According to Vladimir Amarin, at present state support is provided to Belarusian enterprises primarily in the form of compensations for interest payments on loans. The compensations vary from half of the refinancing rate to 100% of the refinancing rate, which now stands at 22% per annum. If state support is reduced by two percentage points, the move will not drastically affect the economy of Belarusian enterprises. “Compensations for bank loans will be reduced in accordance with the list of decisions in the draft decree's addenda. The restricted-access list includes 21 decisions. Of them 12 were made by the head of state with regard to the implementation of government programs and government projects and nine were made by the government. In other words, state support will be reduced on a case-by-case basis,” explained the Finance Minister.

On the whole, the draft presidential decree has been prepared for the sake of reducing budget spending. The implementation of the measures will allow reducing expenses of the central state budget by Br400 billion in 2016 and by Br500 billion in 2017.

“The state budget needs to be revised this year since macroeconomic indicators are far from the forecast parameters. We are taking measures relating to the consolidation of budget revenues, optimization and reduction of expenses. In June we will present a draft decree on adjusting state budget parameters. We are going to have to reduce the intended expenses in order to ensure the balanced execution of the state budget till the end of the year,” noted Vladimir Amarin.

The official made it clear that the government will continue honoring social commitments in full. “We have no plans to step down social commitments. All of them are executed in full. The reduction will primarily affect capital outlays, which are money spent on capital repairs and low-priority equipment purchases,” stated the Finance Minister.