1. Budget Sustainability Policies in the Republic of Belarus
Elena Pechen,
Director, Chief Directorate of Budget Policies,
Ministry of Finance, Republic of Belarus
February 2016

2. Human Capital Development Index
Background
Form of Government: presidential republic
Population: 9.5 million people (men – 46.5%, women – 53.5%; urban residents – 77.3%, rural population – 22.7%)
Capital: Minsk – 1.9 million people
State Languages: Byelorussian, Russian
Open, export-oriented economy: Belarus sells its goods in the markets of 161 countries
Key trading partners in 2015: Russia – 48.3% 48.3% of total trade, EU countries – 25.3%, other countries– 26.4%
Belarus Economy
Currency
Byelorussian Rouble (BYR)
GDP
US$76.2 billion (2014), per capita- US$6,600 (2014)
GDP growth rate
101.7%(2012), 101.0%(2013), 101.7% (2014), 96.1% (2015, projected)
Inflation
(percentage change on previous year)
59.2% (2012), 18.3% (2013), 18.1% (2014), 13.5% (2015 projections)
Human Capital Development Index
High Level Development Group of Countries
(50th position in global ranking)

3. International Comparisons
Centralization Rate (central government budget as % of GDP)
GDP per capita (US$ thousand)
Албания
Беларусь
Россия
Украина
Б&Г
The World Bank Doing Business Rankings (June 2015)
National Debt as of the end of 2014, % of GDP
Maastricht Criterion – 60%

4. Social and Economic Development Priorities in the Budget Sector
1. Maintenance of optimal tax burden for the economy
2. Tax policy harmonization in EEU countries
3. Support of sustainable and well-balanced republican and local budgets through financing of expenditures within the available limits of revenues and sources of funding for budget shortfall (surplus)
4.Reduction of external national debt and improvement of government debt management efficiency while retaining its size, structure and debt servicing and repayment at safe levels to exclude excessive pressures.
5. Keeping the social sector of budget expenditures in place, prioritizing health and education sectors aimed at the improvement of health indicators and further development of education process.

5. Background for Introduction of Budget Rules
1. Establishment of stable environment for businesses, with regard to aggravating external economic factors
2. Promotion of investment opportunities of the economy and support of stability of its tax legislation.
3. Government guarantees of the minimal social service standards to the citizens, retention of social sector in budget spending
4. The time for peak in the national debt repayments, significant pressure on the budget to support the national debt repayment and servicing
5. Debt instability of individual local budgets providing a negative impact on macroeconomic balance

6. Consolidated Budget Revenues
Revenues (2015 (estimate), %)
Revenues (2016 (approved), %)
Amount of Revenues in 2016:
288.9 trillion BYR
($12.7 billion)

7. Rule 1: not to increase the tax burden
Tax burden (% of GDP)
Key inputs of tax burden:
Profit Tax (18%)
VAT (20%, 0% on exports)
Property Tax (1-2.5 %)
Income Tax (13%)
Excise and Customs Duties

8. Consolidated Budget Expenditures
Expenditures (2015 estimate)
Expenditures (2015 estimate)
FYI: Average wages and pensions (US$)
Expenditures in 2016:
272.3 trillion BYR
(US$12.0 billion)

9. Rule 2: Maintaining budget social expenditures in the GDP
Consolidated Budget Expenditures for Social Sector (% GDP)

10. National Debt– consistently safe levels
We assess also positively a recently approved debt policy establishing internal thresholds for national debt to GDP ratio at the level of 45% and the annual spending ratio for servicing and repayment of hard currency debt to the international reserves also at the level of 45%.
Standard & Poor’s, Research Update, April 10,2015 
As of :
External national debt is
US$12.4 billion, or 22.7% of GDP
Key features of our external national debt:
Share of loans from international financial institutions – 20.8%
Share of earmarked, targetted loans – 41.0%
Raising of foreign National loans seeks implementation of critical investment projects (earmarked, targetted loans) and national debt refinancing.
External and internal national debt, US$ billion * *
* As of

11. Rule 3: Retention of safe levels of the national debt
National Debt, % of GDP
Maastricht Criterion– 60%
Legislative Threshold – 45% *
* As of

12. National Debt Economic Safety Indicators
Threshold Value
External National Debt, US$ billion
12,6
12,4
External National Debt, % of GDP 25
16,6
22,7
Internal National Debt, Trillion BYR
48,4
97,4
Internal National Debt, % of GDP 20
5,7
9,8
Payments for National Debt Servicing (both foreign and domestic), % of republican budget revenues 10
5,5
7,9
Payments for Foreign National Debt Repayment and Servicing Fees, % of hard currency receipts
7,1

13. Rule 4: Generation of Republican Budget Surplus for National Debt Repayment
Surplus generation in , BYR trillion
Budget expenditures
Budget expenditures
Surplus generation
Surplus generation
2015 (estimate)
2016 (approved)

14. Republic of Belarus Budget Structure
General Government Consolidated Budget
Government Extra-Budgetary Funds
Social Welfare Fund
Government Extra-Budgetary Fund of Civil Aviation
Government Extra-Budgetary Fund of the Penitentiary Department
Government Extra-Budgetary Fund for Universal Servicing of the Ministry of Telecommunications
Consolidated Budget
Republican Budget
Local Budgets
(1,327 total)
Primary Level Budgets
Rural
(1,162)
Rural Towns
(16)
City
(cities subordinate to districts)
(14)
Basic Level Budgets
District
(10)
(cities subordinate to oblasts/regions)
(118)
Oblast (Regional) Level Budgets
Oblast Budgets
(6)
Minsk City Budget

15. Budget Rules at the Local Level
Sustainability of Local Budgets
Deficit Rule
Debt Rule
Rules for Allocation of Resources
Well-Balanced National Budget

16. Budget Rules at the Local Level (cont’d)
Deficit Rule
Debt Rules
Rules for Resource Allocations
Budget Code
Law on Republican Budget
Decisions of Local Council Members
Annual limits for budget deficits
Permission to use accumulated balance from previous years
Debt level restriction
Limits on expenditures for debt servicing and repayment
Borrowing exclusively in the internal market
Conditions for issuing guarantees
Allocation of spending authorities
Distribution of tax and non-tax revenues by budget levels
Inter-budgetary relations