The total losses from the Russian tax maneuver for Belarus in the period up to 2024 will amount to $ 9,282 billion, direct budget losses – $ 3,238 billion. Such an outlook was presented by the IPM Research Center Director Alexander Chubrik.
According to IPM estimates, in 2019, budget losses will be at $ 272,3 million, in 2024 – $ 864,4 million. In particular, without a tax maneuver, oil for Belarus would cost $ 19,2 less in 2019, and $105,5 less in 2024. Declines in budget revenues in 2024 compared to 2018 (with the oil price of $60 per barrel) will be $1,560 billion.
According to the baseline scenario (*if Russia does not compensate for losses from the tax maneuver), the Ministry of Finance implements a medium-term strategy for managing public debt.
It will involve refinancing 75% of the debt every year for the next several years; income from re-customs procedure ceases from 2020) Belarus’s GDP growth is projected to be 1.2% in 2019, 1% in 2020 and 0.8% in 2021. Yet, the situation remains difficult. Real GDP is growing weakly, long-term trend growth rates remain low, external factors are also unfavourable for Belarus.
“GDP is growing due to IT. Since 2010, this is the only activity that has not fallen, constantly making a positive contribution to GDP. As of 10 months, the contribution of the IT sector has outperformed the total contribution of construction, industry and agriculture,” Chubrik noted.
In the third quarter, the contribution of IT sector was comparable to that of the manufacturing industry, which grew sharply in the third quarter due to refining after its failure in the second quarter by 10.5% due to poor oil problems. At the regional level, the last two months have seen revitalization in five of them, with the exception of the Grodno and Gomel regions.
*Russia will reimburse Belarus for losses from the tax maneuver by introducing a reverse excise tax for Belarusian refineries, RBC reported on Wednesday, 18 December. The total amount of subsidies can reach $1,5 billion.
Chubrik also noted that salaries in Belarus have long been rising above labour productivity. In dollar terms, salaries have already outpaced productivity growth for four quarters, in the last quarter – by 7 percentage points. In real terms, the gap is even larger and lasts longer – 30 consecutive months. In nominal terms, salaries overtake productivity for 10 months.
“So far, wages are rising considerably faster than productivity. The key reason is the problems in the labour market, internal and external migration. That is, both the state and private employers compete for workers with Minsk and neighbouring countries and therefore are forced to raise salaries. Plus there is still pre-election rhetoric, although it concerns more state employees and pensioners.”
The expert also drew attention to maintaining a tight fiscal policy. In January – October, a significant budget surplus was recorder (4,5% of GDP in the general government sector, in October it reached 11,1% of GDP).
“The October surplus is record-breaking. It is clear that in view of difficult negotiations with Russia, problems with Russian loans, the Ministry of Finance wants to protect itself as much as possible, to accumulate resources, create an airbag, since the total debt is high – about 50% of GDP. The cost of its repayment and maintenance is about 6% of GDP. So the tough policy of the Ministry of Finance is well-founded,” the expert explained.