English

Government pledges to restrict pay growth, raise utility rates

The reform program that was devised by the government to obtain a $3-billion loan from the Anti-crisis Fund of the Eurasian Economy Community (EurAsEC) provides for restricting pay growth and raising the rates of taxes and the rates of utility and public transport services.

The program, whose text has become available to BelaPAN, requires the government to reduce the national budget deficit to 1.5 percent of GDP this year and to one percent in 2013.

To increase tax revenues, the government would raise the rates of export duty on potash by 50 percent in the first half of 2011. The rates of tax on the production of potash and crude oil would be raised 12 and 30 times, respectively, in the latter half of the year.

Cost-saving would be a priority of the government’s budgetary policy, with the share of pay in state budget expenditures to remain unchanged in 2012 and 2013 compared with 2011.

The rates of utility services provided to households would be increased to ensure that households cover at least 30 percent of their costs this year, 35 percent in 2012 and 40 percent in 2013. The cost recovery rate for some services would be increased to 100 percent. Households would be required to pay for the services consumed in excess of the "norm."

The rates of urban and suburban passenger transportation services would be gradually raised to bring the cost recovery rate to 70 percent in 2011, to 85 percent in 2012 and to 90 percent in 2013.

The $3-billion EurAsEC loan, which was approved by the board of the Anti-crisis Fund on June 4, is to be disbursed in six tranches within three calendar years.

The first $800-million tranche was received on June 21. The second and subsequent tranches, each amounting to $440 million, are to be provided after Belarus submits reports on the implementation of the reform program.

The loan carries a floating interest rate set every three months on the basis of the “price of the funding of Russia in international markets,” which currently is about 4.1 percent per annum.

The 10-year loan period includes a three-year grace period during which Belarus will have to pay only interest. Repayment of the principal amount is to begin in the latter half of 2014.