Opinion: The adopted budget reveals the authorities' skepticism re economic growth

At the same time it also revealed Lukashenka’s plan for election year - try to maintain the current GDP level and nothing more, writes Ryhor Astapenia.

On 11 December, the Belarusan parliament took only 50 minutes to adopt its 2015 budget.

The rapid adoption of the budget highlights the parliament's puppet status - it could not even be troubled to hold even demonstrative discussions over the important document.

Although more than 80% of Belarusans believe that budget information should be easily accessible, even experts lack a means to analyse most of the revenues and expenses.

The adopted budget, interestingly, reveals the authorities' skepticism with regards to economic growth and it also revealed Lukashenka’s plan for election year - try to maintain the current GDP level and nothing more. Although the budget appears modest, some of items, like value of the Russian ruble or the price of a barrel of oil are extremely optimistic.

Absence of public debate on budget

Unlike most European countries where it may take months to adopt a budget, the Belarusan parliament adopts it as quickly as possible. On 11 December, MPs passed the country's budget for 2015 in only 50 minutes. When the Finance Minister Uladzimir Amaryn presented the law in his 18-minute speech he also explained changes to the tax code, otherwise members would have adopted the budget even faster.

Several MPs made comments regarding the lack of money for social programmes. They also thanked their colleagues and called to take the law in the first reading, which took place shortly afterwards. In all, the House of Representatives adopted 13 bills that day.

The incredible speed of the legislators has roots in their weak position in the Belarusan political system. Few see the House of Representatives and the Federation Council, the upper and the lower chambers of Belarus's parliament, as serious political institutions. Most Belarusans do not even know a single member of parliament.

Belarus's parliament simply never holds debates over the budget because the budget itself is mainly developed in the presidential administration and the Council of Ministers, much more important institutions, where the discussion has an absolutely confidential nature. Thus, MPs simply approve whatever the others have previously approved.

An obscure document

According to the Independent Institute of Socio-Economic and Political Studies, almost 60% of Belarusans believe the information provided on how the state budget is formed is basically incomprehensible. It seems that many hesitate to admit the truth to the pollsters as much in the Belarusan budget remains obscure - even for experts. The authorities present the budget just before its adoption and there are no means by which to keep track of how the money is spent, and whether or not they indeed go to their announced priorities.

Data: Independent Institute of Socio-Economic and Political Studies

For example, next year's budget has set an increase in income tax from 12% to 13%, one percentage point that officially will go to support large families. However, the IISEPS’s analyst Aliaksandr Sasnou​ told zautra.by web-site that the money may not actually be going anywhere: “What if he (Lukashenka) takes the money and sends it to strengthen his gendarmerie​? You can say anything you want, but no calculations have been submitted.”

Despite the fact that Belarus lacks any semblance of local self-governance, the local authorities still prepare their own budget, which only complicates matters further. The expenditures of the national and local budgets overlap, which makes them even more incomprehensible. The total sum of all budgets is called the consolidated budget. In 2015 the national budget expects to bring in $13.7bn pledged under the proposed ruble exchange rate in the budget in revenues. The consolidated budget for 2015 is $22.1 bn.

Uladzimir Kavalkin of the KoshtUrada.by, a website that tracks budget expenditures, told Belarus Digest that it is important not to forget about state extra-budgetary funds. The authorities create them out of the national budget and they are also non-transparent.

The budget is modest and retains little growth...

On 11 December, Aliaksandr Lukashenka told Prime Minister Mikhail Miasnikovich that "the set plans for next year's economic growth is the minimum and Belarus is eager for more”. Indeed, the budget has GDP growth at only 0.5%, with a 3.6% decline in exports and sets inflation at 12% - all while increasing taxes. Although the budget has a surplus of $4 billion, this money will be spent on paying off foreign debt.

The budget reflects Aliaksandr Lukashenka's plans for the upcoming elections that will likely take place in November 2015. The authorities are being very careful with their economic policy in order to avoid a crisis. The only thing that the authorities plan to assign more money to is a 50% increase for social welfare, although this is an unusually small gift for an election year in Belarus. All other expenditure categories have only small increases this year. Even defence institutions, on the eve of a possible full scale war in Ukraine, have not received additional funds.

... But even this budget remains wishful thinking

It is unlikely that the authorities will be able to achieve all they have set out to do, so they will likely need to amend the budget throughout next year. This is due to the fact that the budget already has a few areas that appear to be overly optimistic. For example, the budget has the exchange rate of the Russian ruble at RUB 43/$1 (at the time of publication $1 in Russia was worth 55 rubles) or the price of Urals oil at $83/barrel (at the time of publication a barrel of Urals cost $56).

The price of the US dollar in Belarus, with a 30% currency trading fee, is around BYR 14,500 while it should be around 11,400 next year according to the adopted budget. When one of the MPs asked the Minister of Finance whether these figures appeared realistic to him, Uladzimir Amaryn answered that "Russia has even more optimistic figures".

Even with these wishful figures, the budget of Belarus lays out a very tough year ahead. One of the deputies before the adoption of the budget said that " Belarusans could see up to a 1.5% increase in their incomes." This is likely an unrealistic estimate, as just avoiding a recession is what Belarus should really be thinking about.

Originally published at BelarusDigest