Page 26 - BELRptFeb19

A revised version of the Tax Code came into force in Belarus. Its developers sought to make the document as easy and comprehensible as possible, in particular for small business, the minister said.
The minister noted that more than 95% of economic operators are bona fide and law-abiding businesses who respect tax regulations. About 4% of them fudge the rules for objective reasons and less than 1% of businesses violate the law knowingly.
6.1.2 Budget dynamics - funding, privatization
Battered Belarus faces a new economic crisis if Minsk fails to secure full compensation from Russia for losses triggered by the latter’s new energy taxation system (the so-called tax manoeuvre ), the International Monetary Fund (IMF) said in a latest economic outlook released on January 17.
The IMF's medium-term outlook is "subdued absent vigorous structural reforms, weighed down by unfavourable demographics and weak productivity" in Belarus. At this juncture, medium-term growth is projected at 2%, limiting convergence towards the income levels of richer neighbouring countries, according to the multinational lender.
However, this modest outlook is "conditional" on full compensation from Russia for losses triggered by the so-called tax manoeuvre. "Should compensation be significantly less than full - and this is the key risk hovering over the Belarusian economy at this stage - medium-term growth could be materially lower than 2%, and the budget and current account deficits higher than projected above," the statement reads.
The so-called tax manoeuvre in the Russian oil industry envisages a gradual reduction in the rate of export duty on oil and petroleum products from 30 % to zero in the period from 2019 to 2024 and a proportionate increase in mineral extraction tax on oil production.
According to the Belarusian finance ministry, the country’s budget revenue losses from the tax manoeuvre in 2019 alone were estimated at BYN600mn ($300mn), and that the losses might total $2bn by the end of 2024.
On December 8, a spokesperson with Belarusian President Alexander Lukashenko said in a televised interview that Minsk already lost $3.6bn due to Russia's cut of energy subsidies to Belarus. Due to Moscow's 'tax manoeuvre' Belarus will lose extra $11bn within the next four years, the spokesperson added.
Belarus’ foreign exchange reserves stood at around $7.1bn in late December. However, significant part of the reserves were created by bonds issued by the National Bank of Belarus (NBB), which the regulator should repay within the next 12 months. The bondholders of these notes are local commercial banks.
Belarus tapped the international debt market on February 21 for the first time this year with a new $600mn issue of 12-year Eurobond with 6.2% coupon following January's drop in the nation's foreign exchange reserves by $838mn, or 11.5% month-on-month, to $6.477bn.
The Finance Ministry of Belarus hopes to borrow $1bn in international capital markets annually , First Deputy Finance Minister Maksim Yermolovich said. “We will have to refinance the debt of about $1bn annually. The focused efforts to build relationships and to gain access to the international borrowing
26 BELARUS Country Report February 2019 www.intellinews.com