Page 7 - BELRptFeb19

Multi-billion losses
The Russian government is about to implement a crushing change for Belarus' battered state budget by cancelling exports of petroleum products. 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.
Minsk’s newly-appointed ambassador to Russia Vladimir Semashko said in November that the oil and gas negotiations with Moscow have brought little progress so far .
At the same time, Minsk and Moscow seek to secure energy deal by December 15. "There are doubts as to whether [an agreement will be reached] by December 15, but we will agree sooner or later," he added amid growing worries in Minsk about new financial crisis, which could be triggered by Russia's expected tax manoeuvre.
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 increased by $181.3mn, or 2.6% month-on-month, to $7.108bn in October. 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.
"Our main trading partner is not Germany, Mr Putin"
On December 6, a bitter dispute broke out between Lukashenko and his Russian counterpart Vladimir Putin during an EEU summit in Saint Petersburg.
"I draw attention to the fact that today the price is $129 per 1,000 cubic meters for Belarus and will be $127 next year, while it is $250 for Germany," Putin said during the event. "This is certainly a great advantage for our allies within the EEU, although we should definitely try to make prices completely the same. But this requires time and a different degree of integration between our countries, which is a subject of negotiations."
"You are right, but our main trading partner is not Germany but Russia, and it is important to us that there are equal conditions, primarily in Belarus and brotherly Russia," Lukashenko fired back immediately, adding that Belarus advocates the comprehensive and unconditional fulfilment of obligations by all the EEU member countries, according to BelaPAN news agency.
Lukashenko underlined that an agreement had been reached to create single markets of natural gas, oil and petroleum products within the EEU by 2025.
"We made this decision and we have to do everything within the set timeframe
7 BELARUS Country Report February 2019 www.intellinews.com