LAGGING GROWTH COULD CAUSE FISCAL DIFFICULTIES IN BELARUS…

Slower than anticipated growth and deteriorating performance of the industrial sector is having on impact on Belarus’ fiscal situation. GDP increased just 3.0 percent in the first six months of the year, compared with 6.0 percent growth in full year 2000. Industrial output in the first half of 2001 was 4.1 percent higher than in the same period last year, a considerable slackening of growth given the 8.3 percent achieved for all of 2000. The slowdown in the Russian economy this year is the major factor in the deceleration of growth in Belarus.

The lower-than-expected rate of GDP growth is having a negative effect on Belarus’ fiscal situation. Consolidated state budget revenues amounted to 2,513.9 billion roubles in the first six months of 2001, representing a shortfall of 1 percent from the target in the annual budget document. The central government budget experienced a revenue shortfall of 2.8 percent below target. The State Tax Committee blamed the shortfall on increases in the share of enterprises operating at a loss, a lower than anticipated increase in aggregate output, and VAT exemptions provided to enterprises. State-owned enterprise losses were boosted as output rates declined less than sales, while stocks of finished goods at enterprises rose to 67.9 percent of the average monthly level of output. The share of enterprises operating at a loss rose from 10.7 percent in early 2001 to 14.3 percent at the beginning of July. Meanwhile, exemptions from VAT in the first six months of 2001 amounted to a loss in revenue of 86.9 billion roubles. In addition, the government provided 21.5 billion roubles in tax credits and 6.1 billion roubles in tax deferments. Arrears to the state budget accumulated by enterprises amounted to 100 billion roubles after just the first four months of this year, including the value of deferments and other official concessions (Belapan News Agency, July 24).

…AS POSSIBILITY OF STATE INTERVENTION INCREASES.