BELARUS NEWS AND ANALYSIS
DATE:
03/04/2009
Belarus cuts budget by 20 pct over crisis
MINSK, April 3 (Reuters) - Ex-Soviet Belarus has cut 2009 budget expenditure by about 20 percent to eliminate a deficit and fend off the effects of the global financial crisis, the office of President Alexander Lukashenko said.
A statement issued after a meeting late on Thursday said expenditure in the consolidated budget had been reduced to the equivalent of $22.4 billion from $27.4 billion.
The International Monetary Fund, which has agreed to lend Belarus $2.5 billion, has called for tough budget policies as one of its recommendations.
'Let me stress that what was planned more than half a year ago at a relatively calm time no longer applies,' Lukashenko's press service quoted him as saying at the meeting.
'Every rouble due to be spent in the budget must be placed under a microscope. And everything of secondary importance must be removed.'
Budget revenues had originally been set at $26.4 billion, with a planned deficit of 1.1 percent of gross domestic product. That was to have been financed by further sales of a part of the Beltransgaz pipeline network to Russian giant Gazprom, foreign credits and sales of domestic securities.
Belarus began feeling the effects of the crisis late last year as exports plunged by 45 percent, GDP growth slowed to 1.4 percent from 10 percent and industrial output fell by 2.3 percent.
Authorities say expenditure will be reduced by cutbacks in budget funds and state investment programmes. But they say social expenditure will remain untouched in a system which prides itself on enduring state control, considerable subsidies and intervention to provide social security.
'The main thing remains that our country is a state for its people,' Lukashenko told the meeting. 'Social programmes and obligations undertaken by our government cannot be altered.'
In addition to the first $788 million tranche of the IMF credit, Belarus has received a $1.5 billion credit from Russia. But much of the money has already been used in recent months to maintain the stability of the Belarussian rouble currency.
To meet IMF requirements, authorities devalued the Belarussian rouble by 20 percent at the beginning of 2009 and tied the exchange rate to a basket of currencies made up of the dollar, euro and Russian rouble. The Belarussian rouble has since slipped to 2,824 to the dollar from 2,200.
(Reporting by Andrei Makhovsky, writing by Ron Popeski)
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