BELARUS NEWS AND ANALYSIS

DATE:

02/10/2008

Belarus '09 budget overhauls tax, cuts deficit

MINSK, Oct 2 (Reuters) - Belarussian gave initial approval on Thursday to next year's budget which will overhaul the tax system and reduce the deficit to 1.8 percent from 1.9 percent in 2008.

The draft, still to be passed in a second reading, got rid of a graduated income tax system of between 9-30 percent. Instead, there is to be a flat rate of 12 percent.

Finance Minister Andrei Kharkovets later told journalists that the change was aimed at raising living standards.

The draft indicates that Minsk wants to try to borrow $200 million abroad next year to cover a deficit of $1.4 billion. The remainder will be covered by existing funds.

Belarus is in talks with Moscow to receive a credit on favourable terms of $2 billion, similar to the $1.5 billion it received last year which helped Minsk pay for a sharp increase in gas imports from Russian monopoly Gazprom .

Belarus now pays $129 per 1,000 cubic metres, far below the $500 that Gazprom says its Western European clients pay.

The budget draft assumes a gas price of $140 next year, but that is far below a level of $200-250 mooted by Moscow. (Reporting by Andrei Makhovsky, writing by Sabina Zawadzki; Editing by Ron Askew)

Source:

http://www.guardian.co.uk/business/feedarticle/7842984

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