Report No. 89737-BY
BELARUS
Public Expenditure and Financial Accountability (PEFA)
Public Financial Management Performance Report
June 2014
Europe and Central Asia Region
Report No. 89737-BY
Belarus
Public Expenditure and Financial Accountability (PEFA)
Public Financial Management Performance Report
June 2014
Europe and Central Asia Region
CURRENCY AND EQUIVALENT UNITS
(Exchange Rate Effective June 3, 2014)
Currency Unit = Belarussian Ruble (BYR)
US$1 = 10,100 BYR
Euro 1 = 13,750 BYR
GOVERNMENT FISCAL YEAR
January 1 to December 31
PEFA ASSSESSMENT PERIOD
2010 - 2012
WEIGHTS AND MEASURES
Metric System
ABBREVIATIONS AND ACRONYMS
AGA Autonomous Government Agency MoIA Ministry of Internal Affairs
ASOSAI Asian Organization of Supreme Audit MoL Ministry of Labor and Social Protection
Institutions
Belstat National Statistical Committee MoT Ministry of Trade
BYR Belarussian Ruble MoTL Ministry of Taxes and Levies
CCCU Customs Code of the Custom Union MoF Ministry of Finance
CIT Corporate Income Tax MTFP Medium Term Financial Program
CPI Consumer Price Index NBRB National Bank of the Republic of Belarus
CoA Chart of Accounts n/a Not applicable
CoFoG Classification of Functions of Government PE Public Enterprise
DSA Debt Sustainability Analysis PEFA Public Expenditure and Financial
Accountability
EUROSAI European Organization of Supreme Audit PFM Public Finance Management
Institutions
GDP Gross Domestic Product PIN Payee Identification Number
FY Fiscal/Financial Year PIT Personal Income Tax
GFS Government Finance Statistics SCC State Control Committee
GFSM1986 Government Finance Statistics Manual SCustC State Customs Committee
(IMF, 1986)
GFSM2001 Government Finance Statistics Manual SIP State Investment Program
(IMF, 2001)
IFRS International Financial Reporting SNG Subnational Government
Standards
IMF International Monetary Fund SPF Social Protection Fund
INTOSAI International Organization of Supreme TSA Treasury Single Account
Audit Institutions
KRU Department of Control and Inspection USD United States Dollar
MDAs Ministry, Department, Agency VAT Value Added Tax
MoE Ministry of Economy
Table of Contents
Acknowledgements iv
Summary v
I. Integrated Assessment of PFM Performance v
A. Credibility of the budget v
B. Comprehensiveness and transparency vi
C(i). Policy-based budgeting vii
C(ii). Predictability and control in budget execution vii
C(iii). Accounting, recording and reporting viii
C(iv). External scrutiny and audit ix
II. Assessment of the impact of PFM weaknesses ix
1. Aggregate Fiscal Discipline ix
2. Strategic Allocation of Resources x
3. Efficient Service Delivery x
III. Change in performance since the previous assessment x
IV. Prospects for PFM Reforms xii
1 Introduction 1
1.1 Objective of the PFM-PR 1
1.2 Process of preparing the PFM-PR 1
1.2.1 Stakeholders and their roles 1
1.2.2 Assessment process 2
1.3 Methodology 2
1.4 Scope 3
2 Country Background Information 4
2.1 Description of country economic situation 4
2.1.1 Country context 4
2.1.2 Overall government reform programme 6
2.1.3 Rationale for PFM reforms 6
2.2 Description of budgetary outcomes 6
2.2.1 Fiscal performance 6
2.2.2 Allocation of resources 8
2.3 Legal and institutional framework for PFM 9
2.3.1 The legal framework for PFM 9
2.3.2 The institutional framework for PFM 11
3 Assessment of PFM Systems, processes and institutions 15
3.1 Budget credibility 15
3.1.1 PI-1 Aggregate expenditure out-turn compared to original approved budget 15
3.1.2 PI-2 Composition of expenditure out-turn compared to original approved budget 16
3.1.3 PI-3 Aggregate revenue out-turn compared to original approved budget 18
3.1.4 PI-4 Stock and monitoring of expenditure payment arrears 19
3.2 Comprehensiveness and transparency 21
3.2.1 PI-5 Classification of the budget 21
i
3.2.2 PI-6 Comprehensiveness of information included in budget documentation 23
3.2.3 PI-7 Extent of unreported government operations 25
3.2.4 PI-8 Transparency of inter-governmental fiscal relations 28
3.2.5 PI-9 Oversight of aggregate fiscal risk from other public sector entities 31
3.2.6 PI-10 Public access to key fiscal information 35
3.3 Policy-based budgeting 38
3.3.1 PI-11 Orderliness and participation in the annual budget process 38
3.3.2 PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting 41
3.4 Predictability and control in budget execution 44
Background to Tax Administration 44
3.4.1 PI-13 Transparency of taxpayer obligations and liabilities 45
3.4.2 PI-14 Effectiveness of measures for taxpayer registration and tax assessment 48
3.4.3 PI-15 Effectiveness in collection of tax payments 51
3.4.4 PI-16 Predictability in the availability of funds for commitment of expenditures 54
3.4.5 PI-17 Recording and management of cash balances, debt and guarantees 56
3.4.6 PI-18 Effectiveness of payroll controls 59
3.4.7 PI-19 Competition, value for money and controls in procurement 61
3.4.8 PI-20 Effectiveness of internal controls for non-salary expenditure 65
3.4.9 PI-21 Effectiveness of internal audit 67
3.5 Accounting, recording and reporting 70
3.5.1 PI 22: Timeliness and regularity of accounts reconciliation 70
3.5.2 PI-23 Availability of information on resources received by service delivery units 71
3.5.3 PI-24 Quality and timeliness of in-year budget reports 72
3.5.4 PI-25 Quality and timeliness of annual financial statements 74
3.6 External scrutiny and audit 76
3.6.1 PI-26 Scope, nature and follow-up of external audit 76
3.6.2 PI-27 Legislative scrutiny of the annual budget law 78
3.6.3 PI-28 Legislative scrutiny of external audit reports 80
3.7 Donor practices 82
3.7.1 D-1 Predictability of Direct Budget Support 82
3.7.2 D-2 Financial information provided by donors for budgeting and reporting on
project and program aid 83
3.7.3 D-3 Proportion of aid that is managed by use of national procedures 84
4 Government Reform Process 85
4.1. Recent and ongoing reforms 85
4.2. Institutional factors supporting PFM reform planning and implementation. 86
Annexes 87
Annex 1: PFM Performance Measurement Framework Indicators Summary 88
Annex 2: Organizational Structure of the Ministry of Finance 103
Annex 3: Variance in Expenditure Composition of General Government Budget 104
Annex 4: Sources of Information and Evidence 107
Annex 5: List of Stakeholders Interviewed 114
Annex 6: List of Documents Consulted 118
Annex 7: Disclosure of Quality Assurance Mechanism 124
Annex 8: Assessment Team Composition and Roles 127
ii
Table 0.1. Overview of PFM Performance Scores
Scoring Dimension Ratings Overall
PFM Performance Indicator
Method i. ii. iii. iv. Rating
A. PFM-OUT-TURNS: Credibility of the budget
PI-1 Aggregate expenditure out-turn compared to original approved budget M1 С С
PI-2 Composition of expenditure out-turn compared to original approved budget M1 B A B+
PI-3 Aggregate revenue out-turn compared to original approved budget M1 B B
PI-4 Stock and monitoring of expenditure payment arrears M1 A B B+
B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and Transparency
PI-5 Classification of the budget M1 А А
PI-6 Comprehensiveness of information included in budget documentation M1 A A
PI-7 Extent of unreported government operations M1 D A D+
PI-8 Transparency of inter-governmental fiscal relations M2 D↑ A A B
PI-9 Oversight of aggregate fiscal risk from other public sector entities M1 C A C+
PI-10 Public access to key fiscal information M1 B B
C. BUDGET CYCLE
C(i) Policy-Based Budgeting
PI-11 Orderliness and participation in the annual budget process M2 D C A C
PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting M2 C C D D D+
C(ii) Predictability and Control in Budget Execution
PI-13 Transparency of taxpayer obligations and liabilities M2 B A B B+
PI-14 Effectiveness of measures for taxpayer registration and tax assessment M2 A A A A
PI-15 Effectiveness in collection of tax payments M1 A A A A
PI-16 Predictability in the availability of funds for commitment of expenditures M1 B B B B
PI-17 Recording and management of cash balances, debt and guarantees M2 A B B B+
PI-18 Effectiveness of payroll controls M1 B A A B B+
PI-19 Competition, value for money and controls in procurement M2 D D D D D
PI-20 Effectiveness of internal controls for non-salary expenditure M1 C B A C+
PI-21 Effectiveness of internal audit M1 D n/a n/a D
C(iii) Accounting, Recording and Reporting
PI-22 Timeliness and regularity of accounts reconciliation M2 A A A
PI-23 Availability of information on resources received by service delivery units M1 A A
PI-24 Quality and timeliness of in-year budget reports M1 С А А С+
PI-25 Quality and timeliness of annual financial statements M1 C A D D+
C(iv) External Scrutiny and Audit
PI-26 Scope, nature and follow-up of external audit M1 C A A C+
PI-27 Legislative scrutiny of the annual budget law M1 B B D C D+
PI-28 Legislative scrutiny of external audit reports M1 A D D D+
D. DONOR PRACTICES
D-1 Predictability of Direct Budget Support M1 n/a n/a n/a
D-2 Financial info provided by donors for budgeting/reporting on project/program aid M1 n/a n/a n/a
D-3 Proportion of aid that is managed by use of national procedures M1 D D
iii
Acknowledgements
The PEFA Assessment team gratefully acknowledges the extensive cooperation and assistance from officials
from the Government of Belarus. In particular, the team would like to recognize the leadership exercised by the
Budget Policy Department of the Ministry of Finance in coordinating the Government working group that
consisted of officials from relevant ministries and agencies, including the Ministry of Finance, the Ministry of
Economy, the Ministry of Taxes and Levies, the State Control Committee. The self-assessment conducted by the
working group and highly constructive and candid discussions during the PEFA assessment process have
demonstrated strong interest and willingness to benchmark Belarus PFM system against international standard
and to inform development of the medium-term national PFM reform agenda. The PEFA assessment team
gratefully acknowledges all the support, efforts and time provided by the Ministry of Finance staff.
The assessment team greatly appreciates the contributions of all other participants, who took part in the
interviews and attended the workshops (including the Parliament, the State Customs Committee, the National
Bank, the National Statistics Committee, the Ministry of Trade, the Ministry of Health, the Ministry of Education,
the Ministry of Industry, the Ministry of Labor and Social Protection, the Main State Treasury for the city of Minsk,
the Financial Department of the Minsk Oblast Executive Committee, as well as representatives of the non-
governmental organizations).
The World Bank assessment team was comprised of Mrs. Elena Nikulina (Team Leader, ECSP4), Mr. Sebastian
Eckardt (Co-leader, ECSP3), Mr. Andrew Mackie, Mr. Mark Silins (ECSP4), Mrs. Yelena Slizhevskaya, Mr. Kiryl
Haiduk and Mrs. Maryna Sidarenka (ECSP3). The team received guidance from Mr. Adrian Fozzard, Sector
Manager, Public Sector and Institutional Reforms, Europe and Central Asia Region (ECSP4). Valuable inputs
were received from the peer reviewers, including Mr. William Dorotinsky (PRMPS), PEFA Secretariat, and IMF
team for Belarus. Mrs. Alina Gres (ECCBY) provided excellent support during preparation process. Mrs. Virginia
Yates (ECSP4) put significant effort into formatting the report and preparing it for publication.
iv
Summary
I. Integrated Assessment of PFM Performance
The period since the 2009 PEFA assessment was marked by persistent macro-economic crisis in Belarus. In the
face of substantial fiscal pressures, fiscal management was dominated by short term consolidation needs. While
the government succeeded in maintaining fiscal discipline, short term crisis management has to some extent
crowded out more long term institutional reforms to strengthen the way the budget is managed.
Overall, PFM improvements during 2010-2012 focused on strengthening the legislative framework. Notable
progress has been made with the adoption of the Tax Code, Budget Code and the introduction of codified
procurement legislation. However, in several important areas, such as medium term budgeting and
intergovernmental fiscal relations, implementation of the new legal provisions has been slow.
Figure 1 presents the aggregate scoring of six core dimensions of PFM performance as defined by the PEFA
framework. Brief summary of the assessment results for each dimension follows below.
Figure 1. Aggregate scores for the core dimensions of PFM performance, 2013 assessment.
Credibility of the budget
4
3
External Scrutiny and Comprehensiveness
Audit 2 and Transparency
1
0
Accounting, Recording
Policy-Based Budgeting
and Reporting
Predictability and
Control in Budget
Execution
Source: World Bank staff.
Note: PEFA framework uses alphabetic scores for the indicators, where A is the highest score and D is the lowest. For
the purposes of this chart, those scores were converted into numeric scale (where 4 corresponds to the highest A score)
and averaged for each core performance dimension.
A. Credibility of the budget
Macroeconomic instability undermined reliability of revenue and expenditure forecasts resulting in
significant revenue and expenditure deviations compared to approved budgets. Actual expenditure
exceeded planned expenditure in two out of the three years, with the deviation of aggregate general government
expenditures exceeding 30 percent in 2011. Aggregate revenue also deviated substantially from the original
revenue forecast. During 2011 and 2012 high inflation boosted revenue collection considerably in excess of
v
original estimated revenues. The functional composition of actual expenditures was less affected. While the
variance in expenditure composition exceeded 10 percent in 2010, it was less than 10 and 5 percent in 2011 and
2012, respectively.
Notwithstanding the challenges, the government succeeded in containing the budget deficit. Strong
budget controls and payment management prevented accumulation of expenditures arrears, the stock of which
remained low throughout the period despite the absence of formal commitment controls. Aligning the definition of
arrears with international practice and introducing the requirement for obligatory registration of the invoice due
date in the treasury system could further strengthen the existing mechanisms for monitoring of arrears.
B. Comprehensiveness and transparency
Belarus’ budget documentation is fairly complete and comprehensive. The budget classification used is
largely consistent with IMF’s Government Finance Statistics Manuals (GFSM) and Classification of Functions of
Government (CoFoG). Complete budget execution data is collected and reported for all levels of government and
regularly consolidated. There remains scope for unification of the existing multiple financial reporting structures
and their fuller integration with the budget classification. This might be an important improvement in preparation
for the development of the new financial management information system. In addition, some gaps in the budget
documentation remain: the macro-economic indicators for FY 2012 did not include exchange rate estimates, and
information on the stock of financial assets is missing.
A significant share of public finances is managed outside the formal budget process undermining
transparency, control and efficiency in the use of public resources. Based on available data, quantifiable
elements of extra-budgetary activity represented more than 10% of central government expenditures in 2012.
This includes: own-source revenues of spending agencies, special funds, and significant cross subsidies in the
utility sectors. In addition, there are significant tax expenditures which are not reflected in the budget.
Oversight of aggregate fiscal risk resulting from operations of public enterprises (PEs) represents a
particular challenge for Belarus, given their economic significance. Due to Belarus’ gradual transition path,
state owned enterprises account for more than half of output and about two thirds of public employment. In
addition, the banking system remains heavily dominated by state owned banks which perform large quasi-fiscal
activities related to lending under government programs, mostly in the housing construction and agricultural
sector. While these operations have created significant fiscal risks (in the form of called guarantees and bank
recapitalization expenditures), at present, Belarus does not explicitly include aggregate fiscal risk analysis in
either its fiscal framework or the annual budget process. Also, overall fiscal risks are not systematically reflected
in the consolidated report on public enterprises prepared by National Statistical Committee.
Enactment of the Budget Code established a solid basis for improved transparency of inter-
governmental fiscal relations but the rules based transfer formula has not yet been implemented.
Transfers to subnational governments are reasonably transparent but continue to be based on incremental
adjustments while the newly developed rules based formula is being tested. This is an area where further
improvements are expected. Lower tier territorial governments are provided with reliable information on the
resources available for the forthcoming budget year in a timely fashion before they start their detailed budget
preparation. Complete budget execution data, broken down by function, economic and administrative
classifications, covering both local and central government budgets, is collected and reported quarterly.
vi
The availability of key fiscal information to the general public has increased but significant scope for
further improvement remains in this area. Enactment of a requirement to publish contract awards increased
the number of types of information made available to the public from 2 in 2009 to 3 in 2013. However, a full set of
budget documentation, individual ministries, departments or agencies (MDAs) reports, the costs of operating
individual service delivery units (schools, hospitals etc.) and external audit reports are not yet readily available to
the public.
C(i). Policy-based budgeting
The annual budget process is orderly, in the sense that ministries and lower tier governments are given clear
instructions on the economic and other assumptions to be used in preparing their detailed budget submissions.
The Budget Code stipulates a basic budget calendar, but key dates, including issuance of the budget circular and
submission of budget requests by MDAs, are not specified. While MDAs participate throughout the budget
preparation process, the formal time given to them to prepare detailed budget requests is limited. Delays in the
issuance of the budget circulars occur partly because of uncertainties about the budget outlook stemming from
the macroeconomic instability. The budget circular establishes budget ceilings for MDAs, but these are not
approved by the Council of Ministers and are therefore subject to revision. Parliament approves the budget
before the start of the new fiscal year.
The multi-year perspective in fiscal planning and budgeting remains limited. Slow progress in this area
over the recent years is partially a consequence of unstable macroeconomic environment. Medium term fiscal
forecasts are prepared, but forward estimates are not systematically linked to the annual budget allocations.
Ministry of Finance’s debt department has made progress in developing external public debt sustainability
analysis. Line ministries prepare sector strategies in the context of the development planning process. While
these strategies identify and cost priority investments, the medium term, recurrent cost implications associated
with these investments are not captured. Although a process for prioritising the investment budget is in place,
this process remains separate from the main budget process.
C(ii). Predictability and control in budget execution
Since the 2009 assessment, Belarus has undertaken significant reforms which have simplified and
improved the taxation system. In 2010, a unified Tax Code came into force, which means that taxpayers can
now refer to a single consolidated law addressing their tax obligations. In addition, some taxes were removed or
reduced, access to information was simplified and the administrative burden in relation to taxpayer compliance
was reduced. Some limited discretionary powers still exist in the law. Administative appeals are open to all
taxpayers, however, a transparent and independent tax appeal mechanism is only available to legal, and not
physical persons. Tax registration and assessment mechanisms are effective. Audit and investigations are
conducted using comprehensive six month plan which is based on an assessment of taxpayer risk.
Belarus has achieved good progress in implementing the Treasury Single Account (TSA) for
consolidation of cash balances for most central government accounts. Most receipts and payments pass
through the treasury single account which is reconciled on a daily basis, however own source revenues and a
few small extra-budgetary funds remain outside. An annual cash flow forecast is prepared, broken down by
quarter and months. The forecast is updated quarterly, although informal monitoring occurs more frequently in
the Treasury. Belarus operates a quarterly budget allocation process which sets hard budget controls and cash
limits. The system works effectively in providing certainty over funding for budget institutions; changes are
vii
permitted but are controlled by the Ministry of Finance (MoF). In the final quarter of 2012, due to cash flow
1
problems there were some delays which affected a small amount of funding of unprotected items .
Controls over payroll and non-salary expenditures are relatively strong. The control framework is
comprehensive and well understood and the compliance level is high. In the case of non-salary expenditures, the
major weakness is limited coverage of mandatory commitment controls which are only applied to certain
categories of expenditures. In the case of payroll, one area for improvement is the development of automatic
linkages between human resources and accounting systems of budget organizations to synchronize changes.
The advent of system based controls has not fully replaced manual based controls leading to some duplication.
With the implementation of the Law on digital signature this practice is expected to disappear.
Controls over debt and guarantees have improved since 2009. Debt recording and monitoring for central
government is well developed with comprehensive monthly reporting. The issuance of debt and guarantees for
central government is clearly defined in the legislation; criteria exist for borrowing and issuing guarantees, and a
single entity, the MoF, signs for debt and guarantees. Monetary ceilings rather than fiscal targets are set in the
annual budget law.
Internal audit – in the sense of an operation reporting to management on the performance of the systems
for which it is responsible – does not yet exist in Belarus. The existing heavy framework of controls at central
and local levels is focused on compliance rather than addressing improvement of public finance management
(PFM) systems. In addition to the procedures operated by and within spending Ministries or lower tier authorities
to ensure correctness, there are periodic inspections by MoF central and/or local inspectorates, sometimes in
conjunction with the State Control Committee (SCC). The main focus of these inspections is comprehensive ex-
post checking of transactions, with a view to the discovery and correction of errors.
Prior to 2012, the procurement framework was extremely fragmented, but progress was made in this area
with introduction of a new Public Procurement Law in 2012. While the data provided on the Ministry of Trade
website appears to be comprehensive, the present procurement system lacks a comprehensive system to
validate whether the procurement methods are justified in accordance with legal requirements. The Law requires
government bidding opportunities and contract awards to be made available to the public through electronic
means. A procurement Complaints Commission has been established under the new Law however this does not
yet have representation from the private sector or civil society and there is no legal requirement for the
publication of the resolution of procurement complaints.
C(iii). Accounting, recording and reporting
Basic systems for accounting, recording and reporting are in place. There are regular reconciliations
between transactions data in the Treasury system, and accounting data provided by ministries and lower tier
governments. There are accounting records for every service delivery unit (schools, hospitals, cultural centers,
etc.), which provide reliable information on all types of resources received on a monthly, quarterly and annual
basis. Monthly revenue and expenditure execution data is prepared on a timely basis and appears to be
accurate. However there is no separate reporting of commitments. Public sector accounting is based on national
1
Selected items of budget expenditures (wages, food stuff, medicaments, transfers to population, public debt payments) are
traditionally given a priority in funding and for that reason are referred to as “protected”.
viii
rules which are applied consistently but do not comply with international standards. National accounting
standards are not disclosed in the annual financial statements.
C(iv). External scrutiny and audit
The current external audit arrangements in Belarus deviate from the international practice embedded in
the PEFA methodology. The SCC, reporting to the President, performs many of the tasks assigned to supreme
audit institutions in other countries. The coverage of SCC audits is reasonably comprehensive but the scope of
work is limited. There is no disclosure of SCC's audit procedures other than the recently developed Performance
Audit guidelines. The SCC annual conclusion on the execution of the republican budget is presented to the
National Assembly on a timely basis. There is good follow up to SCC recommendations by the Government,
however, neither the recommendations, nor their discharge are published. Legislative scrutiny of external audit
reports is limited to the hearings on the SCC conclusion on annual republican budget execution. SCC is not
obliged to provide any of its inspection reports to the legislature and they are not discussed in the parliamentary
Committees.
Clear procedures exist for the legislature’s budget review and these are respected. The legislature’s review
covers fiscal policies for the forthcoming budget year as well as detailed estimates of expenditure and revenue,
but does not cover the medium-term framework. While informal procedures exist for the legislature to get
involved in the review of the budget from early stages of its preparation, the official time allowed for the formal
review is insufficient. There are also clear rules limiting in-year amendments to the budget without prior
legislature approval. However these rules allow for extensive reallocation and expansion of total expenditure
without legislative consent.
II. Assessment of the impact of PFM weaknesses
An effective PFM system is essential for the implementation of public policies and the achievement of strategic
national objectives by supporting aggregate fiscal discipline, strategic allocation of resources and efficient service
delivery. An open and orderly system is one of the enabling elements for those three levels of budgetary
outcomes:
Effective controls of the budget total and management of fiscal risks contribute to maintaining aggregate
fiscal discipline
Planning and executing the budget in line with government priorities contributes to implementation of
government’s objectives
Managing the use of budget resources contributes to efficient service delivery and value for money
A brief summary of the impact of the identified weaknesses of Belarus PFM system at those three levels of
budgetary outcomes is presented below.
1. Aggregate Fiscal Discipline
While budget outcomes for 2010-2012 prove the ability of Belarus PFM system to contain the budget
deficits during difficult times, the prudent fiscal position was undermined by fiscal risks. Notwithstanding
the continuous macroeconomic instability, the government avoided a substantial deterioration of the headline
ix
fiscal position. Despite revenue shortfalls, the strong treasury function and control structure effectively contained
expenditures and expenditure arrears have been minimal. However, significant below the line fiscal costs to
recapitalize state owned banks weakened the overall fiscal position. Contingent liabilities and fiscal risks
associated with the large stock of quasi-fiscal debt under government-directed lending in the banking sector
continue to threaten consolidation efforts.
2. Strategic Allocation of Resources
The budget process does not have a strong policy or strategic focus . Absence of a proper medium term
budget framework, weak links between sector plans and budget allocations and parallel process for preparation
of investment program are not conducive for efficient targeting of resources to strategic policy priorities. The
significant share of extra budgetary activities and parallel use of different budget management procedures for
budget funds and own source revenues of budget organizations additionally complicate strategic prioritization of
resources. Legislative changes to the national planning framework that are being considered may facilitate a
move towards medium term budgeting.
3. Efficient Service Delivery
The current Belarus PFM system is control oriented and does not focus on efficiency and effectiveness
of service delivery. The top-down budgeting and expenditure control system does not encourage more intensive
use of existing resources. The control environment is burdensome, and obliges those responsible for the delivery
of public services to focus their efforts on compliance rather than improving performance and the effectiveness of
service delivery. The procurement system is being modernised and, if implemented successfully, could result in
improvements in the quality and cost effectiveness of procurement for goods and services. Recent introduction of
the elements of performance auditing is encouraging and has a potential to draw more attention to the issues of
efficiency and effectiveness of service delivery.
III. Change in performance since the previous assessment
2013 assessment is the second PFM performance assessment for Belarus based on the PEFA framework. When
comparing the 2013 scores with the scores from the 2009 assessment, it should be kept in mind that not all the
scores are directly comparable for the reasons explained below:
for indicators PI-2, PI-3 and PI-19, the methodology for scoring and calibration has been revised by PEFA
Secretariat in January 2011.
three donor indicators D1, D2, D3 were not used in the 2009 assessment;
in twelve cases, a different interpretation of the PEFA framework based on the latest methodological guidance
from the PEFA Field Guide and broader set of data available in 2013 resulted in a different score than in 2009
in the absence of change in PFM performance.
x
Table 1.1 summarizes changes in performance scores compared to the 2009 assessment.
Table 1.1. Changes in the Scores Compared to 2009 Assessment
Performance
Improved No change Deteriorated Total
Score
Improved PIs 10, 13, 17 PI 23, 26 5
different
interpretation
PIs 1, 5, 6, 8, 14
No change 8
15, 16, 22
PIs 4, 7, 9, 12, 18, 20,
Deteriorated PIs 3* PI 2*, PI 11, PI27 14
21, 24, 25, 28
Total 4 20 3 27**
Source: World Bank staff
Note: * Revised methodology applied
** PI 19 scores are not comparable due to the change of methodology, and D1, 2,3 indicators were not used in 2009.
When considering the aggregated performance at the indicator levels, rather than at the dimension level, we
observe no change in performance for twenty performance indicators. In the case of three indicators there is a
2
slight improvement in performance and score and two indicators slightly deteriorated . In addition, one dimension
achieves an upward arrow in recognition of reforms which have been implemented but which have yet to impact
on PFM performance.
Main improvements in performance were observed in the following areas:
PI-10 (public access to key fiscal information) - there is an improvement in performance due to the
introduction of the publication of contract awards.
PI-13 (transparency of taxpayer obligations and liabilities) - improvements to the tax system, including access
to information and administrative processes.
PI-17 (recording and management of cash balances, debt and guarantees) - improvements due to the
extended coverage of the treasury single account and controls over loans and guarantees.
PI-8 (intergovernmental fiscal relations) receives upward arrow recognizing significant legislative reforms
since 2009 which have yet to impact on PFM performance.
Main slippages in performance were observed in the following areas:
PI-11 (orderliness and participation in the annual budget process) - performance deteriorated due to a
shortened time period for MDAs to prepare their detailed budget requests.
PI-27 (legislative scrutiny of the annual budget law) – performance deteriorated due to a shortened period for
legislative review of the annual budget law.
2
Excluding the donor indicators and PI-2, PI-3 and PI-19 which are not directly comparable with the 2009 Assessment.
xi
Annex 1 summarises the comparability of scores and changes in performance since the previous assessment.
IV. Prospects for PFM Reforms
Overall, PFM reforms to date have focused on strengthening the legislative framework, but
implementation has been slow. Notable progress has been made in strengthening the legislative framework
with the adoption of the Tax Code, Budget Code and the introduction of codified procurement legislation.
However, in important areas, such as medium term budgeting and intergovernmental fiscal relations,
implementation of new provisions has been lagging. Therefore the PEFA scores measuring performance in these
areas do not yet show improvement compared to the 2009 scores.
Commitment to further advance public financial management reform is strong among the set of
institutions involved in budgetary management. The five year economic and social development plan 2011-
15 of the Government explicitly states the optimization of public expenditures with a focus on achieving results,
raising efficiency of the use of state funds and improvement of public debt management through the development
of the Public Debt Management Strategy as key policy objectives. However, highly centralized decision making
and an uncertain authorizing environment may lead to delays and stall the implementation of PFM reforms,
despite commitment at the technical level
xii
1 Introduction
1.1 Objective of the PFM-PR
The main objective of the present PFM Performance Report (PFM-PR) is to provide the Government of
Belarus with an objective up-to-date diagnostic of public financial management performance based on the
internationally recognized PEFA methodology. The report is expected to inform the development of the
Government medium-term program for public financial management reform. The process of preparing the
report was designed to build a shared understanding of PFM performance and those dimensions that require
improvement.
1.2 Process of preparing the PFM-PR
1.2.1 Stakeholders and their roles
The primary recipient of the PFM performance report is the Ministry of Finance of Belarus. On the MoF
request, the underlying diagnostic analysis was undertaken in the form of an external assessment led by the
World Bank.
3
As a lead donor the World Bank provided a qualified team that undertook the assessment in accordance with
the methodology and following the process described in the concept note agreed with the MoF. The World
Bank was also responsible for quality assurance of the PFM-PR using the standard procedures for Bank
funded analytical work and PEFA Check requirements.
The MoF took the initiative to undertake the self assessment as input into the Bank led assessment. It
established the PEFA Working Group (WG) and coordinated the WG activities throughout the assessment
process. In this capacity the MoF provided the data in its possession requested by the assessment team,
advised the World Bank on key counterparts for individual indicators and facilitated the arrangement of
meetings between the World Bank assessment team and the counterparts and provision of data by other
agencies involved in the assessment. MoF also coordinated the review of the draft PEFA assessment report
by the Working Group and assisted with organization of the launch and final workshops that involved the WG
members and other stakeholders.
Other key stakeholders represented in the Government PEFA Working Group included the Ministry of Taxes
and Levies (MoTL), Ministry of Economy (MoE), SСС. For assessment of indicators that required information
from the line ministries and local authorities, MoF provided help to organize meetings with the ministries of
health, education, labor and social protection, and Financial Department of the Minsk Oblast Executive
Committee. To collect information that is not in possession of the agencies represented in the Working Group,
the assessment team interviewed the representatives of the Parliament, Prime Minister’s office, National
Bank, State Customs Committee (SCustC), National Statistical Committee (Belstat), Chamber of Commerce
and Industry and business councils. The respective meetings were organized by the World Bank office in
Minsk in consultations with the MoF.
Several other donors were informed about the plans for the assessment. IMF team was invited to contribute
in the role of the peer reviewer. EU and Eurasian Anticrisis Fund expressed interest in the results of the
3
Annex 8 provides information on the assessment team composition and roles.
1
assessment and the follow up work on the PFM reform program. Representatives of these organizations will
be invited to the dissemination events.
1.2.2 Assessment process
The initial discussion on the approach to the assessment took place after receipt of the letter of the Minister of
Finance in April 2013 requesting World Bank assistance in undertaking the assessment. Following the
principal agreement to proceed with the assessment, the World Bank team discussed with the MoF the
detailed approach that was reflected in the concept note. The concept was subject to the quality assurance
review in line with the PEFA Check requirements. This review took place in September 2013. In parallel, the
Bank team undertook a review of background documentation, including the self-assessment prepared by the
MoF.
th th
The first visit of the assessment team to Minsk took place on September 29 – October 11 , 2013. The MoF
team organized a launch workshop at its premises at the beginning of the visit with an invitation of the
members of the PEFA Working Group and other stakeholders. The World Bank team presentation at the
launch workshop focused on the changes in PEFA methodology since the 2009 assessment and the
guidelines for the repeat assessments. The MoF and the World Bank office in Minsk organized meetings
between the World Bank team and government counterparts and other institutions as required. The purpose
of the meetings was to discuss performance indicators and to collect evidence for the assessment. The World
Bank team presented preliminary findings, and highlighted outstanding evidence required to the members of
the Working Group at a wrap-up meeting at the end of the first field mission. Additional data was gathered
through the field based team members after the conclusion of the first mission.
During November –December, the World Bank team drafted a PFM Performance Report (PEFA Report)
based on the evidence gathered during and after the first mission. The team had consultations with the PEFA
Secretariat on selected aspects of the methodology to make sure that it was applied appropriately. The draft
report was shared with the MoF and other members of the Working Group for comments in early January
2014.
th th
The World Bank team’s second mission organized on January 29 – February 7 reviewed and revised the
draft PEFA Performance Report on the basis of consultations with the stakeholders. As part of the second
field visit, the MoF and the World Bank organized a series of workshops with the PEFA Working Group and
other relevant stakeholders identified by the authorities. The purpose of workshops was to a) discuss the
findings and conclusions of the draft PEFA Performance Report and b) solicit initial views on the priorities of
the future public financial management reform program.
The work on the report continued in March-April. Quality assurance review took place in May.
1.3 Methodology
The assessment team followed the methodology for PEFA assessments as described in the latest version of
the methodology documentation available at the PEFA secretariat web site (www.pefa.org), including Public
Financial Management Performance Measurement Framework, the Guidance Notes for Repeat
Assessments, Field guide for the assessors. The assessment team applied the Framework guidance in
Annexes 1 and 2 to the Public Financial Management Performance Measurement Framework as well as
subsequent clarifications and guidance on evidence issued by the PEFA Secretariat.
2
The assessment applied all 31 indicators of the PFM Performance Measurement Framework. The donor
indicators D1-D3 were applied for the first time (donor indicators were not assessed in 2009). The reference
years for the assessment are 2010-2012.
The sources of information for the assessment included relevant legislation, budget documentation and
reports, methodology and other documentation and data provided by the MOF and other institutions involved
in the assessment on the World Bank request, information collected by the assessment team during the
interviews, MoF self-assessment, 2009 PEFA report, and relevant reports produced by the World Bank and
IMF. In addition to the interviews with the public entities involved in public finance management, interviews
with non-state stakeholders (Chamber of Commerce, Business councils, etc.) were organized to corroborate
the evidence for selected indicators where this is required by the PEFA methodology (e.g., PI13, PI14, PI19,
etc.)
The report justifies the scoring and describes, in Annexes 3-6, the analytical work which has been carried out
and the sources of information used for each indicator. As required by the Guidance for Repeat
Assessments, the report takes into account the changes in PFM performance since 2009 and documents the
reasons for changes in indicator scores from the previous assessment.
Quality assurance process was organized to comply with the PEFA Check requirements available at the
PEFA Secretariat web site. The four parties agreed to be involved in the quality assurance process starting
from the Concept review stage were the World Bank, PEFA Secretariat, IMF and the MoF of Belarus. The
quality assurance review was intended to ensure that the PEFA methodology was applied appropriately and
advise on issues related to the use of the PEFA assessment in the PFM diagnostic. Methodology
consultations with the PEFA secretariat were undertaken prior to the second mission so that the Secretariat
recommendations could be taken into account in consultations with the authorities. Annex 7 provides more
details on the quality assurance process.
1.4 Scope
PEFA framework focuses primarily on the national level of a country’s PFM system. At the national level it
seeks to cover the entire PFM system, including cross-country issues, the revenue side and the entire budget
cycle from planning through execution to control, reporting and audit. A number of indicators are designed to
probe into how the national level interacts with sub-national governments and with public service providers at
the local level.
The scope of the 2013 assessment for Belarus was the same as in the 2009 assessment to achieve
comparability of results for the indicators where methodology did not undergo modifications since the first
assessment. The focus of the qualitative and institutional analysis was on the central government institutions.
For quantitative analysis, both the data for the central government and the general government was analyzed,
to assure comparability with the 2009 assessment. The authors of the 2009 assessment noted the centralized
nature of Belarus budget process as its specific feature and considered it essential to assess the indicators
related to credibility of the budget and overall budgetary planning for the consolidated budget. Since the
Social Protection Fund was separated from the republican budget after the 2009 assessment, the correct
comparator basis for such indicators in 2013 is the general government budget, as defined in Belarus, and
including the republican budget, the subnational budgets and the Social Protection Fund budget. Details on
the administrative and budget structures are provided in section 2.3.2.
3
2 Country Background Information
2.1 Description of country economic situation
2.1.1 Country context
The Republic of Belarus is a landlocked country with a total surface area of 20.76 million hectares and
population of 9.46 million, 75.8 percent of which lives in urban areas. It is strategically located between
the EU and Russia and borders with Latvia, Lithuania, Poland, Russian Federation, and Ukraine. It is an
upper middle income country with GNI per capita (Atlas method, 2012) of US$ 6,520, lower than more
advanced transition economies such as Poland (US$ 12,650) and Czech Republic (US$ 18,060). Poverty has
declined sharply over the past decade. Belarus poverty rate has declined to 4 percent (poverty line US$ 5 a
day by purchasing power parity, 2010), far below the ECA regional averages of 18.8 percent. In addition,
consumption growth of the bottom 40 percent of the population was above national average growth in
consumption and higher than in other ECA countries. Belarus has also one of the lowest GINI coefficients in
ECA (0.26 versus 0.34 ECA average) and performs well on social indicators, being ranked 50th out of 187
countries in the UN Human Development Index (2012).
After gaining independence in 1991, Belarus faced similar challenges as other former Soviet Union
countries, but pursued a gradual transition path characterized by more limited structural reforms and
pervasive state intervention. The country has highly centralized decision-making and relatively strong
administrative capacity. Despite some initial structural reforms, the economy continues to be characterized by
a large state presence. State owned enterprises, which are supported by an extensive system of state
support, still accounts for over half of output and two thirds of employment. Equally, the financial sector is
dominated by state owned banks which account for over 70 percent of bank assets and which channel a
predominant share of financing to less productive parts of the economy, including through pervasive state
directed lending programs. Despite some initial liberalization efforts, the government also continues to
regulate prices for socially important goods and services, most importantly foodstuff and communication
services. While the gradual reform approach has helped Belarus avoid the social costs of economic
restructuring, it has resulted in serious vulnerabilities, including loss of competitiveness, stagnant productivity
growth, and dependence on underpriced energy imports from Russia.
After a decade of strong economic growth, Belarus has faced persistent macro-economic turmoil
since 2009. During most of the 2000s, a combination of favorable external factors and loose macro-economic
policies boosted economic growth, with annual growth rates averaging 9 percent from 2002-2008. However,
strong growth was associated with increasing macro-economic vulnerabilities and growing external
imbalances, which resulted in two crises in 2009 and 2011. The first was a direct outcome of the global
financial meltdown of 2008/09, which was transmitted to Belarus through trade and financial channels. The
second was triggered by loose monetary, fiscal and income policies in (pre-election) 2010, which generated a
short-term economic recovery but resulted in a widened current account deficit (15 percent of GDP in 2010)
and heightened pressure on foreign exchange reserves. This eventually led to the loss of control of the
exchange rate and sharply accelerating inflation. The Belarusian Ruble (BYR) lost close to 70 percent of its
value vis-à-vis the US dollar and inflation soared to 109 percent in December 2011.
4
Table 2.1. Selected economic indicators
2010 2011 2012
Population
Total population, millions 9.500 9.481 9.465
Annual population growth, % -0.15 -0.20 -0.17
National account and prices (annual % change)
Real GDP growth 7.7 5.5 1.7
Real GDP per capita growth 7.9 5.8 1.7
CPI (annual average), % 7.8 53.2 59.2
External sector (% of GDP)
Current account balance (incl. grants) -15.0 -8.6 -2.7
Trade balance of goods and services -13.6 -2.1 4.8
Capital Account -1.4 -6.5 -7.4
Financial Account -13.8 -6.8 -1.5
Foreign Exchange Reserves (in months of 1.8 1.6 1.5
imports of goods)
External public debt (incl. IMF) 17.6 22.8 22.1
General Government Balance -1.8 2.8 0.7
Source: Belstat, National Bank, Ministry of Finance.
Tight monetary and fiscal policies and improved external conditions succeeded in stabilizing the
economy during 2012. Slowing domestic demand expansion decelerated economic growth to 1.5 percent
but helped to contain inflation, which was subdued to 21.8 percent (eop) in 2012. Devaluation together with
significant terms of trade gains related to a new favorable energy trade agreement eased pressure on the
current account deficit, which narrowed further from 8.5 percent of GDP at the end of 2011 to 2.8 percent of
GDP in 2012.
External imbalances reemerged in 2013, heightening risks associated with Belarus’ already
precarious external position. The current account deficit widened as a result of a sharp contraction of net
exports. After exceptionally strong export growth – especially during the first half of 2012 – foreign trade has
reverted back to more typical patterns during 2013. This alongside interest payments and net payments on
custom duties on refined oil products within the Customs Union widened the current account deficit to 10.2
percent of annualized GDP in 2013. In addition, the country faces significant external refinancing needs.
Belarus has largely relied on external debt to finance its current account deficit with limited foreign direct
investments. Gross external debt to GDP ratio increased 2.5 times over 2009 –11, exceeding 62 percent of
GDP, while public debt more than doubled in relation to GDP within the same period to 30.7 percent at the
end of 2012. The maturity structure of private corporate and banking sector external debt is heavily weighted
on the short term (around 45 percent). Belarus will also need to refinance a significant part of its public
external debt in the forthcoming two years, including repayments of IMF loans and Eurobonds. This will add
significantly to the country’s gross financing needs and put additional strain on the balance of payments,
reinforcing the continued need for tight macroeconomic policies and containment of current account deficit,
especially in the context of persistently low foreign exchange reserves.
5
2.1.2 Overall government reform programme
Belarus has emerged from the macroeconomic crises of 2009 and 2011, but faces both formidable
challenges and unique opportunities to build the foundation for sustained and shared prosperity. The
macroeconomic crises of the past years have reinforced the need for structural reforms to regain
competitiveness, to diversify and modernize the country’s economic structure, and to create sustainab le and
productive jobs. There is a growing understanding within the Government that for Belarus to achieve further
growth and social development, it needs to create an environment that allows its enterprises to dynamically
adapt to the demands of an increasingly competitive global economy. Certain reform measures in that
direction are envisaged under various strategic documents, however, a comprehensive reform program is so
far missing.
2.1.3 Rationale for PFM reforms
The macro-economic outlook for the medium term dictates the need to supplement strict fiscal discipline with
stronger emphasis on allocative and operational efficiency of public spending during the forthcoming years.
The pattern of the recent adjustment constrains future fiscal choices. Further cuts in discretionary spending,
especially in public investment and non-wage recurrent expenditures threaten to undermine the productivity of
public spending, lead to deterioration of public infrastructure and undermine growth prospects. It is therefore
critically important to improve efficiency of public spending and develop instruments for strategic reallocation
of resources. The Government realizes that this requires changes in the way it manages public finances and
launched the work on a public finance management (PFM) reform program.
2.2 Description of budgetary outcomes
2.2.1 Fiscal performance
Despite recurrent bouts of macroeconomic instability, Belarus avoided a substantial deterioration of
the fiscal position over the period of 2010-12. After a moderate general government deficit (including the
Social Protection Fund, SPF) 1.8 percent of GDP in 2010, the government balance moved to a surplus during
the subsequent two years. In 2011, the crisis induced a sharp fiscal consolidation, and the Government
curtailed expenditures, while revenue growth was fuelled by inflation, achieving a 2.8 percent general
government budget surplus, followed by a smaller surplus of 0.7 percent of GDP in 2012.
However, modest headline deficits mask significant fiscal risks associated with quasi-fiscal activity in
the banking system. Although the budget has remained balanced, the Government incurred substantial
fiscal costs for the recapitalization of major state-owned banks. Banks were recapitalized through the
issuance of sovereign bonds, and the related cost was recorded as a financing operation in the fiscal
accounts (below the line). Between 2005 and 2011, the state budget injected on average 1 percent of GDP
annually to recapitalize major state-owned banks, effectively compensating them for the losses incurred in
directed lending programs. In 2011, bank recapitalization expenditures peaked at BYR 14.6 trillion, or 5.3
percent of GDP, as bank capital adequacy was threatened by a significant increase in foreign liabilities,
induced by the devaluation. Given the state’s interventionist role in the financial sector, contingent liabilities
and fiscal risks associated with the large stock of quasi-fiscal debt under government-directed lending in the
banking sector continue to threaten consolidation efforts.
6
Public debt has more than doubled from 12.9 percent in 2008 to 31.4 percent of GDP in 2012. Belarus
contracted substantial external debt in both 2009 and 2010 to support the balance of payment in the context
of the global financial crisis, mostly through loans from multilateral lenders and through the issuance of Euro
bonds in 2009/2010. Exchange rate devaluation in 2011 further inflated the stock of Belarus’ lar gely external
and FX-denominated domestic liabilities, while below the line recapitalization expenditures to bolster state-
owned banks (equal to about 5 percent of GDP in 2011) were financed through the issuance of domestic
debt. As a result, the public debt to GDP (including publicly guaranteed debt) reached 31.5% of GDP in 2012
(up from 12.9 % of GDP in 2008). In addition, local government direct and guaranteed debt (which according
to the national definition is not included in public debt and publicly guaranteed debt) continued to decrease.
While initially on the rise – from 2% of GDP in 2004 to 13.8% of GDP in 2010, it started to fall in 2011 to 10%
of GDP in 2011 and then further to 6% of GDP in 2012 (again including both direct debt and publicly
guaranteed debt), mainly due to inflation erosion. While the central government has no formal obligation to
bail out local governments, the high degree of fiscal dependency and the absence of a framework for dealing
with subnational default create implicit liabilities and fiscal risks. While the debt to GDP ratio is relatively low
for a middle income country, the redemption profile is heavily concentrated in the short term, with about half
of public debt maturing in the next 3 years, creating significant refinancing risks.
Table 2.2. General Government budget (in percentage of GDP)
2010 2011 2012
Total Revenues 41.5 38.7 40.5
Consolidated Budget Revenue 29.6 28.8 29.8
PIT 3.3 3.1 3.6
CIT 3.4 2.9 3.7
VAT 9.9 8.9 8.6
Excise 2.6 1.9 2.1
Taxes on foreign trade 3.5 5.1 4.8
SPF revenues 12.0 10.0 10.7
Total Expenditure 43.3 35.9 39.8
Non-interest expenditure 31.6 25.5 27.8
Current Expenditure 23.3 20.4 21.4
Capital Expenditure 8.3 5.1 6.4
Interest expenditure 0.7 1.1 1.4
SPF expenditure 11.2 9.3 10.6
Net lending 0.0 0.1 0.0
Aggregate balance -1.8 2.8 0.7
Primary Balance -1.1 3.9 2.1
Net Financing 1.8 -2.8 -0.7
Domestic -1.0 -5.8 0.0
External 2.8 3.1 -0.7
Source: Ministry of Finance.
Note: The definition of the General Government budget used throughout the report reflects its current application in Belarus
and includes republican budget, subnational budgets and the budget of Social Protection Fund. Consolidated budget
includes republican budget and subnational budgets.
7
Reflecting the state-driven economic model, Belarus has traditionally redistributed a significant share
of GDP through the budget and the Social Protection Fund. Especially prior to the 2008 crisis, buoyant
revenue growth fuelled an expansion of consolidated government expenditures from 45.9 percent of GDP in
2004 to 49 percent of GDP in 2008, making Belarus the country with the largest expenditure-to-GDP ratio in
ECA. Since 2008 - and induced by the two macro-economic crises - Belarus achieved one of the largest
contractions in the size of government in the region. The overall expenditure envelope has contracted by
almost 10 percentage points of GDP over 2008-2012, to about 40 percent of GDP at the end of 2012. In
addition, there are large quasi-fiscal activities, including in the utility (below cost recovery utility tariffs for most
residential services) and the banking sector (directed lending programs) as well as various tax expenditures
related to tax exemptions and privileges extended to selected enterprises.
Belarus’ tax system is based on consumption, income taxes and taxes on foreign trade . Consumption
taxes (VAT and Excises) make up the lion share of government revenue accounting for 64.9 percent of
general government revenues in 2012 followed by income taxes (CIT, PIT and payroll taxes) accounting for
4
23.3 percent, and taxes on foreign trade which account for 11.8 percent. Between 2008 and 2012 the overall
tax burden of the general government declined from over 50.6 percent of GDP in 2008 to 40.7 percent of
GDP in 2012. Initially, this decline was driven by a cyclical downturn in revenue performance, after the
economic crisis of 2009, but tax policy changes have contributed to make these reductions more permanent.
Major distortive and inefficient taxes —such as turnover taxes, local sales tax on goods and services (in the
presence of the national VAT) and the local development fee of 3 percent on net corporate profit—were
abolished during 2010/11. In 2012, the main change in tax policy was a reduction in the profit tax rate to 18%,
from 24% previously. The resultant reductions are planned be partially offset by rate increases for several
excise duties, including fuel, alcohol and tobacco. Despite the reduction in the tax burden, Belarus continues
to have the highest tax-to-GDP ratios in the region.
2.2.2 Allocation of resources
As a result of a significant expenditure contraction, the functional composition of the budget has
changed. General government expenditure fell from 49.2 percent of GDP in 2008 to 40 percent in 2012. This
reduction was achieved through cuts in the capital budget, which resulted in lower spending on economic
affairs, which includes many capital intensive sectors such as transport and energy. Social sectors, including
social protection, education and health, on the other hand, were largely protected from spending cuts and
continue to absorb a significant share of public expenditures.
In terms of economic classification, the share of capital expenditures in total general government
spending took the brunt of the adjustment. As a result of the crisis induced fiscal consolidation, capital
expenditures have declined significantly both as a share of total expenditures and as a share of GDP in
recent years. Interest payments increased substantially as a result of the growing debt burden, more than
doubling as a percentage of total budget expenditures from 1.6 percent of total expenditures in 2010 to 3.6
percent in 2012. It is noteworthy that Belarus continues to spend 12.6 percent of total expenditure on various
subsidies, including in the agriculture, utility and industrial sectors.
4
At a rate of 20 percent, the current VAT rate is at the similar level as in most peers. The profit tax rate, which used to be
among the highest in the region, has been reduced to 18% in 2012 (from 24%). A flat personal income tax rate of 12
percent (or 15 percent for self-employed) is applied to wage income, profits of self-employed and capital income accruing to
natural persons. The statutory gross rate for payroll contribution to the social protection fund is 35 percent, split at 1 percent
and 34 percent for employees and employers, respectively.
8
Table 2.3. Actual Budgetary Expenditures by Sector (in percentage of total GG budget expenditures)
2010 2011 2012
General public services 14.7 14.8 16.4
National Defence 2.2 2.5 2.4
Public Order and Safety 4.1 4.0 3.9
Economic Affairs 17.1 14.5 14.2
Environmental Protection 0.7 0.5 0.4
Housing and Community 5.5 5.8 5.7
Health 9.1 9.7 9.7
Physical Culture, Sports, Culture, Media 2.4 2.4 2.4
Education 11.7 12.8 12.3
Social Protection 32.6 32.7 32.6
Source: Ministry of Finance
Despite these recent changes, the composition of spending continues to reflect Belarus’ state driven
economic model which is characterized by broad redistribution, a substantial role of the Government in
capital formation and still high levels of subsidies to both consumers and producers. Spending is dominated
by social assistance payments and benefits which account for estimated 12.1 percent of GDP in 2013,
followed by wages and salaries which are expected to account for 9.9 percent of GDP in 2013. Despite some
cuts over the past years, subsidies remain high at 4.3 percent of GDP, while capital spending is estimated to
remain around 5 percent of GDP in 2013. In terms of functional composition, the allocation for economic
affairs, which took the brunt of the spending contraction since 2008, is expected to decline further to
estimated 5.2 percent of GDP in 2012. Education and health sectors have remained largely protected from
spending cuts in the past years and are projected to remain at 4.5 percent and 5.9 percent of GDP
respectively.
Table 2.4. Actual Budgetary Expenditures by Economic Classification (in percentage of total GG budget
expenditures excluding net lending)
2010 2011 2012
Current Expenditure 55.4 59.8 57.2
Wages & Salaries 20.5 22.1 21.0
Other Purchases of Goods & Services 14.0 14.4 13.5
Interest Payments 1.6 3.1 3.6
Subsidies 11.0 12.8 12.6
Transfers 8.2 7.4 6.5
Social Protection Fund 25.6 25.6 26.5
Capital Expenditure 19.1 14.2 16.2
Net lending -0.1 0.4 0.1
Source: Ministry of Finance.
2.3 Legal and institutional framework for PFM
2.3.1 The legal framework for PFM
The legislative foundation for public financial management in Belarus has its origins in the Constitution
(1994). The main PFM laws are the Budget Code (2008) and the Tax Code (General Part – 2002, Specific
9
Part – 2009). The table below presents an overview of the main laws and regulations that guide the PFM
system in Belarus. The main guidance of the legal framework in respect to specific areas is discussed in more
detail in the narrative of the respective Performance Indicators.
Table 2.5. Overview of the main laws and regulations governing PFM in Belarus
Area Description
General - The Constitution (1994) sets the basis for PFM.
Budget - The Budget Code (2008) defines in detail the roles, functions and responsibilities in
preparation and management of government revenue and expenditure. It also defines general control and
execution reporting arrangements.
- Edict №299 of the President on Preparing, Executing and Reporting on State Investment
Program (2006).
Tax - General Part of the Tax Code (2002) governs tax administration.
administration - Specific Part of the Tax Code (2009) includes specific guidance on majority of taxes and fees.
- Customs Code (2007), Customs Code of the Custom Union (2010).
Public sector - Law on Enterprises (1992).
entities - Law on Accounting and Reporting (1994).
- Law on Audit (1994).
Expenditure - Budget Code (2008).
control and - Law on Electronic Document and Electronic Digital Signature (2009).
internal audit - Edict №325 of the President on Departmental Control (2010).
- Law on Public Procurement (2012).
- Edict №618 of the President on Public Procurement (2008).
- Edict №58 of the President on Contract Bidding in Construction (2005)
External Audit - The Constitution (1994)
- Law on State Control Committee (2010)
- Edict №510 of the President On improvement of the control (supervision) in the Republic of
Belarus (2009).
Legislative - The Constitution (1994).
oversight - Standing Order of the House of Representatives (2008).
- Standing Order of the Council of Republic (2008).
Decentralisation - The Law on Local Government and Self-Government (2010)
Banking and - Banking Code (2000).
financial laws - Edict №252 of the President on Approving Regulation on External State Loans and State
Loans, Guaranteed by the Government (2006).
- Edict №359 on Granting Guarantees of the Government for Loans Provided by Banks (2008).
Other - Edict №136 on Approving the Program of Socio-Economic Development for 2011-2015
(2011).
- Edict №575 on Approving the Concept of State Safety of Belarus (2010).
- Law on Mass Media (2008).
- Edict №60 of the President On Measures to Improve the Usage of the National Segment of
Internet (2010).
Source: World Bank staff based on the legislation of Belarus.
Some important revisions of the legal framework took place after the 2009 assessment. The Budget Code
came into force on January 1, 2009, incorporating various pieces of legislation on PFM and creating a
comprehensive framework for the budget process as a whole. However, not all the provisions of the Budget
10
Code are in force, because selected articles of the Code have been continuously suspended since its
enactment through the annual budget laws.
In 2010 the Specific Part of the Tax Code came into force consolidating more than one hundred legal acts on
taxation and covering around 30 taxes and duties established at republican as well as subnational level.
Starting from July 6, the 2010 Customs Code of the Customs Union came into force introducing special
provisions for customs regulation in the Customs Union of the Eurasian Economic Community in relation to
5
the movement of goods through the customs border of the Customs Union .
Edict of the President №510 on improving control activity came into force in 2010. Aiming for improved
transparency and coordination of the numerous inspections being conducted by different bodies in Belarus, it
provided a uniform approach for planning and conducting inspections, as well as obliging control agencies to
submit their inspection plans to SCC for consolidation and publication on the internet.
The Law of the Republic of Belarus On Public Procurement of Goods (Works, Services) was adopted on July
13, 2012 and came into force from January 1, 2013. It brought together all the provisions of such regulatory
legal acts on public procurement applicable until the Law came into force, as Edicts of the President of the
Republic of Belarus № 618 and № 58 (in the part of selecting contractors for construction) and Resolution of
the Council of Ministers of the Republic of Belarus № 1987. The Law applies to all procurement of goods
(works, services) utilizing government funds.
2.3.2 The institutional framework for PFM
Belarus is a unitary presidential republic. As the head of state, the President of Belarus is vested with
significant powers, including those directly related to public finance management. In particular, the President
endorses parliamentary approval of the law on republican budget, authorizes reallocation of appropriations
set out in the annual republican budget for the current fiscal year, and approves the State Investment
Program. The President also has the authority to issue edicts of a legal nature (edict № 510 on control activity
mentioned above is an example of the Presidential edict of direct relevance for PFM framework).
The President has under his subordination a strong control apparatus, Belarus State Control Committee
(SCC), which also performs many of the functions assigned to supreme audit bodies in other countries. As
part of its broad control authority, this body exercises control over the use of budget funds and state property,
and also verifies annual budget execution reports.
The Constitution vests the legislative power in Parliament – National Assembly, which consists of the lower
chamber, House of Representatives (110 seats, with all members elected by universal popular vote to serve
four-year terms) and the upper house, the Council of the Republic (with 64 seats, of which, 56 members are
elected by regional councils and 8 members are appointed by the president, all for four year terms).
The Constitution vests the judicial power in the judicature which is independent of the executive and the
legislature. The organization of the judicature system follows the territorial division of the country. In the
assessment period the court system of the Republic of Belarus was divided into economic courts (which
adjudicated business activity disputes between economic entities) and general courts of law, which
adjudicated disputes with involvement of physical persons. Starting from 2014, the court system reform
merged economic courts with general courts of law.
5
Consists of the customs territories of Republic of Belarus, Republic of Kazakhstan and Russian Federation.
11
Table 2.6. Overview of the roles and responsibilities of the main institutions responsible for PFM
Institution Main role and responsibility in PFM
President President signs laws, including on approval of republican budget for the next FY; authorizes
reallocation of appropriations set out in the annual budget for the current FY; approves State
Investment Program for the next FY.
Parliament Approves annual laws on republican budget and laws on approving budget execution for the
reporting period.
State Control Exercises state control over effective and efficient use of budgetary funds and state
Committee property; exercises state control over observance of the acts of the President of the
Republic of Belarus, the Parliament, the Government; audits annual budget execution
reports, submitting reports to the President and informing Government and Parliament on
the findings.
Ministry of Formulation and implementation of fiscal policy; drafting annual laws on republican budget
Finance and laws on approving budget execution for the reporting period; preparing consolidated
budget estimates; republican budget execution; domestic and external state debt
management; accounting, reporting and corporate audit methodology; insurance and
securities regulations; etc.
Ministry of Administers and collects most of the taxes.
Taxes and
Levies
State Customs Administers and collects custom duties and fees.
Committee
Ministry of Prepares macroeconomic forecasts to be used as a basis for next FY budget estimates;
Economy prepares draft State Investment Program breakdown; develops public procurement
legislation6.
Ministry of Starting with July 1, 2013 the function of developing and enforcing state policy related to
Trade public procurement was delegated to the Ministry of Trade.
Ministry of Functions of social and pension insurance are performed by the state Social Protection
Labor and Fund under the Ministry of Labor and Social Protection.
Social
Protection
Source: World Bank staff based on the legislation of Belarus
The executive power is exercised by the government. The central (republican) government is embodied in the
Council of Ministers. The key ministries and agencies involved in management of public finances are the
Ministry of Finance, Ministry of Taxies and Levies, State Customs Committee, Ministry of Economy, Ministry
of Trade, Ministry of Labor and Social Protection. The respective roles of the mentioned ministries are
summarized in Table 2.6.
The Ministry of Finance is the lead government agency responsible for formulation and oversight over
implementation of PFM policies and procedures across the public sector. Within the MoF, Budget Policy
Department is responsible for the preparation of the draft annual laws on approving republican budget,
management of appropriations, preparing draft legal acts on amending the republican budget in the course of
the FY, and methodology of the intergovernmental fiscal relations. The Main State Treasury Department
executes the budget, consolidates MDAs financial reports and drafts annual laws approving the execution of
the republican budget. The Public Debt Department is in charge of public debt management. The Department
6
Starting with July 1, 2013 this function has been transferred to the Ministry of Trade.
12
of Tax Policy and Budget Revenues is responsible for preparing revenue estimates as well as drafting tax
legislation. Organizational structure of the Ministry of Finance is presented in Annex 2.
7
The structure of sub-national governments includes three levels: regions (six oblasts and the city of Minsk) ,
8 9
rayons (also called the “base” tier) , and sub-rayons (also called the “primary” tier) . The Constitution entitles
each level of government to exercise a considerable measure of control over the affairs of the lower level
governments subordinate to them.
Sub-national governments (SNGs) are an integral part of the national political and administrative structure.
According to the Law on Local Government and Self-Government, each level of government comprises two
parallel governance structures: 1) Executive Committees (the local government), which are centrally
appointed and directly accountable to higher levels of government; and 2) Councils of Deputies (local self-
government), which are elected locally. Executive Committees are responsible for managing sub-national
service functions, including oversight of service facilities (schools and hospitals) and preparation and
execution of regional budgets. Elected councils in turn represent the views and preferences of local residents,
approve regional budgets and prepare and adopt local bylaws.
Articles 44-47 of the Budget Code provide specific assignments of expenditure responsibilities among the
levels of government. These assignments are predominantly prescribed in terms of financial responsibility.
For many functional categories, the assignments overlap due to delineation of responsibility depending on the
ownership of assets. Thus, the Budget Code states that local governments are responsible for maintaining
institutions of education, healthcare, social services and others that are owned by or put under the authority of
SNGs.
The structure of Belarus budget reflects the administrative structure as shown in Table 2.7 below. It
includes republican (also called “central”) budget and subnational budgets. Since 2010, the SPF budget was
separated from the republican budget and is now approved by a separate law.
The institutional arrangements in Belarus for management of budget resources could be described as
highly centralized, with some operational controls devolved to MDAs and subnational governments. A
strong overarching regulatory framework is set centrally, and budget planning is also predominantly top down
including in relation to investments (although MDAs and subnational governments are consulted and
contribute to budget deliberations). PFM procedures used at the central and local level are largely uniform
and determined by the central authorities. MDAs do have some flexibility to determine detailed spending
plans (ROSPICE), however, once set, these become hard budget execution controls in the centralized
treasury system, which can only be amended with the approval of the Ministry of Finance (or the Financial
Departments of the Executive Committee in the case of subnational governments). Central controls are
supplemented by a range of centralized inspection functions including the State Control Committee and
Department of Control and Inspection (KRU) in the MoF.
In addition to budgetary resources, many government sector entities also have at their disposal
10
extrabudgetary resources, which mainly represent proceeds from revenue generating activities. These
7
The oblasts, are named after the cities that serve as their administrative centers (Brest, Gomyel, Grodna, Magilyow, Minsk
oblast, and Vitsebsk.) The capital city of Minsk also has the status of oblast.
8
This tier includes rayons (118) and also cities (12) subordinated to the oblast government (as opposed to smaller cities in
the fourth tier that are subordinated to the rayon government).
9
This tier includes rural districts (1,275), rural settlements (55), and towns subordinate to rayons (14).
10
Sources of extrabudgetary resources are revenue from budgetary units’ engaging in a principal activity that is not funded
out of the budget and in other types of activities pursuant to the budgetary units’ charters. Resources obtained by
budgetary units from revenue-producing activities are used, after taxes, chiefly for supporting those entities’ operations and
the development of their facilities and equipment.
13
resources are subject to a more devolved control environment which has resulted in separate regulatory,
budget preparation and budget execution processes in MDAs, including parallel payment systems. Own
source revenues are not channeled through the treasury system but are subject to the same level of
inspection and review as budget resources.
Table 2.7 Belarus Administrative Structure
Expenditures
% of total
(BYR
Institutions Number of Entities expenditure,
trillions),
2012
2012
Central Presidential Administration, Parliament – National Assembly 67.2 32
Government (House of Representatives and Council of Republic), Council
of Ministers, Constitutional Court, Supreme Court, Supreme
Commercial Court, Office of Public Prosecutor, State
Secretariat of the Safety Council, State Control Committee
24 ministries (architecture and construction, internal affairs,
housing and utilities, health, foreign affairs, information,
culture, forestry, defence, education, tax collection, emergency
situations, natural resources and environmental protection,
industry, communication and information, agriculture and food,
sports and tourism, trade, transport and communications, labor
and social protection, finance, economy, energy, justice)
10 State Committees (Security, Military-Industrial, Property,
Science and Technology, Standardization, Border, Customs,
Statistics, Forensic Examinations, Commonwealth of
Independent States Executive Committee)
other state bodies and organizations, financed from republican
budget
Autonomous 1 (Social Protection Fund of the Ministry of Labor and Social 55.7 26
11
Government Protection )
Agencies
Subnational 7 regional budgets (6 oblasts and Minsk-city) 88.0 42
Governments
130 base level budgets (118 rayons и 12 towns of oblasts'
subordination)
1344 primary budgets (1275 rural districts, 55 rural
settlements и 14 towns of rayon's subordination)
Total 210.9 100
Source: Ministry of Finance.
11
State extra-budgetary fund which is annually approved by a separate law and executed through the Treasury system.
14
3 Assessment of PFM Systems, processes and
institutions
3.1 Budget credibility
The first three indicators assess the credibility of the annual budget, by comparing the approved
budget to actual out-turns. A credible budget based on realistic revenue forecasts with firm resource
allocations is the lynchpin of sound budgetary management. While some in year adjustments may be
necessary and desirable to reflect changes in the fiscal environment that were not unforeseen at budget
approval, excessive changes not only indicate a lack a budget credibility and discipline that will undermine
predictability, efficiency and effectiveness of resource management by budget users. The three indictors
assess variance for aggregate expenditures (PI1) and revenue (PI3) as well as changes in the functional
composition of expenditures (PI2).
3.1.1 PI-1 Aggregate expenditure out-turn compared to original approved budget
Table 3.1. Aggregate Expenditure Out-turn compared to Original Approved Budget, bn BYR
General Government Budget Consolidated Budget Republican Budget
Year
Planned Actual Deviation, % Planned Actual Deviation, % Planned Actual Deviation, %
2010 71,621 70,227 -1.9 53,913 51,981 -3.6 36,184 33,487 -7.5
2011 78,963 103,624 31.2 58,615 76,285 30.1 37,199 49,542 33.2
2012 181,016 203,790 12.6 134,078 147,907 10.3 85,664 90,144 5.2
Source: Ministry of Finance.
Note: General Government budget is used as the basis for the scoring of this indicator, excluding debt service payments
and donor funded project expenditures in line with the PEFA methodology.
Macroeconomic instability, especially during 2011, induced significant budget deviations. Table 3.1
shows aggregate planned and actual expenditures for the years 2010-12. Actual expenditure exceeded
planned expenditure in two out of the three years, with the deviation of aggregate general government
expenditures exceeding 30 percent in 2011. During the examined period Belarus experienced exceptional
macroeconomic volatility. Loose monetary and fiscal policies in (pre-election) 2010 boosted short term
growth, but resulted in loss of control of the exchange rate and sharply accelerating inflation. As a result the
Belarusian Ruble (BYR) lost close to 70 percent of its value vis-à-vis the USD and inflation soared to 109
percent in December 2011. During 2012, the economy stabilized but growth slowed down and
macroeconomic risks remain significant. The high degree of volatility made macroeconomic forecasting
particularly challenging. As can be seen from Table 3.2, key macroeconomic assumptions, underlying the
budgets during all three years deviated significantly from the actual numbers, undermining the reliability of
both revenue and expenditure forecasts.
15
Table 3.2. Core macroeconomic assumptions underlying the budget, change in percent
2010 2011 2012
Budget Budget Budget
Assumption Actual Assumption Actual Assumption Actual
GDP Growth 11 7.7 10 5.5 5-5.5 1.5
CPI (eop) 8 9.9 7 108.7 19-22 21.8
Source: Ministry of Finance.
Score: C
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-1 Aggregate expenditure out-turn C C Aggregate expenditure out-turn exceeded the
compared to original approved approved budget by more than 15% in one out of
budget three years
Comparability of score with the previous assessment and performance change:
Both score and applied methodology are consistent with the 2009 assessment, including coverage of General
Government for the scoring of the indicator.
3.1.2 PI-2 Composition of expenditure out-turn compared to original approved budget
(i) Variance in expenditure composition excluding contingency items
The functional composition of actual expenditures largely matched the original budget allocations,
with some exceptions. Table 3.3. shows the budget variation for 2010 to 2012. While the variance in
expenditure composition was less than 10 and 5 percent in 2011 and 2012, respectively, it exceeded 10
percent in 2010. The functional composition of in year budget adjustments varied from year to year, although
general administration and economic affairs accounted for the lion share of adjustments in all three years. In
2010 most functions experienced budget increases, financed by cuts in economic affairs (driven by
curtailment of government investment in capital intensive sectors, such as transport). In 2011, cuts across
most functions financed increases in general administration spending. In 2012, cuts in most functions allowed
for increases in spending in general administration and housing and communal services (tables with detailed
analysis of functional variance are included in Annex 3).
Table 3.3. Functional Expenditure Variance
Year Functional Expenditure Variance
2010 13.1%
2011 6.7%
2012 4.5%
Source: Ministry of Finance.
Note: General Government is used as the basis for the scoring of this indicator.
Score: B
16
(ii) Average amount of expenditure actually charged to the contingency vote
Contingency reserve funds typically account for less than 3 percent of overall expenditures and are
subject to statutory limits, established in the Budget Code. The Budget Code of Belarus regulates
establishment and allocation of various contingency funds which are budgeted under General Public Services
head in republican and local budgets. In the republican budget there are two kinds of reserve funds: (i)
Presidential reserve fund, (ii) reserve fund of the Government which includes financial assistance to legal
entities and individual entrepreneurs and reserve fund to mitigate consequences after natural disasters.
According to the Budget Code (Art. 42/43), the total amount of reserve funds in the republican budget shall
not exceed 2 percent of the republican budget revenues excluding the state earmarked budget funds and
grants. Local authorities are allowed to establish their own reserve funds in local budgets in amount of not
more than 1 percent of local revenues excluding the state earmarked budget funds and grants from other
budgets both when approving the budget and in the course of its execution. Allocations of resources from the
reserve funds are made by decisions of the President, Government and local authorities respectively. Taken
together allocations to these various reserve funds did not exceed 3 percent of total expenditure in any of the
three years.
Table 3.4. Reserve Fund Allocations
2010 2011 2012
Actual Reserve Fund Expenditure (bn BYR) 1,056.9 360.6 1,649.6
Actual Reserve Fund Expenditure
(% to approved budget) 1.56 0.46 0.93
Source: Ministry of Finance.
Score: A
PI Dimension Score Score Justification for 2012 score
2009 2013
PI-2 Composition of expenditure A B+ Scoring method M1
out-turn compared to original
approved budget
(i) Variance in expenditure n/a B Variance in expenditure composition exceeded 10
composition excluding percent in one out of three years
contingency items
(ii) Average amount of n/a A Actual expenditure charged to the contingency vote
expenditure actually charged to was on average less than 1 percent of the approved
the contingency vote budget
Comparability of scores and performance change:
The Methodology applied for the assessment of this indicator takes into account the revised PEFA methodology.
Namely, the allocation for reserve funds is excluded from the calculation of functional expenditure variance and separate
dimension scores are provided in line with the revised methodology. In contrast, the previous assessment applied the old
methodology where the reserve funds are included in the calculation of functional expenditure variance and no separate
dimension scores are produced.
The change in the rating from A (2009) to B+ (2013) is not caused by the change in methodology but the result of a
change in performance, namely, higher degree of functional expenditure variance, especially in 2010. The 2009 score
remains A even if the revised methodology is applied to the data of 2005-2007 (the period covered in the 2009
assessment) which results in A scores on both dimensions.
17
3.1.3 PI-3 Aggregate revenue out-turn compared to original approved budget
Aggregate revenue, especially during the crisis year 2011, deviated substantially from the original
revenue forecast. Table 3.5. shows actual revenues in comparison to the initial budget estimates. Actual
revenue exceeded the revenue projection in the approved budget in two out of the three years. In 2010, the
economic slow-down dampened revenue collection, in particular for profit taxes, but also customs duties
which declined as a result of falling exports. During 2011 and 2012 high inflation boosted revenue collection
far above the originally projected revenue estimate. Especially, during 2011 annual inflation (CPI) increased
to 109 percent (compared to 7 percent assumption) which boosted nominal collections across all tax types.
Table 3.5. Planned and actual budget revenues, bn BYR
General Government Budget Consolidated Budget Republican Budget
Year %, Actual/ %, Actual/ %, Actual/
Planned Actual Planned Actual Planned Actual
Planned Planned Planned
2010 71,101 68,300 96.1 53,394 48,754 91.3 35,522 30,270 85.2
2011 76,045 115,020 151.3 55,521 85,608 154.2 33,611 54,190 161.2
2012 191,618 214,609 112.0 144,374 157,614 109.4 92,772 95,182 102.6
Source: Ministry of Finance, PEFA self-assessment.
Table 3.6. Planned and actual General Government revenue composition, bn BYR
Year 2010 2011 2012
%,
%, Actual/ %, Actual/
Indicator Planned Actual Actual/ Planned Actual Planned Actual
Planned Planned
Planned
Consolidated
budget 53,393.5 48,754.2 91.3 55,520.9 85,608.4 154.2 144,374.1 157,956.0 109.4
revenues
Profit tax 5,974.4 5,580.4 93.4 6,547.0 8,688.9 132.7 14,214.7 19,534.6 137.4
VAT 17,022.9 16,226.4 71.8 19,137.8 26,498.5 138.5 47,133.1 45,456.9 96.4
Excise taxes 4,562.6 4,350.2 95.3 1,478.7 5,599.5 378.7 11,337.2 11,190.7 98.7
Taxes on
foreign
10,114.2 5,776.2 57.1 7,263.9 15,146.9 208.5 25,377.8 25,474.9 100.4
economic
activity
Social
Protection 17,983.0 19,655.7 109.3 20,691.4 29,573.5 142.9 47,550.9 56,995.3 119.9
Fund
Total 71,101.3 68,300.2 96.1 76,044.5 115,020.0 151.3 191,617.9 214,551.8 112.0
Source: Ministry of Finance.
18
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-3 Actual domestic revenue A B Scoring method M1.
compared to originally
Actual domestic revenue was between 94% and
approved budget
112% of projected domestic revenue in two of the
last three years
Comparability of scores and performance change:
The 2013 assessment applies the revised methodology for this indicator. Specifically, the methodology now takes
into account both under- and over projection of revenues whereas the previous methodology applied in the 2009
assessment asymmetrically took into account only over-projection of revenues.
The change in the performance rating from A (2009) to B (2013) is caused by the revised methodology. If the revised
methodology is applied to the data for 2005-2007 (the period covered in the 2009 assessment), the score would be
downgraded to C, with actual revenue collections exceeding 116 percent of originally approved budget in one fiscal year
(2007).
If the same, revised methodology is applied consistently, the score indicates a performance improvement from C (2009)
to (B) 2013.
3.1.4 PI-4 Stock and monitoring of expenditure payment arrears
This indicator assesses whether expenditure arrears are prevalent, and the extent to which any
systemic arrears problem is being brought under control and addressed. The assessment of the first
dimension is as of the end of last FY 2012. The assessment of the second dimension is at the end of the last
two FYs.
(i) Stock of expenditure payment arrears
The current stock of recorded expenditure arrears is low. Table 3.7 shows the quarterly stock of arrears
for 2012 which is well below 1% of total expenditure. As at the end of 2012 the reported stock is just 0.01%.
However, Belarus’ definition of arrears deviates somewhat from common international practice. The
12
concept of an arrear in Belarus is defined in Article 75 of MoF Resolution № 22 (dated March 10, 2010 ), as
those accounts payable “not paid by the dates established by a contract or the legislation of the Republic of
Belarus”. There is in fact no specific time based definition under any legislative provision for when an
13
accounts payable becomes an arrear . The authorities thus apply a very stringent practice by international
14
standards in that all financial liabilities are due to be paid once the goods or services have been properly
received along with appropriate documentary evidence, such as an invoice and other proof of delivery or
15
completion of services or work . A review of the accounting system in the Minsk treasury revealed a few
instances of payment orders which were more than 30 days overdue; however, in general payment orders
were cleared within ten days of registration in the Treasury system.
12
This resolution by the Ministry of Finance is empowered under article 128 of the Budget Code.
13
In some countries, a due date for payment is defined as 30 days after receipt of the goods or service and a properly
rendered invoice.
14
When a contract arises a legal liability arises. Once the goods and services are received this becomes a financial liability,
often termed accounts payable.
15
Article 18, Resolution number 63, of the Ministry of Finance, July 27, 2011.
19
Belarus has the facility within its Treasury system to record commitments, however the use of this
facility is voluntary except for a few categories of spending. Despite this budget control and payment
management appears to be robust. There is a possibility that budget institutions withhold invoices due for
payment from the Treasury system, particularly given contracts are not registered in the Treasury system at
the time they are agreed, but Article 138 of the Budget Code clearly stipulates that any commitments beyond
budgetary means constitutes a breach of the Code, and would therefore be subject to sanctions. With three
16
control agencies in a position to review such actions , and strong indications from all the ministry officials
interviewed during the assessment that budget control was extremely robust, the risk of such breaches
occurring in relation to budget financing is assessed as very low.
Score: A
(ii) Availability of data for monitoring the stock of expenditure payment arrears
Comprehensive quarterly reports are prepared regarding the stock of expenditure arrears. Given the
relatively low stock of expenditure arrears in Belarus, no specific report is produced which provides a
breakdown regarding the age of arrears. However, all payment requests regarding public expenditures are
passed from budget institutions to the Treasury, with a large (and increasing) percentage of these payments
being processed electronically, which in general, ensures the process is timely. The Treasury system
maintains a record of the date the payment was registered, and the payment date if this was defined in the
contract. However, there are two issues which potentially affect the age profile of arrears. The first is the fact
that the date of registration in the Treasury is not the date the invoice was received by the budget institution.
Secondly, the recording of a payment due date is a relatively new process, and many payments do not have
a “payment due date” in the Treasury system. Notwithstanding these issues, the fact that the authorities
currently treat all financial liabilities as arrears and given that the date of registration of the invoice in the
treasury system is likely to be relatively close to the date it is received in the budget institution, the treasury is
able to produce a reliable and comprehensive stock of arrears (albeit based on the Belarus methodological
17
approach which is different from the usual practice internationally ) at any time from the treasury system.
Table 3.7. Stock of Arrears, January 1, 2012 – January 1 2013, bn BYR
General Government Arrears Central government
Date Arrears as % of Arrears as % of
Expenditures Arrears Expenditures Arrears
Expenditures Expenditures
January 1, 2012 106,948.8 145.2 0,14% 79,471.1 23.3 0.03%
April 1, 2012 41,629.6 153.3 29,757.5 38.8
July 1, 2012 93,118.6 252.8 66,510.4 34.3
October 1, 2012 145,426.5 293.1 105,100.7 46.3
January 1, 2013 211,445.3 156.8 0,07% 152,159.7 9.6 0.01%
Source: Ministry of Finance.
Score: B
16
State Control Committee, KRU of the Ministry of Finance and the departmental control bodies of the line ministries.
17
An arrear is generally defined as an accounts payable (financial liability) which remains unpaid for a specific period. 60
days is a common benchmark internationally, although many countries will use the due date as a trigger for recognition of
an arrear. In this case any payment not made by the due date is an arrear.
20
PI Dimension Score Score Justification for 2012 score
2009 2013
PI-4 Stock and monitoring of A B+ Scoring Method M1
expenditure payment arrears
(i) Stock of expenditure payment A A The stock of arrears as at end of 2012 was just
arrears (as a percentage of 0.01% of total actual expenditure.
actual total expenditure for the
corresponding fiscal year) and
a recent change in the stock
(ii) Availability of data for A B The Treasury system provides a comprehensive
monitoring the stock of record of all payment orders, including the date of
payment arrears registration, which is reported on a quarterly basis
by budget institutions, and which Belarus defines as
arrears. The date of registration is not the date of
receipt of the invoice in the budget institution. While
some payment records also include the “due date”
this is not comprehensively recorded, and therefore
a comprehensive list of the age of all arrears is not
currently produced. Despite this, the strong culture
of compliance and the specific legislative
requirement under article 138 of the Budget Code
(commitments beyond the budget are illegal)
provides general assurance regarding the
comprehesniveness of the reporting of arrears.
Comparability of scores and performance change: Scores comparable.
(i) No change in performance
(ii) There has been no change in performance since 2009, but the 2009 score is revised because the 2009
assessment emphasised the low existing stock of arrears rather than whether the processes in place to
correctly monitor the stock of arrears were comprehensive.
3.2 Comprehensiveness and transparency
3.2.1 PI-5 Classification of the budget
This indicator assesses the structure of the budget classification and its consistent use across the
budget cycle. Specifically, it reflects whether the budget classification and the chart of accounts are directly
aligned so that, government accounts, budget execution reports and other budget execution data can be
produced with a break-down that corresponds to the documentation for the proposed and approved budget.
The assessment is based on the last completed FY 2012.
Article 10 of the Budget Code provides guidance on the requirements for the budget classification, and this is
further detailed in Resolution 208 of the Ministry of Finance dated December 31, 2008 which defines seven
segments: administrative, functional, programmatic, economic (expenditures), revenues, and source of deficit
financing classifiers. This comprehensive set of classification segments is effectively also the Chart of
Accounts for reporting against the budget, although the terminology used in Belarus is different from
international practice (similarly to many former Soviet Union countries, Belarus uses the term ‘Chart of
Accounts’ for specific financial reporting formats which differ for central and sub-national government).
21
Administrative – This is a single level structure which is effectively the first level for budget
appropriation control. It includes ministries and other recipients of budget funds including some state
owned enterprises and subnational government entities;
Functional - The functional classification is largely in direct alignment with the classification of the
functions of government (CoFoG), including functions, sub-functions and classes. Thus Belarus has
adopted the full three levels of CoFoG. The authorities have also added a fourth level, termed
paragraph, which provides a more detailed breakdown by spending unit or other specific government
activities. As a result this fourth level is independent of the CoFoG structure with paragraphs able to
apply to more than one third level CoFoG account;
Programmes- This is a two level structure with programmes and sub-programmes. Programmes
generally represent a sector based descriptor with sub-programmes reflecting specific projects within
each sector. Programmes are reported to cover 17% of total government activities and can change
from year to year given that many of the projects will be time limited, for example infrastructure
development;
Economic – the economic segment is a four level structure reflecting payments (outflows) and
therefore is more akin to the IMF 1986 Government Finance Statistics Manual Approach
(GFSM1986) approach. Significant work has taken place during the recent years to improve the
segment structure to better align with GFSM2001 and as a result it is possible to capture
information in accordance with GFSM2001 through a mapping table;
Revenues – the segment is a five level structure reflecting receipts (inflows) and therefore is more
akin to the GFSM1986 approach. Similar to economic segment, significant work has taken place to
improve the revenue segment structure to better align with GFSM2001 and as a result it is possible
to capture information in accordance with GFSM2001 through a mapping table;
Sources of Deficit Financing – this is a four level segment and defines the domestic and foreign
sources of financing in the first three levels, with the fourth level determining whether it is an inflow
or outflow. This structure also allows mapping to GFSM2001 for financial assets and liabilities;
Debt Types – this is a three digit segment which defines the specific debt instruments including
guarantees along with whether it is central or subnational government debt.
The last four segments of the classification system when combined represent a structure which
largely accords with GFSM2001, and generally accepted accounting concepts. One major area of
departure is that the acquisition of non-financial assets are treated as an outflow in the economic segment,
and sales of non-financial assets are treated as an inflow in the revenue segment, which is not in line with the
18
recommended approach for recording stocks and flows in relation to non-financial assets in GFSM2001 .
19
However, it is entirely consistent with GFSM1986 .
There is a consistent use of the budget classification in budget formulation including submission by
budget institutions and the budget documents themselves . Annex III to the Budget Law includes a
detailed breakdown of proposed spending by the three levels of functional classification. Annex IV also
reflects the same three levels of functions and includes an administrative component. The ROSPICE, which
is the annual plan for expenditures by quarters, has a similar structure with the addition of programs (where
appropriate) with a further breakdown according to the economic classification of expenditures. The Treasury
system is similarly structured, with spending controlled in the general ledger in accordance with the
ROSPICE. Thus in terms of expenditures, budget execution reporting is also formulated in accordance with
an identical structure of the three level functional classification.
18
This issue (highlighted in IMF statistical missions) is currently being addressed by the MOF.
19
This contrasts with the approach taken in the financing segment, which treats the flows as a subcode, and therefore it is
possible to derive the net position in relation to cash flows using the same third level code. This approach is consistent with
GFSM2001.
22
However, Belarus also maintains a number of additional reporting structures which are used by
budget institutions for the single purpose of preparation of financial reports in accordance with
Belarus specific accounting rules. These rules and additional charts of accounts (CoAs) pre-date
20
Resolution 208 . This “dual system” has evolved because these pre-existing CoAs of budget institutions
required reporting on a modified accrual basis while the original budget classification was only cash based.
Thus while Belarus fully meets the requirements for CoFoG and GFSM reporting throughout the budget
formulation and execution process, in addition, it also maintains parallel reporting requirements according to
the pre-existing CoAs which are not fully consistent with its budget classification structure. While integration of
the CoAs and budget classification would be preferred, in practice this does not materially detract from the
consistency of use of the general budget classification across budget preparation, budget execution and
budget reporting.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-5 Classification of the budget A A The 2012 budget formulation and execution is
based on administrative, programme, functional and
economic classifications consistent with
GFS/CoFoG standards.
Comparability of scores and performance change:
Scores are comparable, no change in performance.
3.2.2 PI-6 Comprehensiveness of information included in budget documentation
This indicator assesses the extent to which annual budget documentation, as submitted to the
legislature for scrutiny and approval, allows a complete picture of central government fiscal
forecasts, budget proposals and out-turn of previous years. The assessment is based on the last budget
presented to the legislature i.e. the FY 2013.
Table 3.8. List of elements included in the budget documentation
No. Budget documentation Availability Notes
benchmarks
1. Macro-economic Yes The explanatory note includes a table of key macro indicators
assumptions, incl. at least including GDP growth, inflation as well as growth in relation to
estimates of aggregate industrial production, wages and imports and exports. No
growth, inflation and indicator was included for exchange rates for FY2012, however,
exchange rate this had been included in previous years and in FY2013 budget
documentation.
2. Fiscal deficit, defined Yes Complete information is given about the deficit, including the
according to GFS or other above the line balances and the below the line financing (in the
internationally recognised Annex 1 to the annual budget law), both for financial assets and
standard liabilities, including domestic and external sources. Article 13 of
the FY2013 Annual Budget Law also contains ceilings for
20
In fact this approach is similar to that which existed for reporting under the former Soviet Union.
23
No. Budget documentation Availability Notes
benchmarks
domestic and external debt and guarantees.
3. Deficit financing, describing Yes Annex 1 to the Annual Budget Law, shows both the domestic
anticipated composition and external sources for financing the budget, which has the
target of being a balanced budget in 2013 (neither surplus nor
deficit).
4. Debt stock, incl. details at Yes Volume 2 of Draft Budget Supplementary Materials, includes
least for the beginning of the both the opening balance as at 1 January 2013 and the closing
current year balance as at 1 January 2014 for the debt stock by type of debt,
in accordance with the classifications for domestic and external
debt The supplementary materials accompany the submission
of the draft annual budget law to the legislator.
5. Financial assets, incl. details No No information is contained on the government’s stock of
at least for the beginning of financial assets.
the current year
6. Prior year’s budget out-turn, Yes For both revenues and expenditures, the budget is presented
presented in the same format with actual outturn for the previous year, 2011, the outturn up to
as the budget proposal the stage of preparation of the budget documents for the current
year, 2012, the forecast result for the current year, 2012, and
the proposed estimates for the next budget year, 2013.
7. Current year’s budget Yes For both revenues and expenditures, the budget is presented
(revised budget or estimated with actual outturn for the previous year, 2011, the outturn up to
out-turn), presented in the the stage of preparation of the budget documents for the current
same format as the budget year, 2012, the forecast result for the current year, 2012, and
proposal the proposed estimates for the next budget year, 2013.
8. Summarised budget data for Yes Summary information is provided according to the revenue
both revenue and classification and for expenditures in accordance with the
expenditure according to the functional classification. Summary programme information is
main heads of the also present. Summary information is also available for the
classification used, incl. data economic (expenditures) classification for both the consolidated
for current and previous year and republican budgets. The information is presented
comparing the draft budget to the current and previous years,
with the exception of the economic expenditure classification
which only shows budget year data for 2013.
24
9. Explanation of budget Yes The explanatory note includes details on major changes in
implications of new policy revenue policy. The budgetary impact of changes in revenue
initiatives, with estimates of policies is also presented in supplementary materials, showing
the budgetary impact of all prior year revenues and the forecast changes, including as a
major revenue policy percentage of the previous year. The explanatory note also
changes and/or some major presents an explanation of changes to expenditures, generally
changes to expenditure at a relatively high level. More detailed information on the
programs specific changes in the draft budget compared to the approved
budget for the current year can be seen in Volume 1 and 2 of
the Supplementary Materials to the budget which also includes
the percentage change for the new budget year compared to the
current year.
Source: World Bank staff based on the legislation of Belarus.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-6 Comprehensiveness of A A The budget includes 8 of the 9 required elements for
information included in budget proper disclosure of fiscal information for effective
documentation legislative review.
Comparability of scores and performance change: Scores are comparable.
The ommission of exchange rates meant that Belarus did not meet all of the requirements against the macro indicators
for 2012. This does not however, change the overall rating from 2009.
3.2.3 PI-7 Extent of unreported government operations
This indicator assesses the size of unreported operations at the central government level as defined
21
by IMF GFS including departmental revenues such as user fees and charges, fines and rental of
property, etc, as well as the reflection of donor financing in the budget. In order to be counted as
“reported”, fiscal operations should be captured both ex-ante (budget estimates) and ex-post (actual
expenditure) in the fiscal reports (i.e. annual budget estimates, in year budget execution reports, annual
financial statements, either by consolidation with other central government expenditure, or shown in a
separate document presented to the legislature). The assessment covers the last completed fiscal year 2012.
21
In GFS terminology, central government comprises all units at central level carrying out government policies including not
only MDAs, but also non-market non-profit institutions that are controlled by and mainly financed by government (statutory
funds, trust funds, special funds, social security funds and other autonomous agencies but excludes local authorities and
public business enterprises).
25
(i) The level of unreported extra-budgetary expenditure
Table 3.9. 2012 Extra-Budgetary Activities
bn BYR % of Central Government Expenditures
22
Central Government Expenditures 155,169.2 100.00
Extra-budgetary activities 15,992.6 10.31
o/w Special Funds23 76.1 0.06
Own Source Funds 6,867.5 4.4324
Utility Cross-Subsidies 9,049.025 5.83
Source: Ministry of Finance.
The Budget Code requires the operations of state extra-budgetary funds to be included in the general
government budget. Paragraph five of article 7 of the Budget Code defines the general government budget
of Belarus as including the state extra budgetary funds and own source funds. Chapter five of the Code also
provides guidance regarding management of these funds including that they should be included in the
Treasury Single Account (TSA) (article 23) unless otherwise specified by the President. Chapter five also
provides very specific guidance regarding management, classification and reporting, which in general aligns
with the requirements for budgetary funds.
Notwithstanding these provisions of the Budget Code, two small special funds remain outside the
standard budget process, the Fund for Civil Aviation and the Fund of the Department of Corrections.
These represent a relatively small component of extra budgetary activities, at just 0.06 percent of central
government expenditures. The largest of the extra-budgetary funds, SPF, has a separate budget approved by
Parliament and is administered through the treasury system based on the same rules as the republican
budget, so it is considered to be fully on- budget for the purposes of PI-7.
The Budget Code also stipulates own source revenues to be managed through the treasury and
reflected in the budget, but in practice substantial parts of own source revenue have remained off
budget. Article 105 of the Budget Code requires own source revenues from budget institutions to be
managed through the TSA. If this provision would be implemented in practice these revenues and the related
spending would be considered on-budget. However, each year since the introduction of the Budget Code, the
Annual Budget Law over-rides this article (in 2012 this occurs in Article 29) of the Code and authorises
budget institutions to collect these revenues to their own bank accounts, and to make payments from these
accounts. Thus the funds remain outside the treasury and are also not subject to the same degree of ex-ante
control and approval as on-budget resources. While budget institutions do provide information on these
revenues and proposed spending in their annual budget submissions, this is for the information of the Ministry
of Finance, and is not included as part of annual budget estimates.
In addition, there are also significant quasi-fiscal operations including cross subsidies between state
enterprises, but no comprehensive information is available for the total level of these activities.
26
Information was provided in relation to one subsidy , relating to underpriced residential utility services
(district heating and electricity), which was 9,049 billion roubles in 2012, or 1.7% of GDP (about 6% of central
government expenditures).
22
Central Government expenditures include Republican budget and SPF expenditures.
23
Includes two small funds, the Fund for Civil Aviation and the Fund of the Department of Corrections of MOIA.
24
In some budget institutions, for example those subordinate to the Ministry of Labor, the amount of own source funds can
be as high as 35% of total resources.
25
Information on other subsidies outside the budget process was not available.
26
Higher corporate tariffs for electricity are used to subsidise lower residential tariffs.
26
A further category of activities that is not systematically reflected in the context of the budget
planning process relates to tax expenditures. There are a number of explicit measures providing tax relief
to certain tax-payers, including free-economic zones, but the explicit value of these foregone revenues is not
currently considered as part of the budget.
Directed Lending is a fifth category not included in the budget. Directed Lending is where state owned
financial institutions are instructed to provide loans to state enterprises by the government. In 2012 net
lending under government programs was 6,765.3 billion roubles, or 4.36% of total central government
expenditures. Directed lending is subsidized through various means, including government guarantees,
interest rate subsidies, government lodging deposits (at discounted interest rates) at these financial
institutions as well as periodic capital injections to recapitalize state owned banks. Directed lending occurs
outside the formal budget process and is also not fully monitored through the normal debt and guarantee
processes while at the same time creating significant fiscal risks and contingent claims on budgetary
resources. Investment decisions regarding any deposits are also not made in a manner designed to maximise
the returns to the budget regarding optimal use of any surplus cash.
When excluding the extra-budgetary activities that are not currently quantifiable, the level of extra-
budgetary activity represents 10.3% of central government expenditures, which is a significant share of
public finances to be managed outside the formal budget estimates process. Table 3.9 details those elements
of central government activity which are currently not included in budget estimates and therefore should be
classified as extra-budgetary, even though the revenues and related expenditures maybe reported ex-post in
monthly, quarterly and annual fiscal reports by budget institutions.
Score: D
(ii) Income/expenditure information on donor-funded projects
The MoE is responsible for the management and monitoring of donor financing, grants and
concessional loans related to direct financing of projects- although donor financing is not a
significant budget source in Belarus. On the basis of the figures provided, the total value of donor
financing represent only about 0.54%of the central government budget, and are therefore not significant.
External loans used for direct financing of the budget, are the responsibility of the Ministry of Finance and are
27
included in the budget estimates. Humanitarian aid is managed by the Department of Humanitarian Work of
the Department of Presidential Affairs of the President of the Republic of Belarus. Table 3.10 provides details
on the direct financing of 61 projects from development partners identified by the MoE for 2012. It also
includes information on the cash received for humanitarian aid. While the authorities were also able to
quantify in-kind contributions of 22.4 million USD in 2012, this has not been considered in the assessment in
accordance with the PEFA methodology. While detailed information is collected and monitored regarding
these sources of financing, they are not included in the budget estimates, and are managed entirely outside
the treasury and the treasury main account. Reports are prepared periodically but these are not integrated
into formal fiscal reports.
27
There were no direct loans for budget financing in 2012.
27
Table 3.10. 2012 Donor Financing
Fund Bn BYR Percentage of Central Government Expenditures
Central Government expenditures 5,169.2 100.00%
Total donor financing, including: 842.0 0.54%
28,29
Donor financing of projects 366.9 0.24%
Humanitarian aid 475.1 0.31%
Source: Ministry of Economy, Ministry of Finance.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-7 Extent of unreported C+ D+ Scoring Method – M1
government operations
(i) Level of unreported extra- C D The quantifiable level of extra budgetary activity
budgetary expenditure exceeds 10% in 2012.
(ii) Income/expenditure A A The total value of donor funding is less than 1%
information on donor-funded
projects
Comparability of scores and performance change: Scores comparabale.
(i) Additional information was available on specific quasifiscal activity in 2012
(ii) No change in performance.
3.2.4 PI-8 Transparency of inter-governmental fiscal relations
This indicator assesses the transparency of fiscal relation between the central and sub-national
governments and accountability for the use of these funds during the last completed fiscal year
(FY2012).
SNGs derive revenue from three major sources. Shared national taxes are the largest financing item and
contribute roughly 60 percent of sub-national revenue. Transfers from the central government, including both
block and earmarked grants, make up another 35 percent. The remaining 5 percent come from own-source
taxes and non-tax revenue.
All significant tax bases, including VAT, personal income tax, property taxes and CIT, remain under
the control of the national government, but the revenue is shared with oblast governments, who in
turn share these revenues with rural districts and rayon subordinate towns. Property taxes, PIT and
CIT are shared on a derivation basis, while VAT revenue is shared proportional to population. The Budget
Code sets the thresholds for the share of national tax revenues that can be distributed to oblast and lower
tiers of governments, with retention rates set on the annual basis in the ABL. SNGs retain the full revenue of
several national taxes, including property taxes and PIT. Retention rates for PIT and real estate tax of legal
entities are higher for rayons to partially offset unequal distribution of tax bases. The sharing rates for VAT
and CIT are set each year in the annual budget law and through decisions by Local Councils of Deputies.
28
Figures were provided in USD 44,009,903 for direct project financing and 57,000,000 for humanitarian aid in cash. As an
average for 2012 a National Bank conversion rate of 8,335.86 roubles was used.
29
Loans from IBRD of 113,450.000 USD were also received but these were included in the budget.
28
The system of intergovernmental transfers equalizes fiscal capacity and finances specific SNG
expenditures. The Budget Code (Chapter 12) envisions several types of intergovernmental transfers: i)
general purpose block grants; ii) earmarked sectoral grants; and iii) other forms of intergovernmental
transfers. The transfer system is a cascade system, where the republican budget provides grants to regional
governments, which in turn provide intraregional transfers to their constituent local governments. Over 75
percent of intergovernmental transfers are accounted for by general purpose block grants and another 11
percent by capital grants. The rest are special purpose grants principally those earmarked for the mitigation of
the effects from the Chernobyl accident, support to agriculture and housing vouchers. These are set each
year in the annual budget law.
(i) Transparency and objectivity in the horizontal allocation among SN governments
The general purpose transfer from the central government to oblast governments is designed to
equalize fiscal capacity across SNGs. According to the Budget Code, the allocation of subsidies is to be
determined based on the gap between the estimated expenditure needs and revenue potential of the
recipient government. The Budget Code specifies a formula to determine the fiscal gap based on revenue
potential (as opposed to actual revenue) and expenditure needs (as opposed to actual expenditure), both of
which are supposed to be based on a set of objective criteria of any particular locality.
In practice, however, transfers continue to be based on incremental adjustments of actual pre-
transfer revenues and expenditures of the previous year. Currently, the higher-level government makes
its own estimates for the revenues and expenditures of constituent jurisdictions. Revenue estimates for tax
and non-tax revenue are based on incremental adjustments of the respective figures of the previous year.
Similarly, expenditure estimates are derived from spending figures in previous years, adjusted for changes in
the number of staff and enrolments reported by each local government. The system of transfers achieves
high levels of fiscal equalization. After VAT and intergovernmental transfers, fiscal outcomes are very
equitable for both rayons and cities.
A rules-based transfer formula has been developed but it has not been fully implemented due to its
complexity and data requirements. The formula proposed in the Budget Code is overly complex and data-
intensive; to date this has inhibited its application - as a result the formulae has been simplified but is still in its
pilot phase and is being run concurrently with the existing system.
Score: D↑
(ii) Timeliness of reliable information to SN governments on their allocation
Lower tier territorial governments are provided with reliable information on the resources available
for the forthcoming budget year in a timely fashion. Hierarchical arrangements for budget preparation
provide lower tier governments with indications of the resources (revenues and grants) likely to be available
to them for the following year from an early stage in the budget process. Based on budget proposals received
form MDAs calculations of transfers from the republican budget are prepared by the MoF (including estimates
of general purpose block grants and earmarked sectoral grants for each of the SNGs) and shared for
consultations within the government as part of the draft republican budget documentation. Lower tier
governments are quite intensively consulted in the preparation of the republican budget, before it is submitted
29
to the President and the Parliament, and the material provided to the Parliament includes detailed projections
of SNG budgets.
Score: A
(iii) Extent of consolidation of fiscal data for general government according to sectoral categories
The consolidation of fiscal data for the general government according to sectoral categories is
robust. Complete budget execution data, broken down by function, economic and administrative
classifications, covering both local and central government budgets, is collected and reported quarterly. Most
of the data comes from the treasury system at each level of government, but information is also included on
transactions which do not pass through the treasury accounts.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-8 Transparency of inter- B B Scoring method - M2
governmental fiscal relations
(i) Transparent and objectivity in D D↑ Transfers are based on incremental adjustments of
the horizontal allocation among actual pre-transfer revenues and expenditures of the
SN government previous year. Transfers appear reasonably
transparent but are not yet based on a rules based
system.
(ii) Timeliness of reliable A A Reliable information is provided in a timely fashion
information to SN government to lower tier governments on the resources available
on their allocations from central government in the forthcoming budget
year before they start their detailed budget
preparation.
(iii) Extent of consolidation of fiscal A A Complete budget execution data, broken down by
data for government according function, economic and administrative
to sectoral categories classifications, covering both local and central
government budgets, is collected and reported
quarterly.
Comparability of scores and performance change: Scores comparable.
(i) No change in score. The introduction of the Budget Code and the piloting of a rules based formula justify an
upward arrow for this sub-indicator.
(ii) No change in performance.
(iii) No change in performance.
30
3.2.5 PI-9 Oversight of aggregate fiscal risk from other public sector entities
This indicator assesses the extent to which central government monitors and manages fiscal risks
with national implications arising from activities of subnational levels of government, autonomous
government agencies and public enterprises. Fiscal risk can take the form of government guarantees,
operational losses caused by quasi-fiscal operations, and expenditure payment arrears. The assessment is
based on the last completed financial year (FY 2012).
(i) Extent of central government monitoring of AGAs and PEs
In Belarus public enterprises (PEs) represent a very large percentage of the economy with more than
2000 partially or fully state owned joint stock companies and other public enterprises (PEs) in
operation, representing over 70 percent of Belarus industrial production. In addition, state owned banks
represent over 70 percent of the total banking sector assets. Given the economic significance of PEs,
oversight of both specific entity performance and risk, and aggregate fiscal risk associated with PE
operations, represent a major challenge, and an important focus for Belarus.
There are a number of bodies that either monitor performance or receive reports on PEs in Belarus.
Line ministries responsible for a specific sector receive quarterly and annual reports from PEs. The Ministry of
Industry (MOI) also receives quarterly and annual reports for those PEs within its remit (this spans a number
of ministries and sectors). MOI also indicated that it prepares a consolidated report regarding those PEs for
which it has responsibility. The MoF also receives specific information from PEs in relation to its role. (For
example, it receives information such as financial reports and business plans to assess the requirements for
subsidies from the budget). The national statistical agency, Belstat, also receives monthly and quarterly
information from medium and large PEs which it consolidates and reports, with some summary information
published on its website. Consolidated quarterly reports are prepared within 50 days of the end of the quarter
by Belstat. All PEs including smaller enterprises are also required to report to BELSTAT annually, and this
information is also consolidated and published in an annual report on PEs by May of each year. Some 30
major indicators are collected and reported in the consolidated report, many of which provide information on
fiscal risks including: profits or losses, profitability ratios, liquidity, loans and credits, foreign direct investment,
insolvency, accounts payable and receivable, amongst others.
There is also a basic framework in place to assess and monitor the financial viability of state owned
enterprises. Resolution N 140/206 (December 27, 2011) of the Ministry of Finance and the MoE put in place
a procedure for assessing the viability of both public and private sector enterprises. It provides details on
specific ratios that should be analysed from entities financial statements. This is further supported by
Resolution N 1672 (12 December 2011) of the Council of Ministers which provides guidance on how the
ratios should be used to measure the solvency of economic entities.
PEs are subject to inspections and some are also subject to audits. Article 3, of the Law on Audit
Activity, issued in November 1994, defines the requirements for annual statutory auditing of financial
statements. All public companies are covered by this clause, however, unitary enterprises are exempt from
this requirement as are joint stock companies that fall under the supervision of a Ministry, and which were
already inspected by its departmental KRU. Thus most government enterprises are subject to some form of
audit or inspection, and the related reports are available to the government. However, not all enterprises are
subject to an independent external audit and review.
However, in terms of aggregate fiscal risk associated with PE activity, Belarus does not explicitly
include a respective component in either its fiscal framework or the annual budget process. It has,
31
however, established a high level Commission, comprising 22 senior ministers and government officials under
Presidential Edict N371, dated July 10, 2002 termed the Interdepartmental Commission on the Safety in the
field of Economic Security under the Council of Safety of the Republic of Belarus. The Commission meets at
least quarterly and has as part of its mandate responsibility for “ evaluation of fiscal, tax and monetary policy
and forecast developments in the financial and credit system in terms of security of the Republic of Belarus in
the economic sphere.” The mandate for this Commission is much broader than just oversight of aggregate
fiscal risk for PEs. The Chair of the Commission is also the Chair of Belstat, the entity that produces the
annual performance report on PEs. Proceedings of the commission are classified.
A major area of fiscal risk for any government is borrowing by PEs. While PEs are able to borrow
domestically without a guarantee, there is currently no requirement for specific reporting outside of the
information provided periodically to Belstat, and through annual reports and financial statements. However, in
relation to PE loans guaranteed by the State, this is controlled within overall fiscal limits defined in the annual
budget law (eg. Article 13 in the law for 2012 budget). The granting of new guarantees must be executed in
accordance with Presidential Edict 359 of June 30 2008, Regulations on Procedure of Granting Guarantees
of the Government of the Republic of Belarus for Loans Provided by Banks of the Republic of Belarus . The
MoF also reports quarterly to the Council of Ministers regarding all guarantees within 20 days of the end of
the quarter.
Moreover, as reflected in PI7, quasi-fiscal activities such as directed loans and cross subsidies
between different PEs are not adequately reflected in the budget process, while creating significant
fiscal risks. The level of planned directed loans for 2012 is forecast at 6 billion roubles, and is therefore
monitored by the government. However, the risks associated with these operations, which require periodic
recapitalization of state owned banks are not actively monitored or managed. During 2005-2011 the state
budget injected on average 1 percent of GDP annually to recapitalize state owned banks, with recapitalization
expenditures peaking at 4.9 percent of GDP in 2011. Information provided on cross subsidies related to
residential utility services indicated that it was 1.5% of GDP and over 9 billion rubles. No data was available
on the levels of other cross-subsidies, however, the utility subsidy alone is significant.
Overall fiscal risks are not systematically reflected in the consolidated report for government on PEs
which is prepared by Belstat. Thus while the data collection process is substantial, it falls short of a
comprehensive process for assessing the consolidated fiscal risks of government.
Score: C
(ii) Extent of central government monitoring of SN governments’ fiscal position
Sub-national governments are integrated into the consolidated annual budget process . Both the
Budget Code and Annual Budget Law cover sub-national fiscal targets and estimates. Sub-national
governments operate separate bank accounts but these are under the control of sub-national Treasury
offices, which are linked to the central treasury and utilise the same accounting software. All receipts and
payments are recorded in the Treasury system, using the same unified budget classification. While the MoF
access is not real time, daily updates occur allowing monitoring of the cash position of all local governments
each day. Sub-national governments also have parallel reporting requirements to central government budget
institutions, but instead of reporting to the Ministry of Finance they report to the Financial Departments
servicing their Executive Committee at the respective level of government including seven 1st level
entities(six oblasts and the city of Minsk), 130 second level entities (118 rural districts, known as Rayons and
12 municipalities subordinate to oblasts), and 1,357 primary level entities (1,288 rural councils, 55 villages
and 14 towns subordinate to Rayons).
32
Subnational governments do not have to seek central government approval to borrow or undertake
guarantees for their enterprises. However, borrowing is subject to clear fiscal rules and limited to the
domestic market. The total of borrowing and guarantees for each sub-national government is limited to 80%
30
of own source revenues , that is, revenues net of special purpose subventions (general subventions from the
central government are therefore included in the calculation of the limits) from the central government. This is
defined in Article 65, paragraph 4 of the Budget Code. In addition, local authorities must not enter into debt
arrangements that would result in the annual debt servicing costs exceeding 15% of own source revenues
(revenues net of special purpose subventions). The Department of Local Budgets in the Ministry of Finance
also indicated that it monitors both revenue estimates and actual revenues in determining the ceilings.
Additional there is a target of a zero deficit at the aggregate level for each Oblast. The Budget Code also
requires local executive and administrative bodies to record the debt and guarantees and to report to the MoF
quarterly on this issue. The Code also requires these bodies to seek active measures to reduce debt levels.
Table 3.11 reproduces the format of the report used by the MoF to monitor debt ratios of the SNGs.
Table 3.11. SNG debt and guarantees as a proportion of own source revenues, bn BYR
Report as at 1 January 2013
SNG TOTAL
Direct debt 7,695.0
Guaranteed debt 24,100.9
Debt liabilities, total 31,795.9
Revenues minus subventions 86,884.8
Debt to revenues minus subventions ratio 36.6
Brest oblast
Direct debt 1,197.4
Guaranteed debt 4,014.9
Debt liabilities, total 5,212.3
Revenues minus subventions 11,240.7
Debt to revenues minus subventions ratio 46.4
Vitebsk oblast
Direct debt 808.3
Guaranteed debt 3,994.1
Debt liabilities, total 4,802.4
Revenues minus subventions 11,045.5
Debt to revenues minus subventions ratio 43.5
Gomel oblast
Direct debt 1,038.4
30
In 2009/10 Local government debt for the next fiscal year could not exceed 30 percent of the planned budget revenues
without transfers from other budgets. In 2011/12 no limits applied. In 2010 six Oblasts had debt and guarantee levels
exceeding the 2012 80% fiscal target, with three exceeding the limit in 2011, suggesting improved control has been
occurring.
33
Report as at 1 January 2013
Guaranteed debt 2,599.7
Debt liabilities, total 3,638.1
Revenues minus subventions 12,363.0
Debt to revenues minus subventions ratio 29.4
Grodno oblast
Direct debt 1,831.9
Guaranteed debt 2,813.8
Debt liabilities, total 4,645.7
Revenues minus subventions 9,506.6
Debt to revenues minus subventions ratio 48.9
Minsk oblast
Direct debt 1,333.1
Guaranteed debt 4,540.8
Debt liabilities, total 5,873.9
Revenues minus subventions 13,163.4
Debt to revenues minus subventions ratio 44.6
Mogilev oblast
Direct debt 672.9
Guaranteed debt 4,151.2
Debt liabilities, total 4,824.0
Revenues minus subventions 9,477.0
Debt to revenues minus subventions ratio 50.9
Minsk
Direct debt 813.0
Guaranteed debt 1,986.4
Debt liabilities, total 2,799.4
Revenues minus subventions 20,105.6
Debt to revenues minus subventions ratio 13.9
Source: Ministry of Finance.
34
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-9 Oversight of aggregate fiscal A C+ Scoring methodology (M1)
risk from other public sector
entities
(i) Extent of central government A C Medium and large PEs report quarterly to Belstat
monitoring of AGAs/PEs and also to their sector ministries. Annually Belstat
prepares a consolidated report on PEs which
includes key performance indicators of fiscal risk.
Not all PEs are subject to an annual external audit
process. The consolidated report on PEs prepared
by Belstat does not include all fiscal risks associated
with PEs.
(ii) Extent of central government A A Subnational governments excute their budgets
monitoring of SN governments’ through the treasury system, ensuring the
fiscal position availability of fiscal data for on-going monitoring.
Debt and guarantee stock levels are limited to 80%
of own source revenues (net of subventions) and in
year debt services costs must not exceed 15% of
those revenues. Quarterly reporting to the MoF
occurs by the local Executive Committees of each
government through their Finance Departments.
Comparability of scores and performance change: Scores comparable.
(i) There has been no change in performance since 2009. The additional detailed information provided regarding
external audit of PEs and the oversight of aggregate fiscal risk justified the downgrading from the score
allocated in 2009.
(ii) No change in performance.
3.2.6 PI-10 Public access to key fiscal information
This indicator assesses the extent to which information on the budget and its execution by the
government is easily accessible to the general public . Transparency principles require that the
Government makes relevant information widely available in a comprehensive, understandable and timely
fashion. The assessment is based on the last completed FY i.e. 2012.
The Constitution (Article 34) and the Law on Mass Media (Article 36) guarantee citizens the right to
receive, store and distribute comprehensive, reliable and timely information about work performed by
public bodies. Presidential Edict №65 of February 6, 2009 assigns personal responsibility to the head of a
public body for interaction with the mass media aimed at providing timely and objective information to the
public. On February 1, 2010 Edict of the President №60 On improving usage of the national segment of the
Internet was adopted. The Edict introduced specific requirement for the public bodies to disclose information
on their operations on their official website. Further procedures and requirements are set out in the Provision
on the Functioning of the Websites of Public Bodies adopted by the Resolution of the Council of Ministers
№645 of April 29, 2010. In addition, Article 8 of the Budget Code stipulates that approved budgets and
budget execution reports should be published in the media, except information classified as a state secret.
35
Belarus also subscribed to the IMF Special Data Dissemination Standard in December 2004. Since then, the
fiscal data in the SDDS format are presented on the MoF website (in English and Russian), as well as the
website of the Belstat. The data includes the following information: General Government Operations (updated
quarterly), Central Government Operations and Central Government Debt (updated monthly). Starting with
2012 MoF is publishing selected quarterly and annual budget execution statements in accordance with
GFSM2001 methodology on its website.
The main source of fiscal information for the public is the MoF website (http://www.minfin.gov.by). The
information provided on the MOF site is limited to the texts of legal acts on adopting, amending and approving
the execution of the Republican Budget, as well as monthly and quarterly fiscal data on budget
implementation. Guidelines for the preparation of Budget Proposals, Budget Speeches or individual MDAs
budgets are not disclosed.
The SCC does not publish external audit reports for the Republican Budget, MDAs or other Public
Bodies. The Parliament hearings on budget and external audit reports are not broadcasted on radio or TV,
but summary press-releases on the hearings are made available for the public.
Table 3.12. Public access to key fiscal information
Elements of information for public Yes/No Availability and means
access
Annual budget documentation when it is No While the Annual Budget Law (main text with Annexes) is
submitted to the legislature accessible by everyone and posted on the MoF website as well
as on the official legal website (www.pravo.by), additional
documentation - as prepared for the Parliament, including the
Explanatory Note, - is not accessible to the public. The major
changes in budget policy are explained by senior MoF officials in
mass-media. The PEFA Guidelines requires a ‘complete’ set of
annual budget documents, including explanatory notes, to be
publicly available in order to satisfy this element.
In-year budget execution reports within Yes Reports on Republican Budget execution are published monthly
one month of their completion with a 30-day delay, and on consolidated budget execution -
quarterly with 50 days delay. The reports mostly follow the
structure of the adopted budget, though at a more aggregated
level. On the expenditure side fiscal reports include data broken
down according to the first level of the functional classification.
Execution at the MDAs level or according to economic
classification is not published.
Year-end financial statements31 within 6 Yes There is no public access to the whole set of individual MDAs
months of completed audit financial statements. The Republican Budget execution report is
published 7 months after the end of the financial year in the form
of a law on approving execution of the republican budget for the
previous financial year. Preliminary annual report on the
execution of the republican budget is available to the public on
the MoF’s website with 50 days delay.
31
While this element does not require that end-year financial statements have to be consolidated, it does require that the
public has access to a complete set of individual MDA statements.
36
Elements of information for public Yes/No Availability and means
access
All external audit reports on No Although the SCC’s reports on budget execution are provided to
consolidated operations within 6 months members of Parliament, they are not available to the general
of completed audit public.
All contract awards (with value above Yes Resolution of the Council of Ministers №1987 of December 20,
approx. USD 100,000 equivalent) 2008 on selected issues of public procurement introduced the
published at least quarterly requirement of publication of information on contracts concluded
under the open bidding public procurement procedures. The
threshold for the publication of information is determined by the
fact that open bidding procedures are obligatory for the contracts
above 8000 basic units32 (approximately equivalent to USD
34,000 and USD 93,000 for the beginning and for the end of
2012 respectively). Resolution of the MoE№8 of January 15,
2009 contains procedural guidelines for the disclosure of this
information, including the requirement of a legal entity to provide
specified information within 15 calendar days after the contract
was concluded for publication on a special government website
(icetrade.by) and in information-analytical bulletin “Competitive
bidding in Belarus and abroad”.
Resources available to primary service No No information is published about the costs of operating
unit (such as elementary schools or particular hospitals, clinics or schools
primary health clinics) at least annually
Source: World Bank staff
Score: B
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-10 Public access to key fiscal C B 3 out of 6 listed types of information are disclosed
information
Comparability of scores and performance change: Scores comparable.
Improvement in the 2013 score is due to improved performance - introduction of a legal requirement to publish contract
award information increased the number of types of information disclosed from 2 (in 2009) to 3.
Ongoing reforms
Starting with 2013 new legislation on public procurement came into force, requiring public disclosure
of procurement information. The Law on Public Procurement introduced a requirement for public
procurement information to be publicly disclosed. A further requirement for such discloser is elaborated in the
Regulation on disclosing the information on public procurement on the official website, approved by the
Resolution of the Council of Ministers № 778 of August 22, 2012. According to its provisions the threshold for
publication of contract awards is set at the level of 8,000 basic units, and a more detailed list of information to
be disclosed was also introduced.
32
Basic unit is used in calculating the amounts of fines, fees, and other charges, with its nominal value being set and
revised by the Council of Ministers.
37
3.3 Policy-based budgeting
3.3.1 PI-11 Orderliness and participation in the annual budget process
This indicator assesses the procedural framework of the annual budget process. A well organised
budget preparation process that allows for effective interaction and structured communication between
political decision makers, the MoF, MDAs and the Parliament is important for enable prioritization of
expenditures and to reconcile spending requests of MDAs with the available resource envelope. The timely
adoption of the budget by the legislature prior to the beginning of the fiscal year is a precondition for good
budget implementation.
(i) Existence of and adherence to a fixed budget calendar
The principal budget calendar is stipulated in the Budget Code, but key dates are not specified. The
Budget Code specifies several key dates in the budget calendar (see Table 3.13 below), but the timeline for
some important steps, including the preparation of detailed proposals by MDAs is not stipulated. The budget
process typically begins about 10 months before the new fiscal year begins and includes repeated
interactions between the MoF, line ministries, and the parliament culminating in the adoption of the annual
budget law in December of the preceding year. However, the length of period during which budget
organizations prepare their submissions after a receipt of the Budget Circular from the MoF is not regulated
and it varies from year to year. During the past three years, the time given to MDAs to prepare their detailed
budget request was very limited (Table 3.14 below). Delays in the issuance of the budget circulars occurred
partly because of uncertainties about the budget outlook (stemming from the macroeconomic instability during
the past few years, as described under PI1).
Table 3.13 Budget Process as Set in the Provisions of the Budget Code of the Republic of Belarus
Description Timeline Article
Preparation of the draft republican budget shall start not later than by the 1st of March Article 91, point 1
10 months before the beginning of the next fiscal year
MoE shall submit to the MoF the forecast of the key parameters of by the 1st of April Article 83, point 4
the economic development of the Republic of Belarus for three
years
National Bank shall submit to the MoF the forecast of the most
essential monetary indicators of the Republic of Belarus for three
years
Main directions of fiscal and tax policy of the Republic of Belarus by the 1st of May Article 85, point 1
(including medium-term financial program) shall be drafted and
submitted to the Government by the MoF
MoF shall prepare instructions on the procedure and timeframes based on the deadline Article 91, point 4
for submission of documents (budget circular) for submission of the
draft republican
budget set (note -
annually) by the
Government
38
Description Timeline Article
Budget negotiations not specified Article 91, point 5
MoF submits draft republican budget for the next fiscal year to the not specified Article 91, point 7
Government in the form of a draft law
Draft law on the republican budget and estimated indicators of the not later than by the Article 91, point 9
consolidated budget of the Republic of Belarus for the next fiscal 1st of September
year shall be submitted to the President
President submits the draft law on the republican budget for the not later than by the Article 95, point 1
next fiscal year to the House of Representatives 1st of November
Article 98, point 1
Draft law is approved by the House of Representatives and within 5 days after Article 100 of the
passed to the Council of Republic approval Constitution
Draft law is passed by the Council of Republic and submitted to within 10 days after it Article 100 of the
the President for signature is passed Constitution
Approval of the law on the republican budget for the next fiscal not later than by the Article 96, point 1
year 1st of December
Subnational budgets are finalized and approved after the not specified Article 94, point
republican budget is approved
Source: World Bank staff based on the legislation of Belarus.
Table 3.14. Budget Preparation and Approval Calendar
FY2011 FY2012 FY2013
Budget Circular issued by MOF May 19, 2010 October 6, 2011 June 8, 2012
Budget proposals from MDAs due May 31, 2010 October 12, 2011 June 15, 2012
Budget estimates submitted to Parliament September 2, 2010 December 15, 2011 September 25, 2012
Source: Ministry of Finance.
Score: D
(ii) Clarity / comprehensiveness of and political involvement in the guidance on the preparation of budget
submissions
A budget circular with comprehensive budget preparation guidelines and ceilings is issued, but the
ceilings are not approved by the Council of Ministers. The budget circular specifies the main
macroeconomic assumptions as well as costing norms to be used in preparing budget submissions. MoF also
establishes indicative ceilings to guide resource prioritization by MDAs. However, since these ceilings are not
reviewed or approved by the Council of Ministers, they are not binding and frequently subject to revisions.
This practice not only results in time-consuming negotiations between MoF and line ministries about funding
levels, but also undermines the strategic allocation and prioritization of resources within the established
resource constraint.
Score: C
39
(iii) Timely budget approval by the legislature or similarly mandated body
The legislature approves the budget on time. During the last three years, the President has signed the
budget before the start of the new fiscal year (January 1). The draft Republican budget law for the following
calendar year is submitted to Parliament by November 1 and in each of the last three years, Parliament
approved a new budget within a month.
Table 3.15 Timeliness of approval of Budget Appropriations
Budget year Date when President signed the Annual Budget Law
FY2010 December 29, 2009
FY2011 October 15, 2010
FY2012 December 30, 2011
Source: Laws on Republican Budget of Belarus for 2010, 2011, 2012.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-11 Orderliness and participation in B C Scoring Method M2.
the annual budget process
(i) Existence of and adherence to B D The Budget Code stipulates a basic budget
a fixed budget calendar calendar, but key dates, including issuance of the
budget circular and submission of budget requests
by MDAs, are not specified. While MDAs participate
throughout the budget preparation process, the
formal time given to them to prepare detailed budget
requests have in practice been very limited
(ii) Guidance on the preparation of C C The budget circular established budget ceilings for
budget submissions. MDAs, but these are not approved by the Council of
Ministers and therefore subject to revisions
(iii) Timely budget approval by the A A Parliament approves the budget before the start of
legislature the new fiscal year
Comparability of scores and performance change: Scores comparable.
(i) Score for dimension is downgraded to D (2013) from B (2009) because of worse performance. This reflects the
very short time period formally given to MDAs to prepare their detailed budget requests during the budget years
under examination. Reportedly, the budget preparation process during all three years was adversely affected by
macroeconomic uncertainty, which may account for the deterioration in the orderliness of the budget process.
(ii) No change in performance.
(iii) No change in performance.
40
Ongoing reforms
No major reforms are planned with regard to the timeline for the budget preparation process.
However, recognizing the increasingly compressed timeline for the submission of detailed budget requests by
MDAs, MOF expressed the intention to issue budget circulars earlier and to restore prolonged preparation
periods for MDAs.
3.3.2 PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting
This indicator assesses whether the budget process incorporates a medium term perspective in fiscal
planning. A medium term budget framework typically places annual appropriations within a multi-year
perspective to allow for prudent control of multi-year commitments in line with projected revenues and to
facilitate medium-term sustainability of fiscal choices. This entails a top-down estimate of available resources
over the medium-term based on macro-economic forecasts; bottom-up estimates of the costs of carrying out
policies, both existing and new; and a framework that reconciles these costs with aggregate resources,
based on clearly articulated policy priorities.
(i) Preparation of multi -year fiscal forecasts and functional allocation
The authorities prepare medium term forward estimates as part of the "Medium Term Financial
Program" in the context of the annual budget process. Art 83, 85, 86 of the Budget Code set out the
broad principles for the medium-term budget framework. Specifically, the Budget Code provides that the
budget documentation each year will include a "Medium Term Financial Program" (MTFP). The MTFP is
defined as "a document containing strategy on the budget capacity to mobilize revenues and strategy of
prioritize budget expenditures within the available resources in the medium-term", and it is stated that one of
its objectives is to "estimate the fiscal impact of the elaborated reforms, programs and laws". In line with these
provisions, the MTFP, which is prepared by the MoF, contains both aggregate revenue, expenditure and
deficit projections, covering the subsequent and two additional out-years. The document also outlines
significant revenue and expenditure policy changes that are expected to affect the fiscal outlook, including tax
policies, policies on wages and changes in tariff of key public services, subsidized from the budget.
However, forward estimates are not systematically linked to annual budget allocations. The MTFP is
currently not being approved by the Council of Ministers and is yet to be included in the annual budget
documentation or submitted to the legislature. Moreover, existing forward estimates do not include a
functional break down of expenditures and as such are not systematically linked to the annual budget
allocations. The move towards medium term budgeting has been made particularly challenging by persistent
macroeconomic volatility over the past years which undermined the reliability of fiscal forecasts.
Notwithstanding this, the authorities recognize the importance of moving budgeting to a medium-term basis,
especially given the continued need for fiscal consolidation.
Score: C
(ii) Scope and frequency of debt sustainability analysis
The Public Debt Department of the Ministry of Finance is routinely undertaking analysis to assess the
key risks associated with the public debt stock, including external debt solvency and sustainability.
Public debt, especially external liabilities, increased sharply since 2008 due to macroeconomic instability,
making more active debt management a priority. Since its establishment in late 2008 the public debt
department of the Ministry of Finance – which is the principal debt management entity of the Government -
41
has continuously developed its analytical capacity. With support from the World Bank and the IMF, the
department has prepared an internal, medium term debt management strategy document which assesses the
risks and costs of different borrowing options. While the MOF does not prepare a formal and comprehensive
debt sustainability analysis, the department prepares medium term projections of external gross financing
needs under different scenarios. This analysis is conducted annually in the context of the budget preparation
process and is based on different macroeconomic scenarios, including the official government forecast,
prepared by the MoE and the latest available macroeconomic framework, prepared by the IMF. The
projections cover the presiding fiscal year plus three out-years. Some sensitivity analysis is undertaken to
assess the impact of possible interest and exchange rate shocks. In view of large repayment obligations on
external debt, including repayment of the IMF and maturing Eurobonds, the current analysis is focused
primarily on external refinancing risks and on identifying available borrowing options. Given market sensitivity
33
of the information in these documents, there are classified and not publically disclosed. In addition, as part
of the economic security indicators, the Government’s five year plan sets out medium term target values for
the Debt to GDP ratio, including both domestic and external debt. However, these are expected to constitute
statutory limits and are not necessarily anchored in a consistent macroeconomic framework and analysis.
Score: C
(iii) Existence of sector strategies with multi-year costing of recurrent and investment expenditure
Strategic programs are being prepared in the context of the development planning process, however,
they are not fully costed and coverage of budget expenditures is limited. State programs are prepared
to operationalize the Government’s five year plan. These state programs typically identify priority investment
projects together with medium term cost estimates of the capital costs and justification of how projects will
contribute the achievement of the objectives stated in the five year plan. However, recurrent cost implications
of capital spending are not reflected comprehensively in these planning documents. Neither are these plans
fiscally constrained, requiring prioritization of specific projects that are affordable within the available resource
envelope during the annual budget process. Moreover, some of the state programs pertain to both budgetary
and other financing sources (including bank financing and investments of state owned enterprises) whereas
the coverage of budgetary expenditures is primarily limited to capital expenditures.
Score: D
(iv) Linkages between investment budgets and forward expenditure estimates
Belarus operates a specific process for the prioritization of major investment projects financed from
the budget. The separation of the investment prioritization process is rooted in a development planning
tradition that views public investment in relation to overall investment and the economy as whole. While the
MoF is responsible for the determination of the overall resource envelope available for capital expenditures,
the MoE plays a key role in prioritizing specific investment projects under the State Investment Program (SIP)
which finances social infrastructure and accounted on average for around 70% of overall central government
34
capital expenditures during 2010-13. According to the Resolution of the Council of Ministers 967/2006 on
the functions of the MoE, MoE is responsible for justifying the volume of capital investment financed from
budgetary sources, as well as for monitoring the effective allocation and use of investments, and for
conducting the appraisal of specific investment projects. The specific procedures for the preparation of the
SIP are stipulated in the Presidential Edict 299/2006 on Approving the Guidelines on Drafting, Approving and
33
The PEFA team reviewed the documents for the 2013 budget process on site.
34
Some capital expenditures, including for example for capital repairs or purchase of equipment by budget organizations,
are not included in the SIP.
42
Reporting on State Investment Program. These procedures are fully synchronized with the annual budget
process and according to Art 89 of the Budget Code, the overall allocation for the SIP is included in the
budget law.
The prioritization of investment projects is linked to the objectives of the five year plan for
socioeconomic development. In practice MoE collaborates closely with MDAs to collect, appraise, prioritize
and consolidate the projects that will be funded in the annual budget. The selection of projects follows
multiple criteria, including project readiness, basic economic analysis and strategic fit with the objectives set
in the five year plan and sectoral programs approved by the President or Council of Minister taking into
account republican budget constraints. During the years examined in this assessment the overall allocation to
capital expenditures declined significantly as a result of the fiscal consolidation effort. Prioritization of these
spending cuts generally followed similar criteria. Priority funding was allocated to ongoing projects that would
have been difficult or costly to delay. The initiation of new projects was limited to priority sectors.
While there is a clear prioritization process for capital expenditures, links with medium term budget
estimates are weak. The MoE submits to the MoF estimates of the SIP for the following 3 years. However,
while some recurrent cost implications are included in the investment proposals (business plans) and
considered during appraisal, these are not included in the estimates submitted to MOF and therefore not
reflected in the forward estimates prepared by the MOF under the MTFP. While line ministries may ensure
coordination of investment and recurrent expenditures, under the present system there is a risk that recurrent
cost implications of capital projects, including for maintenance and operation are not adequately addressed in
medium term fiscal planning..
Score: D
PI Dimension Score Score Justification for 2013 score
2010 2013
PI-12 Multi-year perspective in fiscal D+ D Scoring Method M2.
planning, expenditure policy
and budgeting
(i) Multi-year fiscal forecast and C C Medium term fiscal forecasts are prepared, but
functional allocations forward estimates are not linked to the annual
budget allocations
(ii) Scope and frequency of debt D C While no formal debt sustainability analysis is
sustainability analysis undertaken by the MOF, the debt department
prepares debt portfolio risk and cost analysis as well
as projections of external public debt, however this
analysis is limited to 2 out-years and domestic debt
is not covered
(iii) Existence of costed sector C D Line ministries prepare sector strategies in the
strategies context of the development planning process. While
these strategies identify and cost priority
investments, the medium term, recurrent cost
implications associated with these investments are
not captured
(iv) Linkages between investment C D Belarus has a strong prioritization process for the
budgets and forward investment budget. However, this process –while
43
PI Dimension Score Score Justification for 2013 score
2010 2013
expenditure estimates synchronized- is separate from the main budget
process and recurrent cost implications of
investments are not systematically linked to medium
term forward expenditure estimates
Comparability of scores and performance change: Scores comparable.
(i) No change in performance
(ii) Score upgrade reflects improved performance, the Public Debt Department is now undertaking assessment of
external debt sustainability and solvency.
(iii) No change in performance. Dimension is downgraded from C (2009) to D (2013) reflecting the limited costing
of sector strategies. According to the PEFA field guide the minimum criteria for costing requires that medium
term costs, included in the strategies are broken down by year, program, and main economic category
(including recurrent costs) together with main parameters and assumptions underlying the cost estimates.
(iv) No change in performance. Dimension score is downgraded from C (2009) to D (2013), reflecting the dual
budget process with separate processes for recurrent and capital budgeting.
Ongoing reforms
Legislative changes to the planning framework that are being considered may – once approved -
facilitate the move towards medium term budgeting. A new Law on Government Indicative Planning of
the Socio-Economic Development of the Republic of Belarus has already received preliminary consideration
by the Parliament and has been submitted to the presidential administration for further review and finalization,
which modifies long-term, medium-term and annual planning mechanisms. From the budgetary perspective,
what is particularly important in the new planning law is the replacement of both the five-year fixed plans and
annual plans with rolling three-year plans. In these rolling three-year plans, the first year will play the role
previously played by the annual plan, while the subsequent two years are considered to be "forecasts". Like
the annual plans under the existing system, the rolling three-year plans will continue to identify government
investment projects that the budget should, as far as practicable, finance.
In conjunction with changes to the planning system, the authorities also intend to strengthen the
medium term perspective in the budget process. More specifically, the intention has been that, like the
planning process, the budget would move to a rolling three-year basis, in which the preparation of the annual
budget would be accompanied by the preparation of what would essentially be draft budgets for the
subsequent two years. In this context, rolling three-year plans and rolling three-year budgets are considered
by the authorities to be complementary reforms, because the medium-term budget would be built upon the
medium-term macroeconomic projections contained in the plan.
3.4 Predictability and control in budget execution
This section covers three main areas of budget execution: tax administration, treasury and public debt
management, and internal expenditure controls.
35
Background to Tax Administration
The following three performance indicators, PI-13, PI-14 and PI-15 assess the performance of the
revenue administration and management system based on the major tax revenue arising from all
35
The tax legislation of the Republic of Belarus does not use the term “taxpayer” instead it refers to the “payer of taxes,
fees/duties (another person liable) hereinafter referred to as the payer. However, to ensure consistency of meaning and
terms within this report and the PEFA methodology, the term taxpayer has been substituted.
44
central government activities. There are seven major taxes in Belarus: VAT, excises, profit tax, real estate
tax, land tax, environmental, and custom duties.
3.4.1 PI-13 Transparency of taxpayer obligations and liabilities
This indicator assesses the level of transparency of tax liabilities including clarity of legislation and
administrative procedures, access to information, and the ability to contest administrative rulings on
tax liabilities. The assessment is done as at time of assessment, and covers major tax revenues arising from
all central government entities.
(i) Clarity and comprehensiveness of tax liabilities
Since the 2009 assessment, Belarus has undertaken significant reform to simplify and improve its
taxation system. In 2010 it introduced a unified Tax Code, which now means that taxpayers can refer to a
single omnibus law in relation to their taxation obligations. In addition, it has removed or reduced some taxes,
simplified access to information and reduced the administrative burden in relation to taxpayer compliance. A
summary of the key changes since 2010 is presented in Table 3.16. In addition, the Customs Code of the
Republic of Belarus, January, 2007. Number 204-3, along with related presidential edicts and other
subordinate instructions, defines the requirements in relation to the import and export of goods across the
border of Belarus.
Table 3.16 - Changes to Requirements of the Belarus Tax System 2010-2012
Measure Impact
2010
Cancellation of the levy to support fund of manufacturers of agricultural Reduced tax burden
products, food stuffs alongside with agricultural science, retail sale tax and
vehicle acquisition tax
Taxpayers able to choose quarterly or monthly profit tax payments; Reduced Administration
Enterprises with annual receipts under 3,8 million BYR entitled to shift to Reduced Administration
quarterly VAT payments
Cancellation of goods (works, services) production and disposal costs Simplified Compliance
regulation aimed at the profit tax imputation (all recorded costs are now
included in tax assessment, exclusive of the explicit composition of
expenditures specified by the Tax code
Cancellation of salaries expenses, as well as advertising, information, Simplified Compliance and
consultancy and marketing services expenses ceilings. reduced tax burden
2011
Cancellation of the territory enhancement levy, services tax and three Simplified Compliance and
payments incorporated in the environmental tax reduced tax burden
Cancellation of VAT and excise tax “advance” payments Simplified Compliance and
improved fairness
Reduction of the simplified taxation system tax imposed on export proceeds Reduced tax burden
from 3% to 2%
Initiation a new profit taxation procedure, where respective tax returns are filed Simplified Compliance
once a year with quarterly advance payments
45
Measure Impact
Taxpayers able to independently (regardless of the amount of proceeds, as it Simplified Compliance and
used to be in 2010) determine VAT payment dates (monthly or quarterly) increased flexibility of the
system
Cancellation of entertainment allowance regulation for taxation purposes Simplified Compliance
2012
Profit tax reduction from 24 to 18 per cent Reduced tax burden
Introduction of losses’ carry-forward and depreciation premium mechanisms Reduced tax burden
(accelerated capital consumption in tax accounting)
Reduced tax burden imposed on small and medium-scale businesses by Reduced tax burden
means of reduction of simplified taxation system tax rates by one per cent
(from 8% to 7 % exclusive of VAT and from 6% to 5 % inclusive of VAT).
Source: Ministry of Finance.
Both the Tax Code and Customs Code are comprehensive and clearly structured and readily
understood, even by a lay-person. Both the MoTL and the Customs Committee supplement the legislation
with additional information on their websites, as well as providing access to officials in all of their offices and
telephone advisory hotlines, where parties are not clear on their obligations.
Belarus has also embraced modern technology in both the MoTL and the SCustC. In SCustC there is
the “National Automated System of Electronic Declaration (NASED)”. As of the end of 2012 about 91% of all
export and 78% of import deliveries were processed using e-declarations. The percentage of the
electronically processed customs documents of the total number of the processed customs documents was
83%. For taxation there is the ARM-payer software for electronic lodgement of taxation returns.
In terms of discretionary powers regarding the legislation, the President does have the right to grant
tax exemptions, however, this does not apply to specific tax-payers, but to groups of taxpayers. The
Ministry of Finance indicated that four tax preferences were eliminated in 2011, five in 2012 and a further 12
in 2013, demonstrating a commitment to improving fairness and consistency in relation to the application of
the law. Nonetheless it must be stated that some discretionary powers continue to exist in relation to tax
expenditures. Import customs duty allowance (tariff privileges) is specified by the customs legislation of the
36
Customs Union. In this regard, tariff privileges are applied subject to international obligations of the Republic
of Belarus
Improvements in revenue policy and administration are also reflected in consistent progress in the
doing business indicator related to taxation. As at the time of this assessment Belarus had improved it’s
“Doing business” rating regarding taxation from 158 in 2012 to 129 in 2013. Belarus also had an improvement
from 40.5% to 60.7% in the “Doing business” assessment of the Belarus overall economic climate for
business compared to an international “good practice” benchmark, or a 50% improvement in the last 12
months.
Score: B
36
Application of tariff privileges in the Republic of Belarus is limited by types and procedures for their application specified
in the Customs Code of the Customs Union , Treaty on Unified Customs Tariff Regulation of 25 January 2008 and also by
Decision No. 130 of 27 November 2009 of the Customs Union Commission “On the Un ified Customs Tariff Regulation of
the Customs Union of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation”.
46
(ii) Taxpayer access to information on tax liabilities and administrative procedures
Taxpayers have access to both tax liabilities and administrative procedures. Discussions with both the
MoTL and the SCustC, indicate that a number of mechanisms are in place to provide taxpayers access to
information regarding their liabilities including
37
access to the legislative Codes themselves on the Pravoby website along with subordinated
regulations and instructions and Presidential Edicts;
38
clearly structured websites with summary information regarding key issues for taxpayers ;
specific officials assigned at each physical office of both bodies who are tasked with assisting
taxpayers with their enquiries – this includes coverage at 153 locations across the territory of
Belarus;
a national hotline for both Tax and Customs, where taxpayers can obtain advice and assistance;
39
a quarterly MoTL newsletter with a circulation of 27,000 ;
regular workshops and events of educational nature for taxpayers;
consultation processes regarding new laws and procedures, and an invitation for general public
comment regarding specific issues;
and regular press releases and media events publicising changes and important other issues.
The above range of support services, and the access and usability of the Ministry and Committee websites,
indicate a comprehensive and user-friendly information system for taxpayers.
Score: A
(iii) Existence and functioning of a tax appeals mechanism
The legislative framework has instituted a common appeal mechanism across all of its compliance
and enforcement institutions that includes two appeal options. Under Article 85 of the Tax Code
taxpayers have the right of appeal. In relation to the Customs Code this is Article 32.
The first appeal mechanism is administrative, and provides a tax-payer or importer/exporter who is
dissatisfied with the actions of the decision-making body, the right to appeal to a higher level tax-body or
higher level official from the original decision making body. The SCusC indicated that a Commission would be
formed (that is more than one senior official) to review the original decision and the appeal. The
administrative review has the right to confirm or change the original decision, and must inform the
complainant in writing of the review being undertaken. The original decision maker must also be informed of
the result of the administrative review.
40
The second appeal mechanism involves the Economic Court where an appeal must be lodged in
writing within one year, and the Economic Court must review the appeal within one month of receipt. As with
the administrative appeal process, the original decision may be supported or overturned and a new decision
made or the Court may direct the administrative body to undertake a new review. Complainants are not
required to undertake an administrative appeal prior to an appeal to the Economic Court. In fact both options
can be instigated by a complainant. Table 3.17 shows the number of appeals to the Economic Court for both
Tax and Customs. Tax appeals were also down by 72% in 2012 compared with 2011.
37
http://pravoby.net/laws/
38
The Customs’ Committee website is also available in English.
39
http://www.info-center.by/seminars/plan/
40
The authorities have advised that in 2014 the Economic Court will combine with the Civil Court, eliminating the specialist
nature of the appeal mechanism. This would result in the future in a lower rating under the PEFA methodology.
47
Table 3.17 Appeals Lodged in 2012
Customs Tax Total
Number of appeals lodged 156 1616 1772
Resolved in favour of authority 69 1599 1668
Partially resolved in favour of authority 0 10 10
Resolved in favour of appellant 47 7 54
Unresolved 40 0 40
Source: Ministry of Taxes and Levies, State Customs Committee
The appeal mechanism is available to legal persons, including enterprises and sole-entrepreneurs,
but not applicable to physical persons. Physical persons have no right of appeal to the Economic Court,
and instead must take the matter through the civil court system. Thus while a comprehensive and transparent
appeal mechanism is set up in Belarus for legal persons, it is not currently available to physical persons.
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-13 Transparency of taxpayer C+ B+ Scoring Method M2.
obligations and liabilities
(i) Clarity and D B The legislation is clear and comprehensive.
comprehensiveness of tax Some limited discretionary power exists
liabilities regarding the law.
(ii) Taxpayer access to B A Taxpayers have easy access to comprehensive
information on tax liabilities and user-friendly information regarding their
and administrative liabilities and obligations via a variety of means
procedures
(iii) Existence and functioning of B B Administrative appeals are open to all
a tax appeals mechanism taxpayers, however, a transparent and
independet tax appeal mechanism is only
available to legal persons. Physical persons
only have recourse through the normal civil
court system, which is not regarded as an
appropriate tax complaint mechanism .
Comparability of scores and performance change: Scores comparable.
(i) Improved perfomance, specific action to improve the overall taxation system has occurred since 2009;
(ii) Improved perfomance, specific action to improve access to information and administrative processes
has occurred since 2009;
(iii) No change in performance.
3.4.2 PI-14 Effectiveness of measures for taxpayer registration and tax assessment
This indicator assesses the effectiveness of tax assessment encompassing both registration of liable
taxpayers and accurate assessment of their tax liability. The basis for the rating is the information
available at the time of the assessment and covers all major tax revenues.
48
(i) Controls in the taxpayer registration system
Registration of a legal entity and individual entrepreneur occurs through the Single State Registry of
Legal Entities and Individual Entrepreneurs maintained by the Ministry of Justice. Registration is a
requirement for undertaking business in Belarus. Without this registration businesses are unable to open up a
bank account in Belarus, and therefore, largely unable to do business. The MoTL is required to register
taxpayers within two days of receiving the notification electronically and is also required to issue a unique
payee identification number (PIN) which will be used for all tax related matters and by Customs (Article 65 of
the Tax Code).
In relation to individual taxpayers who are not entrepreneurs (physical persons), in general, income
tax and social contributions are withheld by the employer on their behalf, so no mandatory
41
registration as a tax payer is required . In those instances where individual taxpayers may have
42
supplementary taxable income, the MoTL also issues a PIN. SCustC also uses the PIN in its operations.
Article 65, paragraph 5 of the Tax Code also requires the MoTL to maintain the Register of taxpayers and
other liable persons.
Score: A
(ii) Effectiveness of penalties for non-compliance with registration and declaration obligations
The integration between business registration, operation of bank accounts and tax registration
ensures strong compliance with taxpayer registration. In the event that a taxpayer does not comply with
registration, or fails to meet its obligations with submitting a declaration, Article 13 of the Code of
Administrative Offences establishes specific penalties as per the following table. Given the general
compliance levels evident in Belarus, these rates are assessed as sufficiently high to act as a deterrent.
Table 3.18 Penalties for the non-compliance with registration or declaration requirements
Paragraph and area of breach Penalty43
1. Non-compliance with the time framework for 5/10 of the basic unit for each full or non-full week of
registration with the tax body delay but not more than five basic units.
2. Conducting a business without registration with Individual entrepreneur - five basic units for each full
the tax body or non-full month of running a business but not more
than twenty basic units;
for a legal entity – a fine in the amount of twenty
percent of revenues from such business but not less
than seventy basic units.
4.1 Non-compliance with the time framework for 2/10 of a basic unit to two basic units for an individual
submission of tax declarations (return) - Late less entrepreneur and from one to ten basic units for a legal
than 3 days - entity.
4.2 Non-compliance with the time framework for non-compliance from the part of an official of a legal
41
As all income and tax deductions are fully covered by the government as the employer and the recipient of tax
deductions, the assessment team considered this as the equivalent of a PIN number. There is no possibility of the
employees avoiding their taxation obligations. Where other income exists for this category of taxpayers a PIN is issued.
42
For physical persons, both Belarus citizens and foreign nationals who are importing goods for other than business
purposes, a passport number is used.
43
As at 1 April 2012 a basic unit equalled 100,000 rubles.
49
Paragraph and area of breach Penalty43
submission of tax declarations (return) - Late more entity, - entails a fine in the amount of two basic units
than 3 days - with additional 5/10 of a basic unit for each full month
of a delay but not more than ten basic units;
Individual entrepreneur – in the amount of 10% of the
amount of tax, fee (duty) to be paid but not less than
two basic units, for a legal entity – in the amount of
10% of the amount of tax, fee (duty) to be paid but not
less than ten basic units.
4.2 Non-compliance with the time framework for Non-compliance from the part of a private individual -
submission of tax declarations (return) - Late more two basic units with additional 5/10 of a basic unit for
than 3 days each full month of a delay but not more than ten basic
units
Source: World Bank staff based on the legislation of Belarus.
Score: A
(iii) Planning and monitoring of tax audit and fraud investigation programs
Tax Code (articles 69-78) and Customs Code of the Customs Union (Chapters 16 and 19) provide
details regarding specific issues pertaining to tax and customs inspections and control activities. As
mentioned in PI13, Presidential Edict 510 regarding inspections provides additional guidance to both the
MoTL and the SCustC, regarding the process for audit and inspection of taxpayers.
As a first step, taxpayers are categorized into one of three risk categories. Category one is high risk and
results in an audit not more frequently than once a calendar year; category two is medium risk, and results in
an audit not more frequently than once in three years, and category three is low risk and results in an audit
not more frequently than every five years. If a category one taxpayer audit reveals no breaches, then the next
audit is not scheduled for two years. New businesses are provided with special privileges and are exempt
from audit for their first two years of operation. In addition to the broad risk categories, the MoTL conducts
further analysis of risks based on a set of approximately twenty criteria regarding taxpayers, indicating that
the Edict 510 Framework has been adapted to meet the specific requirements for risk assessment in this
sphere. An indication of the success of its risk assessment criteria is that post inspection analysis revealed
that in excess of 98% of the taxpayers where correctly assessed for risks.
A major focus of Edict 510 is to seek coordination of the various inspection functions of government,
under the general supervision of the SCC. Each control function in government, including taxation and
customs, submit six monthly inspection plans to the SCC, which compiles them and ensures multiple
inspections are not imposed on any entities through the six month period. Where appropriate the control and
inspection activities are coordinated and undertaken at the same time (often jointly).
Audits plans are publicly available. As a general principle, no audit can be undertaken unless it is in a plan
vetted by the SCC. However, both tax and customs audits can be undertaken without a public announcement,
for example spot audits of bodies thought to be acting illegally, with the approval of the President, Prime
Minister, SCC and other senior officials. While Edict 510 requires audits and inspections to be planned, the
MoTL informed the review team that it still conducts approximately two thirds of its inspections without prior
warning to the taxpayer. In 2012 the MoTL undertook 57,652 inspections of solvent enterprises, of which
38,830 were for businesses and 18,632 for individual entrepreneurs. A further 46,809 inspections were
50
conducted on businesses which were ceasing operations including due to insolvency. The results of these
inspections can be seen in Table 3.19 and indicates a 96.1% collection rate against the assessed amounts.
Table 3.19 – Results of Tax Audits Inspections (bn BYR)
including:
Total Value
fines penalties
Solvent businesses assessed taxes owing 272.1 37.5 58.1
incl. collected 261.4 34.4 51.9
Closing businesses assessed taxes owing 30.8 4.2 4.5
Source: Ministry of Taxes and Levies.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-14 Effectiveness of measures A A Scoring Method M2.
for taxpayer registration and
tax assessment
(i) Controls in taxpayer A A A comprehensive registration system exists for
registration system all businesses and individual entrepreneurs.
PINs are used for individual taxpayers that are
not business entities
(ii) Effectiveness of penalties for A A The fines levied, along with the general focus
non-compliance with on rule of law in society assures strong
registration and declaration compliance with registration and tax
obligations declarations
(iii) Planning and monitoring of A A Audits and investigations are conducted based
tax audit and fraud on a comprehensive six month plan which is
investigation programs supplemented by very specific risk criteria for
various taxpayers
Comparability of scores and performance change: Scores comparable.
(i), (ii), (iii) No change in performance.
3.4.3 PI-15 Effectiveness in collection of tax payments
This indicator assesses the ability of the Revenue Authorities to collect the taxes assessed. The
assessment covers major tax revenues arising from all central government activities. The first dimension
focuses on the last two completed FYs, while the second and third dimensions are assessed as at the time of
assessment.
(i) Collection ratio for gross tax arrears
Gross tax and customs arrears continue to represent a very small percentage of total collections. As
can be seen in Table 3.20, even in the area of audit and inspection, compliance levels for payment of
51
assessments are high, at 96.5% of the total value of the assessments (see also Table 3.19 in PI14). The
44
MoTL and the SCustC also have significant powers under articles 49 to 58 of the Tax Code where a
taxpayer has not fulfilled its obligations, including: requiring some form of collateral or surety from the
taxpayer; seizure of physical assets; the suspension of expense transactions on bank accounts.
Table 3.20 – Tax Arrears as a Percentage of Total Collections
2011 2012
Tax revenues, administered by MoTL, million BYR 45,708,472.1 88,593,869.6
Arrears on tax revenues administered by MoTL (as of end of 27,946.5 32,394.6
the year), million BYR
Arrears as % of tax revenues 0.06 0.04
Customs revenues (tax revenues), administered by SCustC, 27,436,444.0 48,936,679.5
million BYR
Arrears on customs revenues (as of end of the year), million 66,400.0 139,626.8
BYR
Arrears as % of customs revenues 0.24 0.29
Memorandum:
Total consolidated budget revenues, million BYR 85,608,368.5 157,955,956.1
Consolidated budget tax revenues, million BYR 73,445,922.0 138,012,801.3
Total arrears on tax and customs revenues, million BYR 94,346.5 172,021.4
Total arrears as % of total consolidated budget revenues 0.11 0.11
Total arrears as % of tax and customs revenues 0.13 0.12
Source: Ministry of Finance.
Most of these powers are executable without reference to the Courts, although the taxpayer has the right of
appeal. To enforce collection through seizure of assets, a relevant court decision is required. Table 3.21
below indicates that in 2011 and 2012, 2.9% and 2.7% of total collections resulted from the use of these
powers, a further indication of the ability of the MoTL to collect taxation arrears. The low level of the stock of
taxation arrears (below 2%) and strong compliance means that any change in the stock during the year will
be negligible.
Table 3.21 Enforced Collections by the Ministry of Taxes and Levies and State Customs Committee, million BYR
2011 2012
Tax revenues, administered by MoTL 45,708,472.1 88,593,869.6
Collections enforced by MoTL 1,336,963.5 2,417,487.8
% 2.9 2.7
Tax revenues, administered by SCustC 27,436,444.0 48,936,679.5
Collections enforced by SCustC 56,376.0 75,397.0
% 0.2 0.2
Source: Ministry of Taxes and Levies, State Customs Committee.
Score: A
44
The Customs Committee also derives authority from Chapter 27 of Customs Code and Chapter 14 of the Customs Code
of the Union State.
52
(ii) Effectiveness of transfer of tax collections to the Treasury by the revenue administration
Central government taxation and customs revenues are collected to zero balance revenue accounts
in the various locations around Belarus, and are transferred to the TSA held at the National Bank of
Belarus each day. Article 108 of the Budget Code states tha t “transactions involving the revenues of the
republican budget shall be recorded on the individual accounts opened for each tax body, customs body and
other organizations authorized by the legislation to collect revenues to the republican budget on the single
treasury account.” The balances in these individual revenue accounts are swept into the main TSA on a daily
basis. This represents an effective structure for a TSA, and ensures full consolidation of tax collections in the
TSA each day. The exception to this is security deposits paid by importers which are retained in a separate
account outside the control of the Treasury. This money is not however, tax revenue, but represents money
held in trust by the government.
Score: A
(iii) Frequency of complete accounts reconciliation between tax assessments, collections, arrears records and
receipts by the Treasury
Each day the MoF is required to send an electronic file to the tax authorities regarding the day’s
receipts, which is used to record the payments received for each taxpayer. PINs are used to reconcile
the information with taxpayer accounts and assure the accuracy of this information.
All budget revenues and expenditure balances in the Treasury are reconciled at least monthly by the
45
third working day of the following month . This includes total taxation and customs collections. The
Treasury also passes information regarding taxpayer references in relation to all deposits made to the TSA
and the zero balance accounts. Thus in addition to the daily reconciliation of taxpayer information, there is a
broader reconciliation done of the balances.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-15 Effectiveness in collection of A A Scoring Method M1.
tax payments
(i) Collection ratio for gross tax A A Total Tax and Customs arrears were less than
arrears, being percentage of 2% in each of the last two years of the
tax arrears at the beginning of assessment
a fiscal year, which was
collected during that fiscal
year
(ii) Effectiveness of transfer of tax A A All tax and customs revenue is either paid
collections to the Treasury by directly into the TSA at the NBB or swept to this
the revenue administration account from zero balance collection accounts
the same day
(iii) Frequency of complete A A Reconciliation between tax, customs and the
accounts reconciliation treasury ledger takes place within three days of
45
Article 45 of Resolution 143/ 171 issued by the Ministry of Finance and Board of the National Bank (December 8, 2005).
53
PI Dimension Score Score Justification for 2013 score
2009 2013
between tax assessments, the end of each month
collections, arrears records
and receipts by the Treasury
Comparability of scores and performance change: Scores comparable.
(i), (ii), (iii) No change in performance.
3.4.4 PI-16 Predictability in the availability of funds for commitment of expenditures
This indicator assesses the extent to which the MoF provides reliable information on the availability
of funds to MDAs, which are the primary recipients of such information . The assessment focuses on the
last completed fiscal year (FY2012).
(i) Extent to which cash flows are forecast and monitored
Immediately following the passage of the Budget Law, the Treasury prepares an annual cash-flow
forecast for the Republican budget and the TSA, Cash forecasts are based on information provided by
revenue agencies and in relation to expenditures based on known budgetary requirements and with some
reference to historical spending patterns. The forecast is broken down by quarters, and within quarter by
months, once that quarter has commenced. This forecast assists with overall budget monitoring, and tracking
of the fiscal balance and cash position. It also provides early warning regarding issues where estimated
inflows may not cover planned outflows. The forecast is updated monthly when actual outturns and
adjustments are made to the forecasts. Formal adjustments are made quarterly.
The Treasury also has an informal process for updating forecasts within the month. They monitor the
th th
forecast each week until the 20 day of the month, when they switch to daily monitoring. Until the 20 most
th
flows are relatively predictable, but from the 20 major tax revenues start to accrue, and these require more
frequent monitoring and assessment, given the overall impact on the final cash position for the month and the
annual forecast.
The Treasury also undertakes shorter term forecasting for liquidity management. A forecast is sent to
the NBRB for the forthcoming week and it also reviews its cash position each day to determine the likely
balance for the following day, and this is also shared with the NBRB. However, the Treasury does not target a
minimum cash balance,, instead it determines which “low priority” payments will be released each day as an
46
alternate form of liquidity management. This is usually termed ”cash rationing” , although in the case of
Belarus, major delays in executing payments is not common, as evidenced by the low accumulation of
arrears (see PI4).
Score: B
46
Cash rationing is the term commonly used to describe the situation whereby a Treasury manages its liquidity position on
a day to day basis by determining which payments will be made and which payments will be delayed. The alternative and
more “active” approach to cash management is to determine the payment requirements as early in advance as possible
and to ensure adequate cash is available to meet those payments.
54
(ii) Reliability and horizon of periodic in-year information to MDAs on ceilings for expenditure commitment
Belarus has a quarterly budget allocation process termed the ROSPICE. Allocations are set for each
quarter within a month following the approval of the budget for the next financial year (Budget Code, Article
107 paragraph 3). These allotments become hard budget controls and cash limits for budget institutions, but
they are largely free to set their own detailed quarterly cash limits, within the overall review process
undertaken by the MoF and after ensuring that known commitments and priority expenditures are budgeted.
Changes to the ROSPICE are allowed, but these have to be approved and executed by the MoF.
While budget institutions may be able to enter into commitments beyond a quarter, this is only with
the express approval of the MoF (for example for a capital project). In practice, expenditures for capital
projects are committed within each quarter, despite the fact that the actual commitment goes beyond the
quarter and may even go beyond the budget year. While “cash rationing” is occurring, to date it appears to
have had minimal impact on the timely release of payments for budget institutions.
Score: B
(iii) Frequency and transparency of adjustments to budget allocations, which are decided above the level of
management of MDAs
Budget institutions are responsible for setting their own cash limits within overall quarterly
appropriations, but significant in year adjustments in the quarterly allocations may occur. Changes to
the ROSPICE are also permitted, although these are controlled by the MoF. In 2012, the MoF and line
th
ministries indicated that due to cash flow problems, a reduction occurred in the funds available for the 4
quarter, and that this was in the vicinity of 3-4% of total funds. The cuts were targeted at discretionary
spending items. Reportedly, on this occasion sequestration was done without proper consultation with budget
institutions, which may have first learnt of this when they found that their funds were blocked in the treasury
system. Such an approach, particularly so late in the year, will have meant that commitments will have
potentially been made that exceed the reduced ROSPICE allocation. In some cases the budget institution
negotiated with the MoF for additional funds, given their limited flexibility to reduce spending late in the year.
In general, budget institutions reported that in year reductions were unusual and that the MoF was open to
negotiation should any reductions be difficult to absorb.
Score: B
55
PI Dimension Score Score Justification for 2013 score
2010 2013
PI-16 Predictability in the availability B B Scoring Method M1.
of funds for commitment of
expenditures
(i) Extent to which cash flows are B B The cashflow forecast is updated formally each
forecast and monitored quarter, although informal monitoring occurs more
frequently in the Treasury.
(ii) Reliability and horizon of B B The ROSPICE provides certainty over funding for
periodic in-year information to the quarter in advance
MDAs on ceilings for
expenditure commitment.
(iii) Frequency and transparency of B B In 2012 the MoF took action to sequester funds just
adjustment to budget once. This occurred in the 4th quarter.
allocations, which are decided
above the management of Line
Ministries
Comparability of scores and performance change: Scores comparable.
(i), (ii), (iii) - No change in performance.
3.4.5 PI-17 Recording and management of cash balances, debt and guarantees
This indicator assesses the quality and completeness of debt records, debt management and the
overall consolidation and control of government cash balances. The assessment of the first and second
dimensions is as at the time of assessment, while the third dimension measures performance over the last
completed fiscal year.
(i) Quality of debt data recording and reporting
The Public Debt Management Department (PDMD) of the Ministry of Finance is responsible for
recording and reporting all central government domestic and external debt and guarantees in
Belarus. PDMD operates three different software systems in relation to the management of debt, one each
for external and internal debt and a third for the issuance of securities. The domestic debt system is used to
consolidate debt information and the other systems are linked through an interface. Data quality is very high
as they reconcile with creditor invoices and records monthly. The high degree of automation and oversight by
the PDMD ensures that all relevant information is recorded within 10 days of any operations.
According to article 64 of the Budget Code public debt as well as debt guaranteed by the state shall
be recorded by the MoF. Reporting of public debt is also required under Presidential Edict 252 and is the
responsibility of the MoF. Resolution 142 of the MoF provides the formats for reporting. The report is
completed by the end of the following month and is submitted to the Council of Ministers. The report includes
total debt stock at month-end, transactions during the month and for the fiscal year (accumulative over the life
56
47
of the debt). The report also includes guarantees . It is signed off by the first Deputy Minister, is classified
and for official use only. A summary is prepared and posted to the MoF website (by PDMD).
Score: A48
(ii) Extent of consolidation of the government’s cash balances
Belarus has made good progress in implementing a TSA for consolidation of its cash balances for
most central government resources. All government accounts are also controlled within a single category
of accounts, Group 36, allowing easier recognition of government bank accounts than might otherwise occur.
Some balances do remain outside the TSA including the following: own source revenue accounts of general
49
government budget institutions (4.43% of total revenues); earmarked development partner funds (0.24% of
total expenditure); cash received for Humanitarian Aid (0.31% of total expenditure); and funds collected by
the SCustC which are held as collateral and represent money held in trust.
50
Local government budgets are also managed through regional treasury offices, but are held in
separate bank accounts in commercial banks, specifically Belarusbank or Belagroprombank. Local
governments also maintain special accounts termed “subbotnik” where funds received through t he voluntary
work provided by employees is held. 50% of the funds collected are retained in separate accounts while 50%
is transferred to the Treasury account. These amounts are small.
Despite these exceptions, the majority of central government funds are managed within the TSA and
reconciled daily. In addition the MoF has the capacity to undertake daily interrogation and reporting on the
fund balances for general government (central and sub-national) through the budget classification used in the
general ledger of the treasury system.
Score: B
(iii) Systems for contracting loans and issuance of guarantees
The legal and procedural framework for debt management is well articulated. The legislative framework
is consistent in that the Minister of Finance signs on behalf of the government and is also responsible for the
oversight, recording and reporting on all debt and guarantees. Article 52 of the Budget Code provides the
main legal basis for external and domestic borrowing and guarantees. It states that the President must
approve all external loans and guarantees to non-residents. The Council of Ministers is also given specific
power in this regard. The Minister of Finance signs for all external debt on behalf of government. The Minister
also enters into all domestic loans and guarantees on behalf of government. Article 56 of the Budget Code
also provides for the issuance of domestic securities, and these are approved within the overall framework of
the budget approval process. The MoF also manages domestic securities arrangements. In addition,
paragraph 4 of the Presidential Edict 252 (April 2006) defines the purposes for external borrowing as”
Financing of central government budget deficit; solving social and environmental problems, mitigation of
consequences of natural disasters and supporting economic reforms; and other purposes as identified by the
47
It does not include local government or non-guaranteed PE borrowing.
48
The Debt Management Performance Assessment (DeMPA) Report (2011) by the World Bank assessed Belarus as
meeting the highest rating in the areas of debt recording and reporting
49
Article 105 of the Budget Code requires these to be included in the TSA, however, this requirement has been set- aside
in the Annual Budget Law each year, including in 2012
50
There would not necessarily be an expectation that local government funds be consolidated into the central government
TSA. Differing practice exists internationally. However, as these funds are also managed through the Treasury, they are
included for the purposes of this assessment.
57
President and legislation”. Paragraph 4 also defines the purposes for the provision of external guarantees: “
For import of raw materials, energy resources and other goods and services in case of a critical supply
situation with regard to the national economy; for implementation of investment projects and state programs
according to the priorities for economic development in the country; for other purposes in accordance with the
legislation.” Paragraph 3 of the Council of Ministers Resolution 118 (August 18, 2003) on Redemption of
State Securities states: “that government securities (covering domestic and international markets) are issued
by the MoF on behalf of the Republic of Belarus to; (i) finance budget deficit; and (ii) refinancing (roll-over) of
the earlier placed state securities issues”.
The issuance of debt and guarantees for central government is clearly defined in the legislation.
Presidential Edict 359 (June 30, 2008) provides the legal basis for issuing domestic guarantees. The Council
of Ministers is authorized to make the decision, and the Minister of Finance signs on behalf of the Council.
The decision should be made on the basis of a range of criteria assessing both the financial performance of
the entity seeking the guarantee and its compliance with various legislative requirements. Article 13 of the
annual budget law also sets monetary ceilings for external and domestic debt and guarantees. In 2012 they
are: domestic public debt, 34 trillion roubles; domestic guaranteed debt, 20 trillion roubles; external public
debt, U.S. $ 14.3 billion; and external guaranteed debt, U.S. $ 5 billion. Clear criteria exist for borrowing and
issuing guarantees, and a single entity, the Ministry of Finance, signs for debt and guarantees. However, debt
and guarantee limits are not determined in accordance with fiscal targets but are controlled through monetary
ceilings which are issued in the annual budget law.
Score: B
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-17 Recording and management of C+ B+ Scoring Method M2.
cash balances, debt and
guarantees
(i) Quality of debt data recording A A Debt recording and reporting for central government
and reporting is very well developed. Comprehensive reporting
occurs monthly
(ii) Extent of consolidation of the C B Cash balances are consolidated daily in the
Government’s cash balances Treasury system, however, there are a number of
extra budgetary funds that remain outside the TSA
(iii) Systems for contracting loans D B The issuance of debt and guarantees for central
and issuance of guarantees government is clearly defined in the legislation,
criteria exist for borrowing and issuing guarantees,
and, a single entity, the Ministry of Finance, signs
for debt and guarantees. Monetary ceilings rather
than fiscal targets are issued in the annual budget
law
Comparability of scores and performance change: Scores comparable.
(i) No change in performance;
(ii) Performance improvement. Belarus has made improvements in relation to cash management by extending the
coverage of the TSA;
(iii) Performance improvement. Controls over loans and guarantees have improved since 2009.
58
3.4.6 PI-18 Effectiveness of payroll controls
This indicator assesses the effectiveness of the payroll system. The scope of this indicator is all payrolls
of the central government, even if they cover different segments of the public service, including all MDAs and
AGAs. The assessment of all dimensions is done as at the time of assessment, except the fourth dimension
which is assessed for the last completed three FYs.
(i) Degree of integration and reconciliation between personnel records and payroll data
The payroll process in Belarus is a combination of central control through regulations, instructions
and standards and decentralised processing and management. A range of laws and regulations apply to
remuneration of employees including rates of pay, allowances, bonuses and length of service. A number of
legal instruments also deal with ensuring comparability of employment levels across different parts of
government. Two laws apply: The Labor Code of the Republic of Belarus (July 26, 1999) and The Law On
State Service of the Republic of Belarus" (14 June 2003). There are additionally two Presidential Edicts, three
Council of Minister’s Resolutions and two Ministry of Labor Resolutions guiding various aspects of
51
employment remuneration .
Both the human resource management and accounting and payment functions are decentralized (but
segregated activities) to budget institutions. This includes decisions regarding how personal information is
maintained and the systems used for payroll processing. There is not one system in use in Belarus and there
is no central record keeping regarding public servants. Within each budget institution, changes to the “staff
list”, which is the list of approved employees, occur periodically, as changes are required. This is authorised
at a senior level after the list is reviewed by human resources, accounting, legal and control departments.
New recruitment is managed in a similar way. Thus senior control exists over who is employed, the
remuneration levels, along with allowances and bonuses. The degree of automation regarding human
resource management is high in Belarus, with all budget entities visited utilising some form of software.
Accounting is also automated with entities generally also using a payroll system. However, the system based
controls are supplemented by paper based approvals for changes. In general, changes between the personal
records in human resources and the payroll in accounting are not directly linked and are taking place once a
52
month, although controls over these changes appear to be very rigorous . At least one ministry is currently
implementing integrated human resource management software, which will allow a direct link between human
resource records and the payroll, although even in this ministry, the current practice is for this to be
supplemented by paper based records and orders.
Score: B
51
Presidential Edict № 770 (28.12.1999) On measures to improve remuneration of labor of budget organization employees;
Presidential Edict № 254 (04.06.2013) "On wages of civil servants and military personnel"; Resolution of the Council of
Ministers number 2070 (31.12.1999) "On measures to improve the conditions of remuneration of employees of
organizations financed from the budget" Resolution of the Council of Ministers № 471 (13.05.1997) "On Approval of the
Procedure and Conditions of calculating length of service of civil service"; Resolution of the Council of Ministers № 564
(29.06.2001) "On the correlation of classes of public servants and public positions in national government bodies, local
government and self-government"; Resolution of the Ministry of Labor № 6 (21.01.2000), "On measures to improve the
conditions of remuneration of employees of organizations financed from the budget and benefiting from subsidies" and the
order of application of the Unified Tariff Scale of the workers of Belarus, approved by the Ministry of Labor of the Republic
of Belarus of № 21 (21.01.2000);
52
Payments for staff remuneration may be made through two different systems, one for budget resources and a separate
system for extra budgetary resources.
59
(ii) Timeliness of changes to personnel records and the payroll
Changes are made to both the personal and payroll records as required, to reflect any changes to the
“staff list” that may have occurred along with the changes to monthly remuneration including
bonuses. All entities visited indicated that these changes occur within the month that they occur and that no
delays were being experienced.
Score: A
(iii) Internal controls of changes to personnel records and the payroll
As mentioned in PI18 (i), all changes to personal records and the payroll are occurring at a senior
management level within each budget institution. These “orders” are in hard copy and duly authorised,
and sent to both human resources and accounting, specifically to the Head of each of these units in the
budget institution. The current “staff list” is sent from Human Resources to Accounting each month.
Reconciliation also occurs back to Human Resources after the payroll is processed. One external entity also
contributes to the integrity of this information: social insurance contributions are deducted for each employee
and where issues or anomalies exist the Social Protection Fund will send queries back to the budget
institution, requiring a follow-up review and reconciliation, although this is not a formal part of the control
framework. Budget institutions are maintaining both system based and hardcopy records of all changes to
personal and payroll, which are auditable.
Score: A
(iv) Existence of payroll audits to identify control weaknesses and/or ghost workers
As the payroll function is decentralised, the process of review also occurs in a decentralised manner.
When a control body inspects a specific budget entity, it is usually not specifically focused on personal
records and payroll, but part of a broader compliance and review audit. Nonetheless, personal records and
payroll are an important element of these inspections. Presidential Edict 510, On improvement of the control
(supervision) in the Republic of Belarus" specifies that institutions must be audited according to an
assessment of risk: low, medium and high. Institutions receiving budget funds are automatically classified
high risk. The frequency of audits for institutions included in the high risk group is expected to be between
53
one and two years, but not more frequently than once a year. In practice audits take place within a two year
period.
Score: B
PI Dimension Score Score Justification for 2013 score
2010 2013
PI-18 Effectiveness of payroll A B+ Scoring Method M1.
controls
(i) Degree of integration and A B Personal records and the payroll are updated once
reconciliation between a month prior to the payroll being issued
personnel records and payroll
data
53
Article 7 of the Presidential Edict №510 on control activities.
60
PI Dimension Score Score Justification for 2013 score
2010 2013
(ii) Timeliness of changes to A A Payroll is updated each month reflecting all changes
personnel records and the occurring during the preceding month
payroll
(iii) Internal controls of changes to A A An audit trail exists regarding all changes to
personnel records and the personal records and the payroll
payroll
(iv) Existence of payroll audits to A B Payroll audits occur for every budget institution at
identify control weaknesses least every two years
and /or ghost workers
Comparability of scores and performance change: Scores comparable.
(i) No change in performance since 2009, however, based on the evidence available, the appropriate score for
this dimension is B
(ii) No change in performance
(iii) No change in performance
(iv) No change in performance since 2009, however, based on the evidence available, the appropriate score for
this dimension is B
3.4.7 PI-19 Competition, value for money and controls in procurement
54
This indicator assesses the effectiveness of the procurement system . The first dimension focuses on
the existence and scope of the legal and regulatory framework, while the other dimensions focus on the
operation of the system. The assessment covers all procurement for central government using national
procedures, including all MDAs and AGAs, and is done as at the time of assessment for all dimensions
except the first dimension which is assessed based on the last completed fiscal year (i.e. based on the
procurement regulations in place prior to the Public Procurement Law coming into force).
(i) Transparency, comprehensiveness and competition in the legal and regulatory framework
A new legislative framework for procurement was adopted in 2012. The Law of the Republic of Belarus
On Public Procurement of Goods (Work, Services) (hereinafter referred to as the Law) was adopted on
July 13, 2012 and came into force from January 1, 2013. Subsequently, in December 2013 two new laws
were introduced (1) the Edict of the President of the Republic of Belarus dated December 31, 2013 № 591
(On undertaking procurement in construction) and (2) Resolution of the Council of Ministers dated January
31, 2014 No. 88 (On organizing and undertaking procurement of goods (works, services) and settlements
between the client and the contractor in construction projects). The regulatory framework prior to 2012 was
extremely fragmented. The public procurement process was governed by a number of edicts and resolutions
including: Presidential Edict №618 On Public Procurement in Belarus (Nov 17 2008); Presidential Edict №58
On Contract Bidding in Construction (Feb 7, 2005); Resolution of the Council of Ministers №1987 on Public
Procurement (Dec 20, 2008); Presidential Edict №261 on Electronic Auctions (March 26, 2012); and
supplementary provisions for specific goods (medical, agriculture, sports and tourism).
54
The PEFA methodology was modified in 2011 by adding a fourth dimension and completely reformulating the other three
to reflect and provide linkages to the OECD-DAC ‘Methodology for Assessing Procurement Systems’ (MAPS) tool.
61
While the regulatory framework did define competitive bidding as the default procurement method, it
provided for extensive exceptions. The regulations also provided for domestic preferences (for mineral
fertilizers, medicines and medical equipment) and an exhaustive list of goods and services which are not
subject to public procurement. Presidential Edict 618 (art 7) provided for public access to government
procurement plans, bidding opportunities and contract awards but not data on the resolution of procurement
complaints.
Table 3.22 Key criteria for assessing legal and regulatory framework for procurement
D Be organised hierarchically and precedence is clearly established. X
Be freely and easily accessible to the public through appropriate means. X
Apply to all procurement undertaken using government funds. √
Make open competitive procurement the default method of procurement and define clearly the X
situations in which other methods can be used and how this is to be justified.
Provide for public access to all of the following procurement information: government procurement X
plans bidding opportunities, contract awards, and data on resolution of procurement complaints.
Provide for an independent administrative procurement review process for handling procurement X
complaints by participants prior to contract signature.
Source: World Bank staff based on the legislation of Belarus.
Prior to the enactment of the new Law there was no fully functioning complaints mechanism.
Complaints were addressed to the purchasing authority or its superior body and could be appealed to the
Courts. As discussed in PI-19(iv) in 2013 a Complaints Commission was established by the Ministry of Trade
(MoT).
Score: D
(ii) Use of competitive procurement methods
Belstat collected detailed public procurement data until 2012 on a semi-annual basis. This process
was a bottom-up process from MDAs, who prepared aggregated information which was then consolidated at
a country level by Belstat. These reports were then provided to the MoE who was the authority in overall
charge of public procurement until the enactment of the new Law (now the MoT). This procurement data is
made publicly available on the MoT website (www.mintorg.gov.by). Starting with 2013 public procurement
data is collected by Belstat on an annual basis.
According to the data available for the last FY (2012) the breakdown of procurement by types of procedure is
presented in Table 3.23.
62
Table 3.23 Procurement by types of procedure
2012, Value,
Procedure 2012 Number 2011 Number
trillion BYR55
Open tender 6,523 6,817
Closed tenders 106 90
Quotation request 12,561 9,563
Competitive list 111,976 102,070
Negotiation procedures 27,330 22,618
Electronic auction 1,079 415
Sub-total - Competitive procedures 159,575 31.6 (58%)
Non-competitive procedures 83,009 22.5 (42%) 79,935
Total 242,584 54.1
Source: Ministry of Economy, Belstat.
An Annex to the Law provides 48 justifications for the use of sole source public procurement. This
includes detailed lists of items which can be sole sourced rather than a higher level description of the
justification or principals of using sole source procurement. The present procurement system lacks a
comprehensive process to validate whether methods used by procuring agencies other than open competition
are justified in accordance with legal requirements.
Score: D
(iii) Public access to complete, reliable and timely procurement information
The Law requires government bidding opportunities and contract awards to be made available to the
public through electronic means. Procuring entities are also required to prepare an annual procurement
plan and place it on the official website (www.icetrade.by) before March 8th of the current year, along with
subsequent amendments. There is no legal requirement for data on the resolution of procurement complaints
to be published. The requirements to publicize procurement plans, bidding opportunities and contract awards
are relatively new and the assessment team were informed that key bidding information (e.g. bidding
documents and draft contracts) and notification of contract awards are, as of yet not routinely filed by
procuring entities; nor does the MoT have the capacity to monitor compliance. The assessment team were
56
informed that the MoT is working with key trading facilities so that their software routinely flags up gaps in
the publication of bidding and contractual information.
Score: D
55
Based on concluded contracts.
56
These are (i) Official procurement website Internet Center of Electronic Trade (www.icetrade.by), operated by Republican
unitary enterprise "National center for marketing and price study" subordinate to the Ministry of Foreign Affairs, (ii) e-market
place (EMP) of the Republican unitary enterprise "National center for marketing and price study" (www.goszakupki.by) and
(iii) e-market place of Open JSC "Belarusian Universal Commodity Exchange" (www.zakupki.butb.by).
63
(iv) Existence of an independent administrative procurement complaints system
The Law defines the procedures for the administrative procurement complaints process . According to
the Law a complainant may make a complaint to the authorised body on public procurement (MoT) during the
tender process or, in the event of the contract being awarded within 10 working days of bidders being notified
about the selection of a successful bidder. A complaint using administrative procedures does not preclude
the right of the complainant to seek restitution through the Economic Court. Under the auspices of the MoT a
57
Complaints Commission was established in 2013 which presently has seven members (from the MoT, MoE,
Belarusian Universal Commodity Exchange, the National Center for Marketing and Prices, Consortium
"Belresursy", the Ministry of Architecture and Construction and the Ministry of Health). Representatives are
considered to have relevant expertise in procurement and legal matters however a major weakness of the
present structure is the lack of representation from the private sector or civil society. The assessment team
was informed that, while no formal conflict of interest rules exist, in practice Commission members refrain
from voting on complaints which relate to their MDA. There is no fee charged for making a complaint and the
Commission has the right to suspend the procurement process while a complaint is being ruled upon. An
unusual feature of the current complaints procedures is that Complaints Commission members can be
subject to a fine if a complaints case is upheld in the Economic Court. The MoT Regulation requires the
maximum period of investigation not to exceed 30 days. Under PEFA methodology, the absence of members
from the private sector or civil society results in the Commission not being fully independent. The default
score for this sub-indicator is therefore D.
Table 3.24. Key criteria for existence of an independent administrative procurement complaints system
Complaints are reviewed by a body which:
(i) is comprised of experienced professionals, familiar with the legal framework for procurement, x
and includes members drawn from the private sector and civil society as well as government.
(ii) is not involved in any capacity in procurement transactions or in the process leading to contract √
award decisions.
(iii) does not charge fees that prohibit access by concerned parties. √
(iv) follows processes for submission and resolution of complaints that are clearly defined and √
publicly available.
(v) exercises the authority to suspend the procurement process. √
(vi) issues decisions within the timeframe specified in the rules/regulations. √
(vii) issues decisions that are binding on all parties (without precluding subsequent access to an √
external higher authority).
Addressing complaints under the new Law is a major part of the MOT's Procurement Department's
workload. The assessment team was informed that the Commission addresses 6-7 complaints per week and
meets at least twice a week.
Score: D
57
Under the Resolution of the Ministry of Trade No 12 (26 June 2013).
64
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-19 Competition, value for money C D Scoring Method M2.
and controls in procurement
(i) Transparency, n/a D Prior to the 2012 Procurement Law the regulations
comprehensiveness and were extremely fragmented. Regulations did define
competition in the legal and competitive bidding as the default procurement
regulatory framework method however the regulations also provided for
domestic preferences (for mineral fertilizers,
medicines and medical equipment) and an
exhaustive list of goods and services which are not
subject to public procurement. Regulations provided
for public access to government procurement plans,
bidding opportunities and contract awards but not
data on the resolution of procurement complaints.
Prior to the enactment of the new Law there was no
fully functioning complaints mechanism.
(ii) Use of competitive n/a D While the data provided on the Ministry of Trade
procurement methods website appears to be comprehensive the present
procurement system lacks a comprehensive system
to validate whether methods used by procuring
agencies other than open competition are justified in
accordance with legal requirements.
(iii) Public access to complete, n/a D The Law requires government bidding opportunities
reliable and timely and contract awards to be made available to the
procurement information public through electronic means. There is no legal
requirement for data on the resolution of
procurement complaints to be published. The
government lacks a reliable system to ensure that
these requirements are complied with.
(iv) Existence of an independent n/a D A procurement complaints system is in operation
administrative procurement however a default score of D has been applied as
complaints system the Complaints Commission does not have
representation from the private sector or civil
society.
Not comparable. The revised methodology (introduced in 2011) uses 4 dimensions instead of 3 and is more
comprehensive.
3.4.8 PI-20 Effectiveness of internal controls for non-salary expenditure
This indicator assesses the internal control system for non-salary expenditures as at the time of
assessment. It covers only the control of expenditure commitments and payment for goods and services,
casual labor wages and discretionary staff allowances. Debt management, payroll management and
management of advances are covered by other indicators.
65
(i) Effectiveness of expenditure commitment controls
Article 138 of the Budget Code clearly defines any commitments beyond budgetary means as a
breach of the Code, and therefore subject to sanctions. “Assuming of liabilities not supported by the
budget allocations if other sources of financing of the said liabilities are not available shall be interpreted as
the use of the budget proceeds in violation of the budget legislation.”
A further element of control over commitments occurs through the ROSPICE, which is the process
whereby annual appropriations are sub-allocated quarterly. The quarterly ROSPICE breaks down
controls into very detailed cash line-item limits. These cash limits are entered into the Treasury system and
represent hard cash controls. While the budget institution can seek changes to the allocations in the
ROSPICE, this is subject to MoF approval. This imposes a requirement for very detailed expenditure planning
in budget institutions.
In addition, certain categories of expenditures, including capital, are subject to additional controls
58
requiring the registration of contracts in the MoF. However, beyond the specific expenditure categories,
the use of commitment controls is voluntary, and in practice not utilised. Notwithstanding that the
combination of the ROSPICE’s detailed planning requirements, and the general high compliance culture in
Belarus regarding budgetary spending, creates a strong level of cash control within the ROSPICE and overall
budgetary appropriation limits, Belarus has implemented commitment controls for only specific categories of
59
expenditures.
Score: C
(ii) Comprehensiveness, relevance and understanding of other internal control rules/ procedures
Belarus has a very comprehensive set of internal controls. The Budget Code is the overarching piece of
legislation, underpinned by a range of Instructions, Orders and Edicts. All of these legislative requirements
are readily accessible to all public servants (and the public) through various legal databases which are
available on the internet. Discussions with a range of officials both in the MoF and in line ministry roles,
demonstrated a strong awareness of the requirements of the Budget Code and the subsidiary rules. A
common feature of interviews was the ability of officials to be able to quote these rules verbatim. This
demonstrated a strong degree of assimilation of the rules into the general operations and culture of budget
institutions.
There is some duplication in the control framework which potentially undermines efficient budget
execution. Duplication is particularly relevant in relation to a continued dependence on manual authorisation
and hardcopy documents, despite a high degree of automation and system’s based processing. Belarus has
issued a Law on electronic signatures, and this may therefore be a transitional phase.
Score: B
(iii) Degree of compliance with rules for processing and recording transactions
The Treasury indicated that some errors may occur during payment processing, including minor
breaches regarding the timely submission of supporting documents, but in general accuracy and
58
Article 4 of Resolution of the MoF 120 on the Instruction on settlements on construction works (December 17, 2001).
59
A commitment can be recognised by registering a contact in the treasury system. This is often reflected by issuing a
system’s based purchase order from the accounting system, which formally recognises the commitment, and that funds
have been “set aside” to honour the commitment when the goods and services are delivered.
66
completeness of transactions appears to be high. Information from ministry inspection units also indicate
some compliance issues, including errors. KRU reports also demonstrate that errors do occur. However,
overall Belarus has a strong culture of compliance, in part assured by the number of ex-post entities that are
entitled to review budget institutions.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-20 Effectiveness of internal B+ C+ Scoring Method M1.
controls for non-salary
expenditure
(i) Effectiveness of expenditure B C While a commitment control process exists, it is only
commitment controls mandatory for specific categories of expenditures.
(ii) Comprehensiveness, B B The control framework is comprehensive and well
relevance and understanding understood. The advent of system based controls
of other internal control rules/ has not fully replaced manual paper based controls,
procedures leading to some duplication
(iii) Degree of compliance with A A Compliance level with internal controls is very high.
rules for processing and
recording transactions
Comparability of scores and performance change: Scores comparable.
(i) No change in performance since 2009, however, based on the evidence available the appropriate score for this
dimension is C, as Belarus does not systematically register contracts and create a commitment against the
budget appropriations.
(ii) No change in performance
(iii) No change in performance
3.4.9 PI-21 Effectiveness of internal audit
This indicator assesses the effectiveness of the internal audit system (as opposed to control activities) based
on the latest available financial and operational information.
There have been some significant developments in the arrangements for financial inspection and
control in Belarus since the 2009 PEFA. These include regulations on the performance of State control and
inspection; and introduction of legislation on departmental (or agency) control.
State Inspection and Control
Edict of the President № 510 on inspections was introduced in 2009 primarily to improve the
investment climate by reducing the number of random inspections faced by private and public sector
bodies in Belarus. To achieve this Edict 510 aims to integrate and improve the coordination of the numerous
inspection agencies in the country, however it has created an extremely cumbersome system of inspection in
the public sector which is not in accordance with modern international systems of public internal financial
control. Under the Edict, control agencies are required to submit six monthly proposals for inspecting
subordinate bodies to the SCC, Belarus's Supreme Audit Institution. The SCC prepares a consolidated
67
coordination plan listing of all inspections to be carried out in the next six months. The coordination plan is
then posted on the SCC website.
Departmental Control
Edict of the President of the Republic of Belarus № 325 of June 22, 2010 “On Departmental Control in
the Republic of Belarus” (hereinafter referred to as Edict № 325) established the concept of
departmental control. All ministries and agencies, as well as oblast and Minsk city executive committees
(around 150 bodies listed in the Annex to Edict 325) have departmental control services. Edit 325 specifies
the key tasks of departmental control bodies which ensure control over compliance of subordinate
organizations with legislation; detecting and preventing violations with the law and ensuring the targeted and
efficient use of state property. This remit is fulfilled through inspection and monitoring activities. The
legislation contains provisions aimed at ensuring independence of the departmental control service;
departmental control bodies are subordinated to the manager of the line ministry/agency or sub-national
government. At the same time a major part of departmental control’s activities has to be planned and
conducted according the requirements of Edict 510 (i.e. in accordance with the six-month coordination plan
posted on SCC website).
Inspections of Rayons and Local Executive Committees
Financial inspections conducted by SCC and Ministry of Finance KRU on the execution of Local
Executive Committees budgets are not scheduled under edict №510 provisions. For these inspections
a plan is approved by the chair of the SCC with staff of the SCC and MoF KRU taking part.
(i) Coverage and quality of the internal audit function
Internal audit - in the sense of an independent service without operational responsibility advising
management on overcoming operational weaknesses - is not currently part of the Belarus system. In
accordance with Presidential Edit 325 inspection activities focus on legal compliance and detection of
violations of the law. The Edit also requires control agencies to review the effective use of state assets and
the assessment team noted some limited work in this area; for example inspections might comment on the
number of personnel in an establishment and the efficient use of government buildings when compared to
norms. There are no published professional standards for the conduct of inspection activities however the
MOF does organize extensive training courses twice a year. KRU coverage of financial inspection is
comprehensive since the Law defines all budgetary organizations as high risk, however there is little
inspection work which is focused on systems ’ monitoring. In the absence of an internal audit function the
default score for sub-dimension (i) is a D, while sub-dimensions (ii) and (iii) are non-applicable.
Score: D
(ii) Frequency and distribution of reports
State Inspection and Control
All budget entities are categorized as high risk entities and should principally be audited annually.
There is a provision that these audits should not occur more frequently than annually. There is considerable
overlap between the financial control activities of KRU and SCC and this is addressed in practice through joint
control activities coordinated by the SCC (see PI-26). The focus of MOF and Departmental Control KRUs is
on financial compliance and reports.
68
Under Edict 510 an inspection report is prepared and signed by the inspector no later than 5 days
after completing the inspection. This report is sent to the inspected organization which has fifteen days to
appeal the findings. A final decision is issued after thirty days. The organization must respond to the findings
in writing and the inspecting agency carries out spot checks to ensure that the findings are acted upon. If
damages exceed 1000 basic units (approximately USD 14,130 - November 2013) the findings of the
inspection are forwarded by the inspecting agency (KRU, SCC) and to law enforcement agencies for further
investigation. There is no requirement to share the findings with the superior body of the inspected entity or
SCC.
Departmental Control
Under Edit 325 all departmental control bodies also submit aggregated statistical reports to the MoF
KRU (detailing for example budgetary violations and administrative fines). Starting from 2013, these
reports are part of departmental reports of the MoF and the procedure for their completion and submission is
defined by Resolution of the MoF № 67 of November 30, 2012 “On Approving the Forms of Departmental
Reports for 2013”.
Inspections of Rayons and Local Executive Committees
A large number of separate reports are prepared and agreed by SCC and KRU inspectors. After the
inspection report is finalised the SCC and/or MOF start to track management responses pertaining to their
findings and, if applicable collect administrative fines. For larger violations, above a certain threshold, the MoF
informs the respective ministry or law enforcement agencies. The MoF’s KRU prepares a summary table of
the finding of KRU staff across the oblast and submits it as the input to the overall SCC inspection report.
SCC in turn adds their part of the findings and prepares an aggregate paper on the inspection of a given
oblast. To discuss the findings of the report (1) SCC may convene a circuit board meeting in the inspected
oblast, or (2) such a meeting may be called directly by the Financial Department (MoF’s territorial unit) of the
inspected oblast. An output of these hearings are Decisions, which contain a summary of the findings
60
together with a management response plan .
Notwithstanding the above financial inspection arrangements, the absence of an internal audit function makes
this dimension score not-applicable.
Score: Not applicable
(iii) Extent of management response to internal audit findings
As the focus of inspection findings is on identifying compliance issues and violations with the Law,
there is no evidence available about management responses to systemic weaknesses identified by
KRU or other inspections. After the report is issued to the inspected agency it has the right to contest the
findings of the control agency and may take civil proceedings in Court if it is dissatisfied with the response.
After the report is agreed the control agency issues an Order to require the findings of the inspections to be
acted upon. The focus on top-down control with penalties for non-compliance ensures actions by
management on findings is prompt and comprehensive however does nothing to address systemic
weaknesses within government.
Score: Not applicable
60
Although in practice by the time the hearing is held many measures may already have been taken by management.
69
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-21 Effectiveness of internal audit D+ D Scoring Method M1.
(i) Coverage and quality of the C D Internal audit in the sense of an independent service
internal audit function without operational responsibility advising
management on overcoming operational
weaknesses is not currently part of the Belarus
system. However a financial control/inspection
function is operational and coverage of budget
organizations is high. Some systems work is carried
out however there are no published professional
standards for the conduct of inspection activities.
(ii) Frequency and distribution of D n/a Not applicable - in the absence of comprehensive
reports internal audit coverage precludes any systematic
distribution of reports.
(iii) Extent of management D n/a Not applicable - a systems review has hitherto been
response to internal audit only a by-product of inspection activity.
findings
Comparability of scores and performance change: Scores comparable.
(i) No significant change in performance. The 2013 score reflects improved availability of data for the current
assessment.
(ii) Not applicable - based on guidance in the Field Guide issued after the 2009 Assessment.
(iii) Not applicable - based on guidance in the Field Guide issued after the 2009 Assessment.
3.5 Accounting, recording and reporting
3.5.1 PI 22: Timeliness and regularity of accounts reconciliation
This indicator assesses the overall reconciliation and clearance process of central government bank
accounts and other accounting information related to suspense accounts and advances (e.g. travel
and construction advances). This indicator assesses the situation as at the time of the assessment.
(i) Regularity of bank reconciliations
As noted in PI-17, there is a single treasury system covering central government, oblasts and rayons.
For central government most revenue and expenditure pass through accounts at the NBRB, with automated
reconciliations of flows and balances between accounting and banking records. Oblast and rayon treasuries
operate through accounts of local bodies of the MoF opened at Belarusbank, with similar daily reconciliation
of flows and balances. Both systems automate the reconciliation process and information on discrepancies
and unidentified payments must be allocated at least on a monthly basis; for execution reporting. In 2010-
2012, the treasury system covered all budget organizations, except for their own-source revenue.
Monthly reconciliations take place in the context of the submission of budget execution reports to the
MoF. Spending authorities responsible for budget operations and extra-budgetary revenue and expenditure
are required to carry out a reconciliation between their expenditure records and their bank account data
before submitting their budget execution reports; thereby ensuring that reconciliations are completed at least
70
on a monthly basis. Budget institutions provide Treasury with information on the balances left on their own-
source bank accounts on a quarterly basis as part of the procedures in preparing the budget execution
reports.
Score: A
(ii) Regularity of reconciliation and clearance of suspense accounts and advances
Oblast and rayon balances at Belarusbank are part of the single treasury system. Information about
them is accessible to the MoF Main Treasury on a daily basis and discrepancies and unallocated payments
are resolved at least on a monthly basis as part of execution reporting. Business and travel requests are
authorized in accordance with laid down procedures and advances are paid into staff members ’ bank
accounts. Regulations require business trips to be accounted for within three business days of the staff
members return to the office, and this is complied with in practice. There are clear procedures for
construction advances - contractors can claim 50 per cent advances for work to be carried out in the month,
which must be invoiced within a month to clear the obligation. Exceptionally, 100 percent advances for non-
standard equipment can be made if delivery of the goods is within five working days. Treasury closely
monitors the closure of construction advances and advised the assessment team that violations of the terms
of advance provision attract penalties and breaches are rare.
Score: A
PI Dimension Score Score Justification for 2013 score
2010 2013
PI-22 Timeliness and regularity of A A Scoring Method M2.
accounts reconciliation
(i) Regularity of Bank A A Bank reconciliation for all treasury bank accounts
reconciliations takes place on a daily basis, own-revenue accounts
are reconciled at least on a monthly basis.
(ii) Regularity of reconciliation and A A Unidentified payments are cleared at least monthly
clearance of suspense as part of end of month reporting procedures.
accounts and advances Travel advances are accounted for within three days
of completion of a trip. Procedures for construction
advances are clear and monitored closely by the
Treasury.
Comparability of scores and performance change: Scores comparable.
(i), (ii) No change in performance.
3.5.2 PI-23 Availability of information on resources received by service delivery units
This indicator assesses the extent to which the PFM systems effectively support front-line service delivery
(i.e. schools and primary health care centers) through providing information on transfer of resources to the
units (in cash or in kind) vis-à-vis the budget estimates. The assessment covers the last three completed FYs.
Budget resources are expended by service delivery units through the accounts of treasury bodies
with cash expenditure reflected in the records of a local treasury and reconciled with accounting
71
records. The right of a budget organization to generate own-source revenues requires the permission of its
superior body. Expenditure lists provide guidelines on how own-source revenues are spent but do provide
managers with discretion on its use; assessment visits noted expenditures on staff bonuses, consumables
(drugs, textbooks and equipment/vehicles). In kind contributions (e.g. equipment provided to a hospital by
WHO) are recorded in the accounting records. The accounting systems in budget organizations are reliable
and ensure the timely and complete accounting for operations with both budgetary and extra-budgetary
resources, although the latter are managed in bank accounts outside the treasury system.
Based on accounting data, all budget organizations—irrespective of their subordination—prepare and
file monthly, quarterly, and annual reports on the use of budget resources and own-source revenue.
Annual reports cover expenditures of each school, hospital etc. and the information is available to check
whether service providers receive resources (both financial and in-kind) as planned in the budget although
these accounts are not published. Given the level of control observed across the Belarus public finance
system the risk of diversion or misappropriation of resources from front-line education or health facilities is
assessed as extremely low.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-23 Availability of information on B A Accounting systems provide reliable information on
resources received by service all types of resources received in cash and in kind
delivery units by budgetary units - information is compiled into
reports on a monthly, quarterly and annual basis.
Comparability of scores and performance change: Scores comparable.
No change in performance, however, based on the evidence available, the appropriate score for this indicator is A.
3.5.3 PI-24 Quality and timeliness of in-year budget reports
This indicator assesses the ability to produce accurate and comprehensive reports from the
accounting system on all aspects of the budget, at both the commitment and the payment stage. The
assessment is based on the last completed financial year (FY2012).
(i) Scope of reports in terms of coverage and compatibility with budget estimates
Comprehensive reports on the execution of the republican budget are prepared every month and
progressively more detail is included in the quarterly and annual reports. The reports address
functional, administrative and economic classification and allow direct comparison with the original budget.
Reporting by MDAs on the source and usage of own-source revenues is received by the Treasury on a
quarterly basis. There is no separate reporting of expenditure at the commitment stage. In a similar way,
oblast and rayon bodies receive reports on budget execution from budget organizations, including information
on own-source funds. Consolidated reports are submitted by local governments to the MoF on approved
forms.
Score: C
72
(ii) Timeliness of the issue of reports
Accurate reports on funds held in the TSA are available within 2 working days and are cross checked
to the information provided by MDAs on the 15th of the following month. Formally monthly reports are
submitted to the MOE, Government, Belstat, SCC and internally within MOF by the 25th of the month
however preliminary reports are made available to users much earlier. The budget execution reports is posted
on the MOF website by the end of the following month on a slightly more aggregated basis.
Score: A
(iii) Quality of information
As noted in PI 24 (ii) above the majority of monthly information provided by MDAs is reconciled to the
Treasury TSA. Own source revenues amount to approximately 5-6 percent of total revenues and are
managed outside the TSA however there is no evidence of concerns regarding the quality of data provided in
these quarterly reports provided to the MOF.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-24 Quality and timeliness of in- B+ C+ Scoring Method M1.
year budget reports
(i) Scope of reports in terms of B C Comprehensive reports on the execution of the
coverage and compatibility with republican budget are prepared every month and
budget estimates progressively more detail is included in the quarterly
and annual reports however there is no separate
reporting of commitments.
(ii) Timeliness of the issue of A A Accurate execution reports on TSA transactions are
reports available shortly after the month end and reporting
on own-source revenues and expenditures is done
on a quarterly basis. Reports are formally
distributed and published within a month of the
month end.
(iii) Quality of information A A There are no material concerns regarding data
accuracy.
Comparability of scores and performance change: Scores comparable.
(i) Performance is consistent with 2009. Based on the evidence available, the appropriate score for Dimension (i)
is C as expenditure is only reported on a payment basis.
(ii) No change in performance.
(iii) No change in performance.
73
3.5.4 PI-25 Quality and timeliness of annual financial statements
This indicator assesses the ability to prepare year-end financial statements in a timely fashion. The
assessment of the first dimension focuses on the last annual financial statement provided. The assessment of
the second dimension focuses on the last annual financial statement submitted for audit. The assessment of
the third dimension focuses on the last three years’ financial statements.
(i) Completeness of the financial statements
61
In accordance with the Budget Code the MOF is required to prepare the annual report of the
execution of the republican budget (together with sources of financing) in the same format as the
62
approved budget. The Budget Code also specifies a number of supplementary reports on (1) the
execution of expenditure on the reserve fund, (2) guarantees issued by the Government, (3) public debt, (4)
extension and repayments of budget loans and credits, and (5) republican accounts payable. From 2010
comprehensive data on financial assets is collected from budget institutions however this is not reported in
63
the annual budget execution report. The Budget Code provides similar provisions for the execution of local
budgets.
Score: C
(ii) Timeliness of submission of the financial statements
The statement of the execution of the republican budget (along with the execution of the Social
Protection Fund) is submitted to the Government by March 1 and the Government then has 5 working
days to submit the report to the SCC. The actual dates of submission for the 2010-2012 execution report
are set out below.
Table 3.25. Actual dates of submission of the republican budget execution report to the Government
Year Date Annual Republican Budget Execution Report Submitted to Government64
2010 February 28, 2011
2011 February 29, 2012
2012 February 28, 2013
Source: Ministry of Finance.
Score: A
(iii) Accounting standards used
Since 2009 the Ministry of Finance has promulgated a number of accounting and financial reporting
regulations. These regulations set out standards (1) relating to the treatment of intangible and tangible
61
Article 113.
62
Article 114.
63
Article 124.
64
The date noted is the date the financial statements were provided to the Government by the MoF. The assessment team
were informed that the financial statements were provided to the SCC within the 5 working days stipulated in the Budget
Code for all three FY.
74
65
assets, (2) the treatment of funds earned during Subbotnik , and (3) the development of budget institution
charts of accounts which are in line with the Budget and Tax Code. Notwithstanding these developments the
annual budget execution report is based on national public sector standards which are not fully consistent
with international public sector accounting standards. Reporting is consistent over time however the
accounting standards are not disclosed in the execution report.
Score: D
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-25 Quality and timeliness of C+ D+ Scoring Method M1.
annual financial statements
(i) Completeness of the financial C C A consolidated government statement is prepared
statements annually. Information on revenue, expenditures and
financial liabilities is disclosed in full however
information on financial assets is incomplete.
(ii) Timeliness of submission of A A The consolidated government statement is
the financial statements submitted for inspection within five months of the
year end.
(iii) Accounting standards used C D Annual budget execution reports are prepared in
accordance with national standards which are not in
accordance with international standards.
Statements are prepared on a consistent basis,
however, the standards are not disclosed in the
report.
Comparability of scores and performance change: Scores comparable.
(i) No change in performance.
(ii) No change in performance.
(iii) No change in performance. However, based on the evidence available, the appropriate score for this dimension
is D. Default score for non-disclosure of accounting standards is D.
Ongoing reforms
The new Law on Accounting introduced the legal requirement that, starting from 2016, banks will
report based on the IFRS, along with insurance companies, other financial institutions and open joint-
stock companies with subsidiaries. All other corporate bodies can apply the IFRS on a voluntary basis.
The banking sector already has experience with IFRS since 2008, as starting that year the National Bank
required them to produce IFRS compliant reports by adjusting the reports produced on the basis of the
national rules.
The recent changes in the system of collecting of data on financial assets would enable the government to
report more comprehensive data in the annual execution report
65
The practice of working on a Saturday and donating their earnings to the budget.
75
3.6 External scrutiny and audit
3.6.1 PI-26 Scope, nature and follow-up of external audit
This indicator assesses the quality of the external audit which comprises the scope and coverage of the audit,
adherence to appropriate audit standards (including independence of the external audit institutions), focus on
significant and systemic PFM issues in its reports, and performance of the full range of financial audit such as
reliability of financial statements, regularity of transactions and functioning of internal control and procurement
systems. The assessment covers the central government institutions including all MDAs and AGAs, and
extra-budgetary funds (if existing). The assessment focuses on the last audited financial year.
The current supreme audit arrangements in Belarus deviate from the international practice,
embedded in the PEFA methodology. The PEFA methodology assesses public sector audit arrangements
against a standard in which public external audit is carried out independently of the executive arm of
government, which incorporates a full range of financial audits and aspects of performance/value for money
audits which are published and freely available to the general public. There are some important differences
between these institutional norms and the role of the Belarus State Control Committee (SCC). The SCC is
66
subordinated to the President, and its Chairman is a member of the Presidium of the Council of Ministers
and is appointed by the President. One of the SCC primary functions is to be part of, coordinate and oversee
the control function across Government (see PI-20 and 21). In carrying out this function they conduct their
work in association with other agency control bodies (for example MOF and Local Executive/LM KRU bodies).
Apart from the SCC's opinion on the Annual Budget Execution Report there is no formal link between the
SCC and Parliament (see PI-28). The SCC's inspection work is primarily seen as scrutinising the
government’s internal processes and, as such their reports are not fully available to the public, however their
findings are extensively covered within the mass-media.
(i) Scope/nature of audit performed
The SCC of the Republic of Belarus performs many of the tasks assigned to supreme audit
institutions (SAI) in other countries. Much of its work is in the nature of compliance as is clear from the
relevant statute, where the emphasis is on compliance and control. The audit performed by the SCC mainly
involves inspection of operations for compliance with the legislation, although, besides financial aspects, the
audit does cover issues relating to the efficiency of the use of budgetary resources. The SCC does not
disclose its audit procedures, however in 2012, the SCC Chairman issued Instruction № 38 of July 18, 2012
to approve the Methodological Recommendations on Performance of Audit by the SCC Bodies. These were
developed based on performance audit standards and guidelines accepted in the framework of the INTOSAI,
EUROSAI, and ASOSAI. SCC is a member of INTOSAI and has access to its methodological resources. The
SCC’s inspections cover all the republican government bodies, extra-budgetary funds, as well as all the
SNGs. According to information provided by the SCC, 51.8 bn BYR (out of 95.8 bn BYR) or 54% of
republican budget expenditures were audited in FY 2012.
Score: C
66
In accordance with Article 34 of the Law of Council of Ministers the Chairman of the SCC sits on the Presidium of the
Council of Ministers; a permanent body also comprising the Prime Minister, his deputies, the Head of the Presidential
Administration, Chairman of the National Bank, the Minister of Economy , Minister of Finance and Minister of Foreign
Affairs; an influential forum in which it can make recommendations on high level policy and legislative issues.
76
(ii) Timeliness of submission of audit reports to legislature
The SCC prepares a conclusion on the report on the execution of the republican budget, which it
submits to the President by May 15. SCC’s opinion on the execution of the republican budget is then
voiced during sessions held by the National Assembly on approval of the Annual Budget Execution Law.
Score: A
(iii) Evidence of follow up on audit recommendations
There is good follow-up to recommendations of the SCC. Each specific recommendation for action is
made with a deadline attached, which will have been discussed with the managers concerned. The MoF is
required to report to the SCC that the recommendations have been implemented as required; and the SCC
itself reports to the President on follow-up. A unit within the MoF, usually in the Treasury, will be identified as
responsible for ensuring that the recommended action is taken by the due date (which may mean monitoring
the performance of another unit). This process is backed up by registering the required action in the database
controlled by the Directorate of Records Management and Organizational Work. That in turn generates
regular reminders and requests to ensure that all those actions to which the Ministry is committed are
discharged in time; and officials are required to report if there is any risk of delay. Officials emphasized the
importance attached within the MoF to the follow-up of SCC recommendations, which are regarded as
obligations backed by the authority of the President. SCC officials also confirmed they were satisfied with the
way their recommendations were followed-up. In some cases a full response might take some time, but this
reflected objective factors – and such cases were also covered by the monitoring process. If the action was
taking longer than expected, as necessary the ministry would alert the SCC of new circumstances arising
which would be discussed accordingly.
Score: A
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-26 Scope, nature and follow-up of D+ C+
external audit
(i) Scope/nature of audit C C Audit coverage is comprehensive but the scope of
performed (incl. adherence to work is limited. There is no disclosure of SCC's
auditing standards) audit procedures other than the Performance Audit
guidelines which have been developed according to
INTOSAI, EUROSAI and ASOSAI standards.
(ii) Timeliness of submission of A A The SCC annual report on the execution of the
audit reports to the legislature budget is presented to the National Assembly within
three months of the receipt of the execution report
from the Government.
(iii) Evidence of follow-up on audit D A There is good follow up to SCC recommendations
recommendations which are accepted and implemented by the
Government; however neither the
recommendations, nor their discharge are
published.
77
PI Dimension Score Score Justification for 2013 score
2009 2013
Comparability of scores and performance change: Scores comparable.
(i) No change in performance other than the publication of performance audit guidelines.
(ii) No change in performance.
(iii) No change in performance. However, based on the evidence available, the appropriate score for this dimension
is A.
3.6.2 PI-27 Legislative scrutiny of the annual budget law
This indicator assesses the legislative scrutiny and debate of the annual budget law based on such factors as
scope of the scrutiny, the internal procedures for scrutiny and debate and the time allotted for that process.
Adequacy of the budget documentation made available to the legislature is covered by PI-6. The assessment
focuses on the last completed fiscal year.
(i) Scope of the legislature’s scrutiny
The arrangements for the Parliament’s involvement in budget preparation are set out i n the Budget
Code which was last revised on October 26, 2012. Members of Parliament (and particularly the chairmen
67
of the relevant Standing Committees) are involved in making recommendations on the budgetary issues to
the Ministry of Finance and MoTL early in year and prior to the establishment of the draft Budget Law and the
formal responses to these recommendations are made by the Executive. In addition there are formal
arrangements for budgetary hearings (often with joint hearings of the Upper and Lower House) once the draft
budget has been submitted by the President.
Budget hearings, and informal discussions, cover all aspects of fiscal policies, including debt
financing, as well as details of expenditure and revenue. Although the Parliament’s detailed consideration
of the government’s proposals is primarily directed towards the republican budget, full information is also
submitted about the budgets of SNGs. Parliament’s scrutiny also extends to the Social Protection Fund. As
noted in PI-12 the MTFP is not yet approved by the Council of Ministers, nor is it included in the annual
budget documentation submitted to the legislature.
Score: B
(ii) Extent to which the legislature’s procedures are well -established and respected
The overall arrangements for the Parliament’s consideration of the draft budget are set out in the
Budget Code. Specialized committees have been established in both the Council of the Republic and House
of Representatives to consider the macro-economic assumptions and expenditure priorities set out in the draft
budget law. While the period of formal hearings is short (see PI-27(iii)), parliamentarians were keen to
emphasize the importance of budget consultations prior to the submission of draft budget between members
of the Parliament and key officials in the MoF, MoE, and MoTL.
Score: B
67
The Standing Committee for Economy, Budget and Finances (Council of the Republic) and Standing Committee on
Budget and Finance (House of Representatives).
78
(iii) Adequacy of time for the legislature to provide a response to budget proposals
Under the new Budget Code, the annual budget law must be submitted to the Parliament by 1 November, and
should be approved by 1 December to give lower tier governments time to finalize their budgets. As indicated
in the table below, over the last two years the formal time period for approval of the budget has been 5 and 15
days from the date of submission to Parliament to approval in the Upper House. Parliamentarians argue that
the informal arrangements outlined in PI-27 (i) ensure that they have sufficient time to consider both the
macro-economic outlook and budget proposals which they approve, however, this informal interaction at the
prior stage of budgeting is not recognized in scoring this sub-indicator. The information on the timeline for the
approval of the Republican budget over the last 3 years is provided in the Table 3.26 below.
Table 3.26. Actual timeline of the submission and approval of the republican budget by the legislature
Approved in
Submitted to the Approved in House Approved by
House of Signed by
Year House of of Representatives Council of
Representatives President
Representatives (1st Reading) Republic
(2nd Reading)
September 2, September 7, September 14, October 4, October 15,
FY2011
2010 2010 2010 2010 2010
December 15, December 16, December 19, December 20, December
FY2012
2011 2011 2011 2011 30, 2011
September 25, October 10, October 26,
FY2013 October 2, 2012 October 8, 2012
2012 2012 2012
Source: Ministry of Finance
Score: D
(iv) Rules for in-year amendments to the budget without ex-ante approval by the legislature
In year amendment rules are set out in the Budget Code. The MoF can approve expenditure reallocations
to different administrative units or for different economic purposes within the approved totals for sub-
functional headings. The President can authorize more far-reaching reallocations resulting in changes of the
overall total revenue, expenditure, deficit or sources of deficit financing set in the annual budget law, without
legislative consent. Any textual amendments to the budget law require a supplementary law which has to be
approved by Parliament, although this has never happened in practice. Comparable arrangements are in
force concerning amendments to oblast and rayon budgets.
Score: C
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-27 Legislative scrutiny of the B+ D+ Scoring Method M1.
annual budget law
(i) Scope of the legislature’s B B The legislature’s review covers fiscal policies for the
scrutiny forthcoming budget year as well as detailed
estimates of expenditure and revenue. But a firm
medium-term framework incorporating the
government’s expenditure priorities and specific
policy objectives has not yet been established.
(ii) Extent to which the A B Simple procedures exist for the legislature's budget
legislature’s procedures are review and they are respected. While the period of
well-established and respected formal hearings is short, parliamentarians were keen
79
PI Dimension Score Score Justification for 2013 score
2009 2013
to emphasize the importance of informal budget
consultations throughout the year between
individual members of the Parliament (particularly
committee chairmen) and key officials in the MoF,
MoE, and other ministries.
(iii) Adequacy of time for the A D While informal procedures exist to review the budget
legislature to provide a the official time allowed for the formal review is
response to budget proposals clearly insufficient for a meaningful debate
(time allowed in practice for all (significantly less than a month).
stages combined)
(iv) Rules for in-year amendments A C There are clear rules limiting in-year amendments to
to the budget without ex-ante the budget without prior legislature approval. These
approval by the legislature rules allow for extensive reallocation and expansion
of total expenditure without legislative consent.
Comparability of scores and performance change: Scores comparable.
(i) No change in performance.
(ii) No change in performance. However, based on the evidence available, the appropriate score for this dimension is
B.
(iii) Reduction in score from an A to a D reflects the fact that the time allowed for legislative scrutiny for the approval
of the FY12 and FY13 budgets was insufficient for meaningful debate. The informal procedures described in the
narrative are not scored in assessing this sub-indicator. Based on the narrative for this dimension in the 2009
assessment, the situation was considered by the assessment team as deterioration in performance.
(iv) No change in performance. However, based on the evidence available, the appropriate score for this dimension is
C.
3.6.3 PI-28 Legislative scrutiny of external audit reports
The focus in this indicator is on central government including all MDAs and AGAs. The assessment of the first
dimension is based on the audit reports submitted to legislature within the last three years, while the
assessment of the other dimensions is based on the last 12 months.
(i) Timeliness of examination of audit reports by the legislature
As discussed in further detail in PI-26, constitutionally the SCC is subordinated to the President and
represented on the Presidium of the Council of Ministers. The only statutory obligation to Parliament
within the Budget Code is that the SCC’s annual conclusion on the report on republican budget execution is
voiced during sessions of the House of Representatives on approval of the law confirming the execution of
the budget for the year in question. The process takes about a month following receipt of the report by the
Parliament. It should be noted that the SCC is not obliged to provide any inspection reports to the National
Assembly and they are not discussed in Committees.
Score: A
(ii) Extent of hearings on key findings undertaken by the legislature
The only formal hearing of the National Assembly to discuss the SCC's findings is in respect of their
report on the Annual Budget Execution Report. This is conducted as a joint session of the Standing
80
Commissions for Budget and Finance of the Council of the Republic and the House of Representatives. Other
than that the assessment team were informed that the SCC and National Assembly cooperate on an ad-hoc
and informal basis - there is no other Constitutional or legislative relationship between the SCC and National
Assembly.
Score: D
(iii) Issuance of recommended actions by the legislature and implementation by the executive
The SCC speaks at the hearings of the National Assembly on the Annual Budget Execution Report
however they do not submit their report in writing. The assessment team were informed that members of
parliament make some recommendations based on this hearing however these do not relate to specific
recommendations of the SCC. No communications between the National Assembly and the Government are
published.
Score: D
PI Dimension Score Score Justification for 2013 score
2009 2013
PI-28 Legislative scrutiny of external B+ D+ Scoring Method M1.
audit reports
(i) Timeliness of examination of A A The National Assembly considers the SCC
audit reports by legislature (for conclusion on the report on the execution of the
reports received within the last republican budget in a timely manner, in the context
three years) of the approval of the annual law approving the
execution of the previous year's budget.
(ii) Extent of hearings on key B D The only formal hearing of the National Assembly to
findings undertaken by discuss the SCC's findings is in respect of their
legislature report on the Annual Budget Execution Report. This
is conducted as a joint session of the
Economic/Finance Committees of the Council of
Representatives and House of Representatives.
Other than that the assessment team were informed
that the SCC and National Assembly cooperate on
an ad-hoc and informal basis - there is no other
Constitutional or legislative relationship between the
SCC and National Assembly.
(iii) Issuance of recommended B D The SCC speaks at the hearings of the National
actions by the legislature and Assembly on the Annual Budget Execution Report
implementation by the however they do not submit their report in writing.
executive The assessment team were informed that members
of parliament make some recommendations based
on this hearing however these do not relate to
specific recommendations of the SCC. No
communications between the National Assembly
and the Government are published.
81
PI Dimension Score Score Justification for 2013 score
2009 2013
Comparability of scores and performance change: Scores comparable.
(i) No change in performance.
(ii) No change in performance. However, based on the evidence available, the appropriate score for this dimension
is D.
(iii) No change in performance. However, based on the evidence available, the appropriate score for this dimension
is D.
3.7 Donor practices
3.7.1 D-1 Predictability of Direct Budget Support
This indicator assesses the predictability of inflows of budget support . Belarus did not receive any
budget support in FY10-FY12 and therefore this indicator is not applicable in accordance with the PEFA
68
methodology .
(i) Deviation of actual budget support from the forecasts
Score: Not applicable
(ii) In-year timeliness of donor disbursements
Score: Not applicable
PI Dimension Score Score Justification for 2013 score
2010 2013
D-1 Predictability of Direct Budget Not n/a Scoring Method M1.
Support used
(i) Annual deviation of actual BS Not n/a
from the forecasts provided by used
the donor agencies at least 6
weeks prior to the government
submitting its budget proposals
to the legislature
(ii) In-year timeliness of donor Not n/a
disbursements (compliance used
with aggregate quarterly
estimates)
Comparability of scores and performance change: D-1 was not used in the previous PEFA Assessment.
(i) and (ii) The Government of Belarus received no direct budget support in FY10-FY12.
68
PEFA Newsflash No.5.
82
3.7.2 D-2 Financial information provided by donors for budgeting and reporting on project and program aid
This indicator assesses the predictability of donor support for programs and projects (including aid-
in-kind) in respect to the provision of accurate and timely estimates of available funds for inclusion in
the budget proposal and reporting on actual donor flows. The assessment is based on qualitative data
for the donors providing project and programme support and focuses on the last completed fiscal year
(FY2012).
The only data available for this indicator was from the World Bank. According to data provided by the
Government total grants and IBRD loans in FY2012 totalled $157m which is insignificant (0.85% of
consolidated budget expenditures). This is broken down into $44m grants (0.24% Grants) and $113.45m
(0.61% IBRD loans). Data on grants is collected by the MoE; data on IBRD lending (the only form of financial
aid) is maintained by the Ministry of Finance. None of the data on externally financed projects and programs
is presented in the annual budget, its annexes or other publicly available supporting documents. The
assessment team was informed by the World Bank that, in general IBRD projects are 100% financed by the
Bank without recourse to co-financing. The process for financing IBRD loans is managed through the Country
Partnership Strategy (CPS) which, amongst other things spells out priorities and lending commitments. The
current CPS runs from 2014-2017. As noted above Belarus has received no direct budget support since
2009.
(i) Completeness and timeliness of budget estimates by donors for project support
The existing procedures for preparation of national budget in Belarus do not require the inclusion of donor
funding and therefore this indicator is not applicable in accordance with the PEFA methodology. Budget
estimates for IBRD financed projects are available in project documents.
Score: Not applicable
(ii) Frequency and coverage of reporting by donors on actual donor flows for project support
As no execution data is set out in the approved national budget documents or supporting documents, this
indicator is not applicable in accordance with the PEFA methodology. Detailed aggregate and project data for
IBRD financed projects is available online to project implementation units and key line ministries through the
World Bank's Client Connection system.
Score: Not applicable
83
PI Dimension Score Score Justification for 2013 score
2010 2013
D-2 Financial information provided Not n/a Scoring Method M1.
by donors for budgeting and used
reporting on project and
program aid
(i) Completeness and timeliness Not n/a
of budget estimates by donors used
for project support
(ii) Frequency and coverage of Not n/a
reporting by donors on actual used
donor flows for project support
Comparability of scores and performance change: D-2 was not used in the previous PEFA assessment.
(i) and (ii) not applicable, as no budget estimates or execution data is set out in the approved national budget
documents or supporting documents.
3.7.3 D-3 Proportion of aid that is managed by use of national procedures
This indicator assesses the use of national procedures (i.e. procurement, payment/accounting, audit,
disbursement and reporting) by the donor funds. The assessment focuses on the last completed fiscal
year (FY2011).
As noted in D-1, the Government of Belarus received no direct budget support in FY10-FY12. The
Government implements World Bank projects exclusively through ring-fenced Project Implementation Units
making no use of national procurement, accounting, audit, disbursement and reporting arrangements.
Discussions with the MoE (also confirmed in consultations with other donors) suggest that usage of national
systems by other donors is minimal or non-existent.
Score: D
PI Dimension Score Score Justification for 2013 score
2010 2013
D-3 Overall proportion of aid funds Not D Less than 50% of aid funds to central government
to central government that are used are managed through national procedures.
managed through national
procedures
Comparability of scores and performance change: D-3 was not used in the previous PEFA assessment.
Less than 50% of aid funds to central government are managed through national procedures.
84
4 Government Reform Process
4.1. Recent and ongoing reforms
Public financial management reforms over the past years took place in a particularly volatile
macroeconomic environment. In the face of substantial fiscal pressures, fiscal management was dominated
by short term consolidation needs. While the government succeeded in maintaining fiscal discipline, short
term crisis management has to some extend crowded out more long term institutional reforms to strengthen
the way the budget is managed.
While the Government has not adopted an overall PFM reform strategy, reforms were initiated across
a range of individual reform areas. Most importantly, an organic budget law (the budget code) was enacted
in 2009, stipulating the institutional and procedural framework for budget management. Building on the results
of the PEFA 2009, the Government has also initiated a range of reforms in those areas where PEFA showed
deficiencies. In 2010, the government introduced a formula-based inter-governmental transfer scheme,
although the formula is complex and data intensive and has therefore not been applied in practice. In 2010,
the government also introduced fiscal rules to constrain sub-national debt. Later in 2011 the Government
initiated pilots to experiment with more flexible financing arrangements in the health and education sectors,
but the draft regulations that are expected to be the basis for the implementation of these pilot projects are yet
to be approved by the government. Following the provisions of the Budget code, the MOF has also started to
prepare medium term fiscal plans in the context of the annual budget process, but these are not yet formally
integrated into the budget documentation, largely because of concerns about the accuracy of medium-term
forecasts in the very volatile macro environment due to the effects of the global financial crisis and domestic
currency crisis.
In parallel, the Government has moved forward with tax policy reforms. Belarus adopted the Specific
Part of the Tax Code in 2008, consolidating all tax legislation into single legislative act. Since then several tax
reforms have not only lowered the overall tax burden, but also simplified the tax system. A flat personal
income tax was introduced with a statutory rate of 12 percent. Seven taxes, including turnover taxes, local
sales tax on goods and services, and the local development fee on net corporate profit, were abolished. The
corporate income tax rate was reduced from 24 to 18 percent. Despite these reductions at above 40 percent
of GDP, the tax burden remains high.
In parallel, Belarus also improved its tax administration to reduce the compliance burden for the
private sector. E-filing of tax returns and electronic payment services were introduced in 2008. By 2011, the
majority of companies in Belarus used electronic filing. The government also limited the number and
frequency of tax inspections to enterprises, applying risk based audit selection methods. As a result,
according to the Doing Business report, the time to comply with tax obligations was reduced by 649 hours
between 2005 and 2013.
Overall, PFM reforms to date have focused on strengthening the legislative framework, but
implementation has been slow. Notable progress has been made in strengthening the legislative framework
with the adoption of the tax code and budget code. Since the initial enactment several amendments have
further improved the framework. However, in important areas, such as medium term budgeting and
intergovernmental fiscal relations, implementation of the new provisions has been lagging. Therefore the
PEFA scores measuring performance in these areas do not yet show improvement compared to the 2009
scores.
85
4.2. Institutional factors supporting PFM reform planning and implementation.
Commitment to further advance public financial management reform is strong among the set of institutions
involved in budgetary management. The five year economic and social development plan 2011-15 of the
Government explicitly states the optimization of public expenditures with a focus on achieving results, raising
efficiency of the use of state funds and improvement of public debt management through the development of
the Public Debt Management Strategy as key policy objectives. However, highly centralized decision making
and an uncertain authorizing environment may lead to delays and stall reform implementation, despite
commitment at the technical level.
86
Annexes
87
Annex 1: PFM Performance Measurement Framework Indicators Summary
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
A. PFM OUT-TURNS: Credibility of the budget
PI-1 Aggregate expenditure out-turn C С Scoring Method M1. There is no change in performance.
compared to original approved
Aggregate expenditure out-turn exceeded the approved budget by
budget
more than 15% in one out of three years (1,9%, 31,2% and 12,6%
in 2010, 2011 and 2012 respectively)
PI-2 Composition of expenditure out-turn A B+ Scoring Method M1. The scores are not comparable due to the
compared to original approved changes in the PEFA methodology.
budget
(i) Variance in expenditure composition, - B Exceeded 10 % in one out of three years (13,1%, 6,7% and 4,5% The Methodology applied in this assessment takes
excluding contingency items in 2010, 2011 and 2012 respectively) into account the revised PEFA methodology. The
change in the performance rating from A (2009) to
B+ (2013) is not caused by the change in
methodology but the result of a higher degree of
functional expenditure variance. The 2009 score
remains A even if the revised methodology is
applied to the data of 2005-2007 (the period
covered in the 2009 assessment).
(ii) The average amount of expenditure - A On average was less than 1 percent of the approved budget Dimension did not exist under the previous
actually charged to the contingency (1,6%, 0,5% and 0,9% in 2010, 2011 and 2012 respectively) methodology. The 2009 score remains A even if
vote the revised methodology is applied to the data of
2005-2007 (the period covered in the 2009
assessment).
PI-3 Aggregate revenue out-turn A B Scoring Method M1. The scores are not comparable due to the
compared to original approved changes in the PEFA methodology. The change in
Between 94% and 112% of projected domestic revenue in two of
88
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
budget the last three years (96,1%, 151,3% and 112,0% in 2010, 2011 the performance rating from A (2009) to B (2013)
and 2012 respectively) is caused by the revised methodology. If the same,
revised methodology is applied consistently, the
score indicates a performance improvement from
C (2009) to (B) 2013
PI-4 Stock and monitoring of expenditure A B+ Scoring Method M1.
payment arrears
(i) Stock of expenditure payment A A Stock of arrears at the end of 2012 was well below 1% of budget There is no change in performance.
arrears and a recent change in the expenditures (0,01% of republican budget expenditures)
stock
(ii) Availability of data for monitoring the A B The Treasury system provides a comprehensive record of all There has been no change in performance since
stock payment arrears payment orders, including the date of registration, which is 2009, but 2009 assessment emphasized the low
reported on a quarterly basis by budget institutions, and which existing stock of arrears rather than whether the
Belarus defines as arrears. The date of registration is not the date processes in place to correctly monitor the stock of
of receipt of the invoice in the budget institution. While some arrears were comprehensive
payment records also include the “due date” this is not
comprehensively recorded, and therefore a comprehensive list of
the age of all arrears is not currently produced. Despite this, the
strong culture of compliance and the specific legislative
requirement under article 138 of the Budget Code (commitments
beyond the budget are illegal) provides general assurance
regarding the comprehensiveness of the reporting of arrears.
B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and Transparency
PI-5 Classification of the budget A А Scoring Method M1. There is no change in performance.
The 2012 budget formulation and execution is based on
administrative, programme, functional and economic
classifications consistent with GFS/COFOG standards.
89
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
Classifications are consistent (allow mapping) with GFS/CoFoG
standards.
PI-6 Comprehensiveness of information A A Scoring Method M1. There is no change in performance.
included in budget documentation
The budget includes 8 of the 9 required elements for proper
disclosure of fiscal information for effective legislative review.
PI-7 Extent of unreported government C+ D+ Scoring Method M1.
operations
(i) Level of unreported extra-budgetary C D The quantifiable level of extra budgetary activity exceeds 10% in There is no change in performance. Slippage in
expenditure 2012. the score is due to additional information available
on quasifiscal activity in 2012.
(ii) Income/expenditure information on A A The total value of donor funding is less than 1%. There is no change in performance.
donor-funded projects
PI-8 Transparency of inter-governmental B B Scoring Method M2.
fiscal relations
(i) Transparency and objectivity in the D D↑ Transfers are based on incremental adjustments of actual pre- There is no change in performance. The
horizontal allocation among SN transfer revenues and expenditures of the previous year. introduction of the Budget Code and the piloting of
government Transfers appear reasonably transparent but are not yet based on a rules based formulae justify an upward arrow for
a rules based system. this sub-indicator.
(ii) Timeliness of reliable information to A A Lower tier territorial governments are provided with reliable There is no change in performance.
SN government on their allocations information on the resources available for the forthcoming budget
year in a timely fashion before they start their detailed budget
preparation.
(iii) Extent of consolidation of fiscal data A A Complete budget execution data, broken down by function, There is no change in performance.
for government according to sectoral economic and administrative classifications, covering both local
categories and central government budgets, is collected and reported
quarterly.
90
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
PI-9 Oversight of aggregate fiscal risk A C+ Scoring Method M1.
from other public sector entities.
(i) Extent of central government A C Medium and large PEs report quarterly to BELSTAT and also to There is no change in performance. The additional
monitoring of AGAs/PEs their sector ministries. Annually BELSTAT prepares a detailed information provided regarding external
consolidated report on PEs which includes key performance audit of PEs and the oversight of aggregate fiscal
indicators of fiscal risk. Not all PEs are subject to an annual risk justified the downgrading from the score
external audit process. The consolidated report on PEs prepared allocated in 2009.
by BELSTAT does not include all fiscal risks associated with PEs.
(ii) Extent of central government A A Subnational governments execute their budgets through the There is no change in performance.
monitoring of SN governments’ fiscal treasury system, ensuring the availability of fiscal data for on-
position going monitoring. Debt and guarantee stock levels are limited to
80% of own source revenues (net of subventions) and in year
debt services costs must not exceed 15% of those revenues.
Quarterly reporting occurs to the MoF by the local Executive
Committee of each government through their Finance
Departments.
PI-10 Public access to key fiscal C B Scoring Method M1. Improvement in the 2013 score is due to improved
information performance - introduction of a legal requirement
3 out of 6 listed types of information are disclosed to publish contract award information increased the
number of types of information disclosed from 2 (in
2009) to 3.
C. BUDGET CYCLE
C(i) Policy-Based Budgeting
PI-11 Orderliness and participation in the B C Scoring Method M2.
annual budget process
(i) Existence of and adherence to a B D The Budget Code stipulates a basic budget calendar, but key Score is downgraded to C (2013) from B (2009)
fixed budget calendar dates, including issuance of the budget circular and submission of because of worse performance. This reflects the
budget requests by MDAs, are not specified. While MDAs short time period formally given to MDAs to
91
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
participate throughout the budget preparation process, the formal prepare their detailed budget requests during the
time given to them to prepare detailed budget requests have in budget years under examination. Reportedly, the
practice been very limited. budget preparation process during all three years
was adversely affected by macroeconomic
uncertainty, which may account for the
deterioration in the orderliness of the budget
process.
(ii) Guidance on the Preparation of C C The budget circular established budget ceilings for MDAs, but There is no change in performance.
budget submissions. these are not approved by the Council of Ministers and therefore
subject to revisions.
(iii) Timely budget approval by the A A Parliament approves the budget before the start of the new fiscal There is no change in performance.
legislature year
PI-12 Multi-year perspective in fiscal D+ D Scoring Method M2.
planning, expenditure policy and
budgeting
(i) Multi-year fiscal forecast and C C Medium term fiscal forecasts are prepared, but forward estimates There is no change in performance.
functional allocations are not linked to the annual budget allocations
(ii) Scope and frequency of debt D C While no formal debt sustainability analysis is undertaken by the Score upgrade reflects improved performance, the
sustainability analysis MOF, the debt department prepares debt portfolio risk and cost Public Debt Department is undertaking
analysis as well as utilizes projections of external public debt assessment of external debt sustainability and
sustainability analysis, however this analysis is limited to 2 out- solvency
years and excludes domestic debt
(iii) Existence of costed sector strategies C D Line ministries prepare sector strategies in the context of the There is no change in performance. Dimension is
development planning process. While these strategies identify downgraded from C (2009) to D (2013) reflecting
and cost priority investments, the medium term, recurrent cost the limited costing of sector strategies. According
implications associated with these investments are not captured to the PEFA field guide the minimum criteria for
costing requires that medium term costs, included
in the strategies are broken down by year,
92
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
program, and main economic category (including
recurrent costs) together with main parameters
and assumptions underlying the cost estimates..
(iv) Linkages between investment C D Belarus has a strong prioritization process for the investment There is no change in performance. Dimension
budgets budget. However, this process –while synchronized- is separate score is downgraded from C (2009) to D (2013),
from the budget process and recurrent cost implications of reflecting the dual budget process with separate
investments are not systematically linked to medium term forward processes for recurrent and capital budgeting.
expenditure estimates
C(ii) Predictability and Control in Budget Execution
PI-13 Transparency of taxpayer obligations C+ B+ Scoring Method M2.
and liabilities
(i) Clarity and comprehensiveness of D B The legislation is clear and comprehensive. Some limited Improved performance, specific action to improve
tax liabilities discretionary power exists regarding the law. the overall taxation system has occurred since
2009.
(ii) Taxpayer access to information on B A Taxpayers have easy access to comprehensive and user-friendly Improved performance, specific action to improve
tax liabilities and administrative information regarding their liabilities and obligations via a variety access to information and administrative
procedures of means processes has occurred since 2009.
(iii) Existence and functioning of a tax B B Administrative appeals are open to all taxpayers, however, a There is no change in performance.
appeals mechanism transparent and independent tax appeal mechanism is only
available to legal persons. Physical persons only have recourse
through the normal civil court system, which is not regarded as an
appropriate tax complaint mechanism.
PI-14 Effectiveness of measures for A A Scoring Method M2.
taxpayer registration and tax
assessment
(i) Controls in taxpayer registration A A A comprehensive registration system exists for all businesses and There is no change in performance.
system individual entrepreneurs. Payee identification numbers are used
for individual taxpayers that are not business entities.
93
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
(ii) Effectiveness of penalties for non- A A The fines levied, along with the general focus on rule of law in There is no change in performance.
compliance with registration and society assures strong compliance with registration and tax
declaration obligations declarations.
(iii) Planning and monitoring of tax audit A A Audits and investigations are conducted based on a There is no change in performance.
and fraud investigation programs comprehensive six month plan which is supplemented by very
specific risk criteria for various taxpayers.
PI-15 Effectiveness in collection of tax A A Scoring Method M1.
payments
(i) Collection ratio for gross tax arrears, A A Total Tax and Customs arrears were less than 2% in each of the There is no change in performance.
being percentage of tax arrears at last two years of the assessment
the beginning of a fiscal year, which
was collected during that fiscal year
(ii) Effectiveness of transfer of tax A A All tax and customs revenue is either paid directly into the TSA at There is no change in performance.
collections to the Treasury by the the NBRB or swept to this account from zero balance collection
revenue administration accounts the same day.
(iii) Frequency of complete accounts A A Reconciliation between tax, customs and the treasury ledger There is no change in performance.
reconciliation between tax takes place within three days of the end of each month.
assessments, collections, arrears
records and receipts by the Treasury
PI-16 Predictability in the availability of B B Scoring Method M1.
funds for commitment of
expenditures
(i) Extent to which cash flows are B B The cash flow forecast is updated formally each quarter, although There is no change in performance.
forecast and monitored informal monitoring occurs more frequently in the Treasury.
(ii) Reliability and horizon of periodic in- B B The ROSPICE provides certainty over funding for the quarter in There is no change in performance.
year information to MDAs on ceilings advance.
for expenditure commitment.
94
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
(iii) Frequency and transparency of B B In 2012 the MoF took action to sequester funds just once. This There is no change in performance.
adjustment to budget allocations, occurred in the 4th quarter.
which are decided above the
management of Line Ministries
PI-17 Recording and management of cash C+ B+ Scoring Method M2.
balances, debt and guarantees
(i) Quality of debt data recording and A A Debt recording and reporting for central government is very well There is no change in performance.
reporting developed. Comprehensive reporting occurs monthly.
(ii) Extent of consolidation of the C B Cash balances are consolidated daily in the Treasury system, Performance improvement. Belarus has made
Government’s cash balances however, there are a number of extra budgetary funds that remain improvements in relation to cash management by
outside the TSA. extending the coverage of the TSA.
(iii) Systems for contracting loans and D B The issuance of debt and guarantees for central government is Performance improvement. Controls over loans
issuance of guarantees clearly defined in the legislation, criteria exist for borrowing and and guarantees have improved since 2009.
issuing guarantees, and, a single entity, the Ministry of Finance,
signs for debt and guarantees. Monetary ceilings rather than fiscal
targets are issued in the annual budget law.
PI-18 Effectiveness of payroll controls A B+ Scoring Method M1.
(i) Degree of integration and A B Personal records and the payroll are updated once a month prior No change in performance since 2009, however,
reconciliation between personnel to the payroll being issued. based on the evidence available, the appropriate
records and payroll data score for this dimension is B.
(ii) Timeliness of changes to personnel A A Payroll is updated each month reflecting all changes occurring There is no change in performance.
records and the payroll during the preceding month
(iii) Internal controls of changes to A A An audit trail exists regarding all changes to personal records and There is no change in performance.
personnel records and the payroll the payroll
(iv) Existence of payroll audits to identify A B Payroll audits occur for every budget institution at least every two No change in performance since 2009, however,
control weaknesses and /or ghost years based on the evidence available, the appropriate
workers score for this dimension is B.
95
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
PI-19 Competition, value for money and C D Scoring Method M2.
controls in procurement
(i) Transparency, comprehensiveness n/a D Prior to the 2012 Procurement Law the regulations were The scores are not comparable due to the changes
and competition in the legal and extremely fragmented. Regulations did define competitive bidding in the PEFA methodology. The revised
regulatory framework as the default procurement method however the regulations also methodology (introduced in 2011) uses 4
provided for domestic preferences (for mineral fertilizers, dimensions instead of 3 and is more
medicines and medical equipment) and an exhaustive list of comprehensive. Enactment of the new
goods and services which are not subject to public procurement. procurement law justifies and upward arrow for this
Regulations provided for public access to government dimension.
procurement plans, bidding opportunities and contract awards but
not data on the resolution of procurement complaints. Prior to the
enactment of the new Law there was no fully functioning
complaints mechanism.
(ii) Use of competitive procurement n/a D While the data provided on the Ministry of Trade website appears The scores are not comparable due to the changes
methods to be comprehensive the present procurement system lacks a in the PEFA methodology. The revised
comprehensive system to validate whether methods used by methodology (introduced in 2011) uses 4
procuring agencies other than open competition are justified in dimensions instead of 3 and is more
accordance with legal requirements. comprehensive.
(iii) Public access to complete, reliable n/a D The Law requires government bidding opportunities and contract The scores are not comparable due to the changes
and timely procurement information awards to be made available to the public through electronic in the PEFA methodology. The revised
means. There is no legal requirement for data on the resolution of methodology (introduced in 2011) uses 4
procurement complaints to be published. The government lacks a dimensions instead of 3 and is more
reliable system to ensure that these requirements are complied comprehensive.
with.
(iv) Existence of an independent n/a D A procurement complaints system is in operation however a The scores are not comparable due to the changes
administrative procurement default score of D has been applied as the Complaints in the PEFA methodology. The revised
complaints system Commission does not have representation from the private sector methodology (introduced in 2011) uses 4
or civil society. dimensions instead of 3 and is more
96
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
comprehensive.
PI-20 Effectiveness of internal controls for B+ C+ Scoring Method M1.
non-salary expenditure
(i) Effectiveness of expenditure B C While a commitment control process exists, it is only mandatory There is no change in performance. However,
commitment controls for specific categories of expenditures. based on the evidence available the appropriate
score for this dimension is C, as Belarus does not
systematically register contracts and create a
commitment against the budget appropriations.
(ii) Comprehensiveness, relevance and B B The control framework is comprehensive and well understood. There is no change in performance.
understanding of other internal The advent of system based controls has not fully replaced
control rules/ procedures manual paper based controls, leading to some duplication.
(iii) Degree of compliance with rules for A A Compliance level with internal controls is very high. There is no change in performance.
processing and recording
transactions
PI-21 Effectiveness of internal audit D+ D Scoring Method M1.
(i) Coverage and quality of the internal C D Internal audit - in the sense of an independent service without There is no significant change in performance.
audit function operational responsibility advising management on overcoming The 2013 score reflects improved availability of
operational weaknesses - is not currently part of the Belarus data for the current assessment.
system. However a financial control/inspection function is
operational and coverage of budget organizations is high. Some
systems work is carried out however there are no published
professional standards for the conduct of inspection activities.
(ii) Frequency and distribution of reports D n/a Not applicable - in the absence of comprehensive internal audit Not applicable - based on guidance in the Field
coverage precludes any systematic distribution of reports. Guide issued after the 2009 Assessment.
(iii) Extent of management response to D n/a Not applicable - a systems review has hitherto been only a by- Not applicable - based on guidance in the Field
internal audit findings product of inspection activity . Guide issued after the 2009 Assessment.
97
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
C(iii) Accounting, Recording and Reporting
PI-22 Timeliness and regularity of A A Scoring Method M2.
accounts reconciliation
(i) Regularity of Bank reconciliations A A Bank reconciliation for all treasury bank accounts takes place on a There is no change in performance.
daily basis, own-revenue accounts are reconciled at least on a
monthly basis.
(ii) Regularity of reconciliation and A A Unidentified payments are cleared at least monthly as part of end There is no change in performance.
clearance of suspense accounts and of month reporting procedures. Travel advances are accounted
advances for within three days of completion of a trip. Procedures for
construction advances are clear and monitored closely by the
Treasury.
PI-23 Availability of information on B A Scoring Method M1. There is no change in performance. However,
resources received by service based on the evidence available, the appropriate
Accounting systems provide reliable information on all types of
delivery units scoring of this indicator is A.
resources received in cash and in kind by budgetary units -
information is compiled into reports on a monthly, quarterly and
annual basis.
PI-24 Quality and timeliness of in-year B+ С+ Scoring Method M1.
budget reports
(i) Scope of reports in terms of B C Comprehensive reports on the execution of the republican budget Performance is consistent with 2009. Based on
coverage and compatibility with are prepared every month and progressively more detail is the evidence available, the appropriate score for
budget estimates included in the quarterly and annual reports however there is no this dimension is C as expenditure is only reported
separate reporting of commitments. on a payment basis.
(ii) Timeliness of the issue of reports A A Accurate execution reports on TSA transactions are available There is no change in performance.
shortly after the month end and reporting on own-source revenues
and expenditures is done on a quarterly basis. Reports are
formally distributed and published within a month of the month
end.
98
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
(iii) Quality of information A A There are no material concerns regarding data accuracy. There is no change in performance.
PI-25 Quality and timeliness of annual C+ D+ Scoring Method M1.
financial statements
(i) Completeness of the financial C C A consolidated government statement is prepared annually. There is no change in performance.
statements Information on revenue, expenditures and financial liabilities is
disclosed in full however information on financial assets is
incomplete.
(ii) Timeliness of submission of the A A The consolidated government statement is submitted for There is no change in performance.
financial statements inspection within five months of the year end.
(iii) Accounting standards used C D Annual budget execution reports are prepared in accordance with There is no change in performance However,
national standards which are not in accordance with international based on the evidence available, the appropriate
standards. Statements are prepared on a consistent basis, score for this dimension is D. Default score for
however, the standards are not disclosed in the report. non-disclosure of accounting standards should
have been a D in 2009.
C(iv) External Scrutiny and Audit
PI-26 Scope, nature and follow-up of D+ C+ Scoring Method M1.
external audit
(i) Scope/nature of audit performed C C Audit coverage is comprehensive but the scope of work is limited. There is no change in performance other than the
(incl. adherence to auditing There is no disclosure SCC’s audit procedures other than the publication of performance audit guidelines.
standards) Performance Audit guidelines which have been developed
according to INTOSAI, EUROSAI and ASOSAI standards.
(ii) Timeliness of submission of audit A A The SCC annual report on the execution of the budget is There is no change in performance.
reports to the legislature presented to the National Assembly within three months of the
receipt of the execution report from the Government.
(iii) Evidence of follow-up on audit D A There is a good follow up to SCC recommendations which are There is no change in performance. However,
recommendations accepted and implemented by the Government; however the based on the evidence available, the appropriate
recommendations (and their discharge) are not published. score for this dimension is A.
PI-27 Legislative scrutiny of the annual B+ D+ Scoring Method M1.
99
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
budget law
(i) Scope of the legislature’s scrutiny B B The legislature’s review covers fiscal policies for the forthcoming There is no change in performance.
budget year as well as detailed estimates of expenditure and
revenue. But a firm medium-term framework incorporating the
government’s expenditure priorities and specific policy objectives
has not yet been established.
(ii) Extent to which the legislature’s A B Simple procedures exist for the legislature's budget review and There is no change in performance.
procedures are well-established and they are respected. While the period of formal hearings is short,
respected parliamentarians were keen to emphasize the importance of
informal budget consultations throughout the year between
individual members of the Parliament (particularly committee
chairmen) and key officials in the MoF, MoE, and other ministries.
(iii) Adequacy of time for the legislature A D While informal procedures exist to review the budget the official Reduction in score from an A to a D reflects worse
to provide a response to budget time allowed for the formal review is clearly insufficient for a performance. The time allowed for legislative
proposals (time allowed in practice meaningful debate (significantly less than a month). scrutiny for the approval of the FY12 and FY13
for all stages combined) budgets was insufficient for meaningful debate.
The informal procedures described in the narrative
are not scored in assessing this sub-indicator.
(iv) Rules for in-year amendments to the A C There are clear rules limiting in-year amendments to the budget There is no change in performance. However,
budget without ex-ante approval by without prior legislature approval. These rules allow for extensive based on the evidence available, the appropriate
the legislature reallocation and expansion of total expenditure without legislative score for this dimension is C.
consent.
PI-28 Legislative scrutiny of external audit B+ D+ Scoring Method M1.
reports
(i) Timeliness of examination of audit A A The National Assembly considers the SCC report on the There is no change in performance.
reports by legislature (for reports execution of the republican budget in a timely manner, in the
received within the last three years) context of the approval of the annual law approving the execution
100
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
of the previous year's budget.
(ii) Extent of hearings on key findings B D The only formal hearing of the National Assembly to discuss the There is no change in performance.
undertaken by legislature SCC's findings is in respect of their report on the Annual Budget However, based on the evidence available, the
Execution Report. This is conducted as a joint session of the appropriate score for this dimension is D.
Economic/Finance Committees of the Council of Representatives
and House of Representatives. Other than that the assessment
team were informed that the SCC and National Assembly
cooperate on an ad-hoc and informal basis - there is no other
Constitutional or legislative relationship between the SCC and
National Assembly.
(iii) Issuance of recommended actions B D The SCC speaks at the hearings of the National Assembly on the There is no change in performance.
by the legislature and Annual Budget Execution Report however they do not submit their However, based on the evidence available, the
implementation by the executive report in writing. The assessment team were informed that appropriate score for this dimension is D.
members of Parliament make some recommendations based on
this hearing however these do not relate to specific
recommendations of the SCC. No communications between the
National Assembly and the Government are published.
D. DONOR PRACTICES
D-1 Predictability of Direct Budget Not used n/a Scoring Method M1. D-1 was not used in the last PEFA assessment.
Support
(i) Annual deviation of actual BS from Not used n/a The Government of Belarus received no direct budget support in
the forecasts provided by the donor FY10-FY12
agencies at least 6 weeks prior to
the government submitting its budget
proposals to the legislature
(ii) In-year timeliness of donor Not used n/a The Government of Belarus received no direct budget support in
disbursements (compliance with FY10-FY12
aggregate quarterly estimates)
101
Score Score Comparability of scores and explanation of
No. Indicator Justification for 2013 score
2009 2013 change since previous assessment
D-2 Financial information provided by Not used n/a Scoring Method M1. D-2 was not used in the previous PEFA
donors for budgeting and reporting assessment.
on project and program aid
(i) Completeness and timeliness of Not used n/a No budget estimates or execution data is set out in the approved
budget estimates by donors for budget document or supporting documents.
project support
(ii) Frequency and coverage of reporting Not used n/a No budget estimates or execution data is set out in the approved
by donors on actual donor flows for budget document or supporting documents.
project support
D-3 Overall proportion of aid funds to Not used D Less than 50% of aid funds to central government are managed D-3 was not used in the previous PEFA
central government that are through national procedures. assessment
managed through national
procedures
102
Annex 2: Organizational Structure of the Ministry of Finance
Source: Ministry of Finance
103
Annex 3: Variance in Expenditure Composition of
General Government Budget
(in bn BYR)
Data for year = 2010
Adjusted Absolute
Functional head Budget Actual Deviation Percent
budget Deviation
[1] [2] [3]* [4]=[2]-[3] [5]=abs([4]) [6]=[5]/[3]
General public services 6,682.6 9,382.7 6,806.4 2,576.3 2,576.3 37.9%
Defense 1,473.3 1,538.8 1,500.6 38.2 38.2 2.5%
Public order and safety 2,623.6 2,920.2 2,672.2 248.0 248.0 9.3%
Economic affairs 16,196.4 12,010.5 16,496.5 -4,486.0 4,486.0 27.2%
Environmental protection 521.6 494.1 531.3 -37.2 37.2 7.0%
Housing and community 3,456.0 3,790.0 3,520.0 270.0 270.0 7.7%
Health 5,681.2 6,173.4 5,786.5 386.9 386.9 6.7%
Physical culture, sports, culture,
media 1,432.6 1,640.7 1,459.1 181.6 181.6 12.4%
Education 7,468.4 8,066.0 7,606.8 459.2 459.2 6.0%
Social protection 22,377.0 23,154.5 22,791.6 362.9 362.9 1.6%
allocated expenditure 67,912.7 69,170.9 69,170.9 0.0 9,046.3
Contingency 3,708.6 1,056.9
total expenditure 71,621.3 70,227.8
overall (PI-1) variance 1.9%
composition (PI-2) variance 13.1%
contingency share of budget 1.5%
* = [1]*(aggregate actual expenditure divided by aggregate budget).
Source: Ministry of Finance.
104
(in bn BYR)
Data for year = 2011
Adjusted Absolute
Functional head Budget Actual Deviation Percent
budget Deviation
[1] [2] [3]* [4]=[2]-[3] [5]=abs([4]) [6]=[5]/[3]
General public services 7,683.2 12,557.4 10,106.8 2,450.6 2,450.6 24.2%
Defense 2,105.8 2,718.6 2,770.1 -51.5 51.5 1.9%
Public order and safety 4,011.9 4,262.3 5,277.4 -1,015.1 1,015.1 19.2%
Economic affairs 12,255.2 15,452.4 16,121.1 -668.7 668.7 4.1%
Environmental protection 562.7 557.2 740.2 -183.0 183.0 24.7%
Housing and community 3,956.9 6,189.1 5,205.1 984.0 984.0 18.9%
Health 7,926.2 10,376.2 10,426.5 -50.3 50.3 0.5%
Physical culture, sports, culture,
media 2,099.0 2,520.7 2,761.1 -240.4 240.4 8.7%
Education 11,046.9 13,696.7 14,531.6 -834.9 834.9 5.7%
Social protection 26,853.0 34,933.1 35,323.7 -390.6 390.6 1.1%
allocated expenditure 78,500.8 103,263.7 103,263.7 0.0 6,869.1
Contingency 462.2 360.6
total expenditure 78,963.0 103,624.3
overall (PI-1) variance 31.2%
composition (PI-2) variance 6.7%
contingency share of budget 0.5%
* = [1]*(aggregate actual expenditure divided by aggregate budget).
Source: Ministry of Finance.
105
(in bn BYR)
Data for year = 2012
Adjusted Absolute
Functional head Budget Actual Deviation Percent
budget Deviation
[1] [2] [3]* [4]=[2]-[3] [5]=abs([4]) [6]=[5]/[3]
General public services 21,615.4 27,113.7 24,690.1 2,423.6 2,423.6 9.8%
Defense 4,625.1 4,897.1 5,283.0 -385.9 385.9 7.3%
Public order and safety 7,766.2 8,124.6 8,870.9 -746.3 746.3 8.4%
Economic affairs 25,716.1 29,666.9 29,374.1 292.8 292.8 1.0%
Environmental protection 934.9 862.0 1,067.9 -205.9 205.9 19.3%
Housing and community 9,475.0 12,016.8 10,822.8 1,194.0 1,194.0 11.0%
Health 18,440.4 19,994.9 21,063.5 -1,068.6 1,068.6 5.1%
Physical culture, sports, culture,
media 4,775.9 4,990.5 5,455.3 -464.8 464.8 8.5%
Education 23,894.6 25,619.7 27,293.5 -1,673.8 1,673.8 6.1%
Social protection 59,723.7 68,854.2 68,219.2 635.0 635.0 0.9%
allocated expenditure 176,967.3 202,140.4 202,140.4 0.0 9,090.6
Contingency 4,049.2 1,649.6
total expenditure 181,016.5 203,790.0
overall (PI-1) variance 12.6%
composition (PI-2) variance 4.5%
contingency share of budget 0.9%
* = [1]*(aggregate actual expenditure divided by aggregate budget).
Source: Ministry of Finance.
106
Annex 4: Sources of Information and Evidence
Performance Information sources
69
Indicators Institutions Documents, websites
PI-1 Ministry of Finance: - Calculation of the aggregate expenditure out-turn compared to
BPD original approved budget (2010-2012).
- Supplementary materials to the draft laws on 2010-2012
republican budgets.
PI-2 Ministry of Finance: - Calculation of the composition of expenditure out-turn compared
BPD to the original approved budgets for2010-2012.
- Supplementary materials to the draft laws on 2010-2012
republican budgets.
PI-3 Ministry of Finance: - Calculation of the aggregate revenue out-turn compared to
BPD, DTPBR original approved budget (2010-2012).
- Supplementary materials to the draft laws on 2010-2012
republican budgets.
PI-4 Ministry of Finance: - Structure of the republican and local budgets accounts payable
Treasury, Treasury broken down by the elements of economic classification of the
Department for the city expenditures as of beginning and end of 2012.
of Minsk - Structure of the republican and local budgets arrears broken
down by the elements of economic classification of the
expenditures as of beginning and end of 2012.
- Dynamics of the consolidated, republican, and local budgets
arrears in 2011-2012.
PI-5 Ministry of Finance: - Supplementary materials to the draft law on 2012 republican
BPD; budget.
Ministry of Health - Draft budget of the Ministry of Health for 2012
- Law of the Republic of Belarus “On the republican budget for
2010” dated December 29, 2009 №73-3
- Law of the Republic of Belarus “On the republican budget for
2011” dated October 15, 2010 №176-3
- Law of the Republic of Belarus “On the republican budget for
2012” dated December 30, 2011 №331-3
- Example of the quarterly republican budget allocations
(ROSPICE) for the Ministry of Health for 2012
- Reports on execution of the consolidated, republican, and local
budgets:
http://minfin.gov.by/budget_execution/analytical_information/
- Resolution of the Ministry of Finance “On approval of the
Treasury Chart of accounts for bookkeeping of the budget
execution” dated October 26, 2010 №123
- Chart of accounts for bookkeeping of the local budgets
execution.
69
BPD – Budget Policy Department; DTBR – Department of Tax Policy and Budget Revenues; Treasury – Main State Treasury; PDD – Public
Debt Department; DMAF – Department of Macroeconomic Analysis and Forecasting; ID – Investments Department; KRU – Department of Control
and Inspection; HRNA – House of representatives of the National Assembly; CRNA – Council of Republic of the National Assembly; DIRF –
Department of International Financial Relations; DICFAC – Department of International Cooperation and Foreign Aid Coordination
107
Performance Information sources
Indicators Institutions69 Documents, websites
- Irina Dubinina. April 14, 2011. Report on the Multitopic Statistics
Mission – Government Finance Statistics. International Monetary
Fund
PI-6 Ministry of Finance: - Law of the Republic of Belarus “On the republican budget for
BPD 2010” dated December 29, 2009 №73-3
- Law of the Republic of Belarus “On the republican budget for
2011” dated October 15, 2010 №176-3
- Law of the Republic of Belarus “On the republican budget for
2012” dated December 30, 2011 №331-3
- Supplementary materials to the draft laws on 2010-2012
republican budgets.
PI-7 Ministry of Finance: - Execution of the state earmarked extrabudgetary funds (Civil
Treasury, BPD; line Aviation Fund and Fund of Department of Corrections of the
ministries Ministry of Internal Affairs) in 2012
- TSA Balance Group 36 account analysis
- Information on the size of cross-subsidies within Concern
“Belenergo” due to containing low heating and electricity tariffs
for households.
- Information on the direct government lending under the state
programs in 2011-2012.
- Revenues and expenditures from the income-generating
activities of the budget organizations of the consolidated budget
(2012).
- Income-generating activities of the Ministry of Labor and Social
Protection organization in 2012.
- Information on donor financed projects, including grants and
loans, in 2010-2012.
PI-8 Ministry of Finance: - Law of the Republic of Belarus “On the republican budget for
BPD, 2012” dated December 30, 2011 №331-3
Financial Department of - Supplementary materials to the draft law on 2012 republican
the Minsk Oblast budget.
Executive Committee - Local budget revenue structure, 2010-2012.
- Information on the volume of transfers received by the local
budgets in 2010-2012.
- Reports on the execution of the consolidated, republican, local
budgets:
http://minfin.gov.by/budget_execution/analytical_information/
PI-9 Ministry of Finance: - Registers of the public debt of the Republic of Belarus, 2010-
BPD, Treasury, PDD; 2012.
State Control - List of the state statistical observations:
Committee; http://belstat.gov.by/homep/ru/statinstrum/main_new.php
Belstat; line ministries - Statistical Digest: Key public enterprises performance indicators,
January-June, 2013.
- letter of the Ministry of Finance from April 24, 2013 № 02-2-2/261
on submission of the draft laws on the republican budget for 2014
and on introduction of amendments to selected codes of the
Republic of Belarus related to taxation for consideration of the
108
Performance Information sources
Indicators Institutions69 Documents, websites
Interdepartmental Commission on the Safety in the field of
Economic Security
- minutes of the meeting of the Council of Ministers of the Republic
from August 30, 2013 №4 on draft forecast of so socioeconomic
development of the Republic of Belarus, budget and main
directions of the monetary policy of the Republic of Belarus for
2014
PI-10 Ministry of Finance: - National Legal Internet Portal of the Republic of Belarus:
BPD; Ministry of Trade http://pravo.by/
- Website of the Ministry of Finance: http://minfin.gov.by/
- Indicators of the Special Data Dissemination Standard of the
International Monetary Fund: http://minfin.gov.by/sdds/
- GFSM2001 government finance statistics indicators:
http://minfin.gov.by/gfs/
- Reports on the execution of the consolidated, republican and
local budgets:
http://minfin.gov.by/budget_execution/analytical_information/
- Law of the Republic of Belarus “On the republican budget for
2012” dated December 30, 2011 №331-3
- Consolidated budget execution report, 2011.
- Analytical reports on the state of the public finances:
http://minfin.gov.by/budgetary_policy/analytical_reports/
- Official website on public procurement in the Republic of Belarus:
http://www.icetrade.by/
- Information-analytical bulletin “Competitive bidding in Belarus
and abroad”: http://ncmps.by/informacionnyjj-bjulleten.html
PI-11 Ministry of Finance: - Guidelines of the Ministry of Finance on the procedure and
BPD; line ministries timeline of submitting draft budget proposals for the revenues
and expenditures for 2010-2012.
- Information on the submission and adoption by the Parliament of
the draft laws on the republican budgets for 2011-2013.
PI-12 Ministry of Finance: - Supplementary materials to the draft laws on 2010-2012
BPD; Ministry of republican budgets.
Economy: DMAI, ID; - Edicts of the President of the Republic of Belarus on approval of
line ministries the State Investment Programs for 2010-2012.
- Main directions of the fiscal and financial policy of the Republic of
Belarus for 2013 and the medium-term fiscal framework for 2013-
2015.
- List of the budget programs to be financed from republican
budget in 2011.
PI-13 Ministry of Finance: - Information of the Ministry of Finance on the main changes of the
DTPBR; Ministry of tax policy compared to the previous PEFA assessment.
Taxes and Levies; - Information of the Ministry of Taxes and Levies dated September
State Customs 19, 2013 №5-1-40/11497
Committee - Information of the Ministry of Taxes and Levies dated October
18, 2013 №4-16/4964
- Website of the Ministry of Taxes and Levies:
109
Performance Information sources
Indicators Institutions69 Documents, websites
http://www.nalog.gov.by/ru/
- Electronic Declaration Portal, Ministry of Taxes and Levies:
http://portal.nalog.gov.by/
- Information on the tax hot line:
http://www.nalog.gov.by/ru/contact-center/
- Website of the State Customs Committee: http://gtk.gov.by
- National Automated Electronic Tax Declaration System
http://gtk.gov.by/ru/eldeclaration_new
- World Bank. Doing business 2013: Smarter regulations for Small
and Medium-Size Enterprises.
- World Bank. Doing business 2012: Doing business in a more
transparent world.
PI-14 Ministry of Finance: - Information of the Ministry of Taxes and Levies dated September
DTPBR; Ministry of 19, 2013 №5-1-40/11497
Taxes and Levies; - Information of the Ministry of Taxes and Levies dated October
State Customs 18, 2013 №4-16/4964
Committee - Coordination plans of controlling (supervisory) activities:
http://www.kgk.gov.by/ru/coordination-control-
deyatel/coordination-plans
- Procedure for determining additional risk criteria used in the
process of planning inspection activities
PI-15 Ministry of Finance: - Arrears on tax and customs revenues administered by the tax
DTPBR; Ministry of and customs authorities, 2011-2012.
Taxes and Levies; - Collections enforced by the Ministry of Taxes and Levies and the
State Customs State Customs Committee in 2011-2012.
Committee - Information of the Ministry of Taxes and Levies dated September
19, 2013 №5-1-40/11497
- Information of the Ministry of Taxes and Levies dated October
18, 2013 №4-16/4964
PI-16 Ministry of Finance: - Order of the Ministry of Finance “On approval of the quarterly
Treasury, BPD, allocations (ROSPICE) of the republican budget for 2012” dated
Treasury Department January 17, 2012.
for the city of Minsk; - Information of the Ministry of Finance on republican budget
line ministries adjustments in 2012.
- Republican budget cash execution forecast templates for a
month and a year.
- Example of the republican budget cash execution forecast dated
June 24, 2013.
PI-17 Ministry of Finance: - Registers of the public debt of the Republic of Belarus, 2010-
Treasury, PDD, BPD 2012.
- Debt liabilities of local government and self-government bodies of
the oblast level, 2010-2012.
- Republican budget cash execution forecast templates for a
month and a year.
- Example of the republican budget cash execution forecast dated
June 24, 2013.
- Law of the Republic of Belarus “On the republican budget for
110
Performance Information sources
Indicators Institutions69 Documents, websites
2012” dated December 30, 2011 №331-3
PI-18 Ministry of Finance: - Information on typical violations detected during inspections of
Treasury, Finance, financial and economic activities of the healthcare organizations
Accounting and carried out within the framework of departmental control of the
Reporting Division, Republic of Belarus
Reporting and Audit; - Information on inspections of budget organizations subordinated
State Control to the Ministry of Labor and Social Protection carried out within
Committee; line the framework of the departmental control during the period of
ministries July 2010 — May 2011
- Example of the Order of the Minister of Finance on approval of a
staff list
- Example of the Order of the Minister of Finance on appointment
for a position
- Extracts from the Regulation on material incentives, rehabilitation
and relief allowances paid out to the employees of the Ministry of
Finance.
PI-19 Ministry of Trade; - Statistical reports on public procurement of goods (works,
National Statistics services) conducted at the expense of the republican and local
Committee; Ministry of budgets, state earmarked budgetary funds, and state
Economy extrabudgetary and innovation funds, 2010-2012.
- Examples of the minutes of the public procurement complaints
commission meetings
- Analysis of the centralized state statistical reports on public
procurement of goods (works, services):
http://www.mintorg.gov.by
- Official website on public procurement in the Republic of Belarus:
http://www.icetrade.by/
- Electronic Trading Platform of the National Center for Marketing
and Price Study Republican Unitary Enterprise:
http://www.goszakupki.by/
- Electronic Trading Platform of the Belarusian Universal
Commodity Exchange OJSC: http://zakupki.butb.by
PI-20 Ministry of Finance: - Reports on inspections №1-KER, 2010-2012.
Treasury, KRU, - Explanatory notes to the inspections reports of the Brest, Vitebsk
Treasury Department and Gomel Oblast Ministry of Finance’s KRU Departments for the
st
for the city of Minsk; 1 half-year of 2013.
line ministries - Examples (screenshots) from the operation of the software in the
territorial Treasury Department
- Order of the Ministry of Finance “On approval of the republican
budget ROSPICE for 2012” dated January 17, 2012.
PI-21 Ministry of Finance: - Reports on inspection №1-KER, 2010-2012.
KRU; State Control - Information on typical violations detected during inspections of
Committee; line financial and economic activities of the healthcare organizations
ministries carried out within the framework of departmental control of the
Republic of Belarus (Ministry of Health)
- Information on inspections of budget organizations subordinated
to the Ministry of Labor and Social Protection carried out within
111
Performance Information sources
Indicators Institutions69 Documents, websites
the framework of the departmental control during the period of
July 2010 — May 2011 (Ministry of Labor and Social Protection)
- Coordination plans of control (supervisory) activities:
http://www.kgk.gov.by/ru/coordination-control-
deyatel/coordination-plans
PI-22 Ministry of Finance: - Resolution of the Ministry of Finance “On approval of the
Treasury Instruction on organizing accounting at budget organizations and
centralized accounting units servicing budget organizations”
dated February 8, 2005 №15
- Resolution of the Ministry of Finance “On approval of the
Instruction on organizing and executing expenditures of the
republican budget, local budgets, budget of the state
extrabudgetary Social Protection Fund of the Ministry of Labor
and Social Protection of the Republic of Belarus <...>” dated July
27, 2011 №63
- Resolution of the Ministry of Finance of the Republic of Belarus,
Board of the National Bank of the Republic of Belarus “On
approval of the Instruction on revenue execution of the
republican budget and the budget of the state extrabudgetary
Social Protection Fund of the Republic of Belarus” dated
December 8, 2005 №143/171
PI-23 Ministry of Finance: - Resolution of the Ministry of Finance “On approval of Instruction
Treasury; line ministries on organizing accounting at budget organizations and centralized
accounting units servicing budget organizations” dated February
8, 2005 №15
PI-24 Ministry of Finance: - Reports on execution of the consolidated, republican and local
Treasury, Department budgets:
of Regulation of http://minfin.gov.by/budget_execution/analytical_information/
Accounting, Reporting - Consolidated budget execution report, 2011.
and Audit - Templates of the annexes to the republican budget execution
reports for the previous fiscal year.
PI-25 Ministry of Finance: - Law of the Republic of Belarus “On approving the report on
Treasury execution of the republican budget for 2012” dated July 12, 2013
№41-3
- Templates of the annexes to the republican budget execution
reports for the previous fiscal year.
PI-26 State Control - Information of the State Control Committee on the scope of the
Committee; Ministry of audit performed in 2012
Finance: Treasury; line - Action plan to address deficiencies noted in the conclusion of the
ministries State Control Committee on execution of the republican budget in
2011
- Action plan to address the deficiencies noted in the conclusion of
the State Control Committee on 2012 execution of the republican
budget and the state extrabudgetary Social Protection Fund of
the Republic of Belarus
- Summary information on implementation of the State Control
Committee’s recommendations mentioned in the their conclusion
112
Performance Information sources
Indicators Institutions69 Documents, websites
on the execution of the republican budget
PI-27 Standing Commission - Information on the submission and adoption by the Parliament of
of the HRNA for Budget the draft laws on the republican budgets for 2011-2013.
and Finance; Standing - Request of Mr. A. I. Antonenko, deputy of the HRNA, dated July
Commission of the 5, 2011 г. № 09-49/95-D on financing of the Grodno Oblast
CRNA for Economy, Executive Committee municipal property maintenance addressed
Budget and Finance; to the Minister of Finance
Ministry of Finance: - Order of the Council of Ministers of the Republic of Belarus dated
BPD October 25,2011 № 09/133-36 on participation in the joint
session of both chambers of Parliament scheduled for November
30, 2011 to provide answers of the Government of Republic of
Belarus to the questions of the HRNA deputies and CRNA
members
rd
- Vidimus from the minutes of the 3 session of the HRNA of the
th
5 convocation dated December 16, 2013 №9 on the draft law of
the Republic of Belarus on republican budget for 2014
- Minutes of the enlarged meeting of the Standing Commission on
budget, finance and tax policy dated September 6, 2010 № 52
- Information of the Ministry of Finance dated November 22, 2013
г. on consideration of the comments provided by the deputies of
the HRNA on August 30, 2013 оn the draft law of the Republic of
Belarus on the republican budget for 2014
- Minutes of the meeting of the Standing Commission on budget,
finance and tax policy dated September 26, 2012 №104
PI-28 State Control - Article 200 of the Procedural Rules of the HRNA
Committee; Standing - Meeting of the Standing Commission of the HRNA on budget and
Commission of the finance on the draft law “On approval of the report on the
HRNA for Budget and execution of the republican budget in 2012”:
Finance; Standing http://house.gov.by/index.php/,7515,36401,1,,0,,,0.html
Commission of the - Approval of the law “On approval of the report on the execution of
nd
CRNA for Economy, the republican budget in 2012” on the 2 session of the HRNA:
Budget and Finance; http://house.gov.by/index.php/,1,36446,1,,0,,,0.html
Ministry of Finance:
Treasury, BPD
D-1 -
D-2 Ministry of Economy: - Information on projects financed by donors, including grants and
DICFAC; Ministry of loans, in 2010-2012.
Finance: DIFR; World
Bank Country Office in
the Republic of Belarus
D-3 Ministry of Economy: - Information about the usage of the financial assistance funds,
DICFAC; Ministry of received in accordance with the procedures applicable in the
Finance: DIFR; World country
Bank Country Office in
the Republic of Belarus
113
Annex 5: List of Stakeholders Interviewed
Name Position70
Ministry of Finance
Mrs.Yelena Abakunchik Head, Accounting and Budget Reporting Division, Treasury
Mrs. Tatyana Astreiko Head, Local Budgets Division, BPD
Mrs. Valentina Borisova Consultant, Consolidated Budget Division, BPD
Mrs. Tatyana Dekhterenok Consultant, Division of Methodology of Budget Process, BPD
Mrs. Karolina Dyurova Chief Economist, Department for Planning, Accounting and Payments, PDD
Mrs. Larisa Ermakova Head, Financing, Accounting and Reporting Division
Mr. Alexander Gonchar Head, Control and Revision Department
Mr. Dmitry Gritskevich Chief Economist, Budget Execution Division, Treasury
Mrs. Tamara Gruzinskaya Deputy Head, Main State Treasury
Mrs. Ludmila Guryanova Deputy Head, Treasury,
Mrs. Yelena Kalachik Deputy Head, Department for Regulation of Accounting, Reporting and Audit
Mrs. Tatyana Kandera Deputy Head, Department of Construction Finance and Capital Investments
Mrs. Lubov Kazmina Head, Division for Financing Healthcare and Sports, Department for Financing of
Social Sphere and Science
Mr. Igor Lankevich Deputy Head, Control and Revision Department – Head, Division for Organization of
Control Activities
Mrs. Yelena Lubinskaya Consultant, Planning, Accounting and Payments Division, PDD
Mrs. Svetlana Napreyenko Consultant, Accounting Methodology Division, Department for Regulation of
Accounting, Reporting and Audit
Mr. Viktor Prikhodko Deputy Head, Budget Revenues Division – Head, Unit for Planning of Budget
Revenues, DTPBR
Mr. Mikhail Prokhorik Deputy Head, Consolidated Budget Division, BPD
Mrs. Olga Ryasina Consultant, Local Budgets Division, BPD
Mrs. Tatyana Rybak Head, Department for Regulation of Accounting, Reporting and Audit
Mrs. Olga Savelyeva Chief Economist, DIFR
Mr. Yury Seliverstov Head, BPD
Mrs. Viktoria Shilovich Head, Department of International Cooperation, DIFR
Mrs. Nadezhda Sudnik Deputy Head, Tax Policy Division – Head, Unit for Taxation of Revenues, DTPBR
Mrs. Olga Tarasevich Deputy Head, BPD – Head, Division of Methodology of Budget Process
Mrs. Marina Tikhonovich Consultant, Division of Methodology of Budget Process, BPD
Mrs. Karolina Voitko Deputy Head, PDD – Head, Planning, Accounting and Payments Division
Department of the Main State Treasury for the city of Minsk
Mrs. Yelena Pesetskaya Head
Financial Department of the Minsk Oblast Executive Committee
Mrs. Tamara Kukhareva Head, Department for Accounting and Financing
Mr. Nikolai Kukhovets Deputy Head, Financial Department
Mrs. Anzhela Kuleshova Deputy Head, Department for Accounting and Financing
Mrs. Natalya Pavluchenko Head, Department for Financing of Non-Production Sector
Mr. Yury Shkiruts Head
70
BPD – Budget Policy Department, DTPBR – Department of Tax Policy and Budget Revenues, Treasury – Main State Treasury, PDD – Public
Debt Department, DIFR – Department of International Financial Relations, DICFAC– Division of International Cooperation and Foreign Aid
Coordination
114
Name Position70
Ministry of Taxes and Levies
Mrs. Yelena Gruzd Department for Accounting of Taxes and Departmental Control Deputy Head of
Department of Accounting for Taxes and Departmental Control, Head of Division of
Accounting for Taxes, Reporting, and Payment Enforcement
Mr. Nikolai Poteyev Head, Department for Organization of Control Activities
Mr. Valery Rumyantsev Deputy Head, Department for Analysis, Planning and Coordination of Control Activities
Mrs. Ella Selitskaya Deputy Minister
Mrs. Diana Shket Deputy Head, Department for Accounting of Taxes, Reporting and Collection of
Payments
Mrs. Alla Sundukova Head, Department for International Tax Cooperation
Mrs. Natalya Zvorono Deputy Head, Legal Department
Ministry of Economy
Mrs. Natalya Aleynikova Deputy Head, Department for Forecasting and Analysis of Investment Activities
Mr. Ivan Belchik Head, DICFAC
Mrs. Tatyana Dubovik Deputy Head, Division of Forecasts and Programs, Department for Macroeconomic
Analysis and Forecasting
Mrs. Olga Kniga Deputy Head, DICFAC
Mr. Oleg Krymsky Deputy Head, Department for Commodity Balance
Mr. Sergey Trofimovich Head, Division for Forecasting and Analysis of Investment Activities, Department for
Investments
Mrs. Olga Vikhotskaya Deputy Head, Division for Fiscal and Tax Policy, Department for Financial, Credit,
Fiscal and Foreign Exchange Policy
Ministry of Trade
Mr. Pavel Zhukovsky Head, Public Procurement Department
State Control Committee
Mr. Viktor Burlo Head, Department for Control of Social Sphere Sectors
Mr. Alexander Kurlypo Head, Department for Control of Budget and Finance Sphere
Mrs. Svetlana Nesterenko Deputy Head, Department for Control of Budget and Finance Sphere
Mrs. Svetlana Okolova Deputy Head, Division for Control over Local Administration Bodies and Budget of the
Department for Control of Budget and Finance Sphere
Mrs. Danuta Ryzhikova Head, Department for Coordination of Control Activities
Mr. Dmitry Sanko Head, Analytical Department
Mrs. Raisa Savritskaya Deputy Chairperson
State Customs Committee
Mrs. Ludmila Drozd Head, Department for Methodology of Customs Charges Collection
Mrs. Tatyana Dubrovskaya Deputy Head, Department for Tariff Regulation of Customs Charges
Mr. Igor Karelin Deputy Head, Analytical Center for Monitoring and Forecasting
Mrs. Yelena Kolesnik Deputy Head, Financial and Economic Department
Mr. Andrey Legky Head, Division for Organization of Audits, Department for Post-Customs Control
Mr. Konstantin Ryzhkov Deputy Head, Department for Post-Customs Control
Mr. Vadim Yakovlev Deputy Head, Department for Tariff Regulation of Customs Charges
National Bank of the Republic of Belarus
Mr. Boris Vlasenko Deputy Head, Department for Banking Statistics
Mrs. Ludmila Redkina Deputy Head, Department for Accounting of Bank Operations
National Statistics Committee
Mrs. Irina Kangro Deputy Chairperson
115
Name Position70
Mrs. Svetlana Nichiporivich Head, Department for Finance Statistics
Mrs. Alexandrа Shevtsova Head, Department of International Relations
Ministry of Industry
Mrs. Irina Andreyeva Consultant, Finance Department
Mrs. Inga Arsyutina Chief Engineer, Department for Electrotechnical and Optical and Mechanical Industry
and Instrument Making
Mrs. Natalya Kalinnikova Deputy Head, Department for Accounting and Methodology, Labor and Social Policy
Mrs. Yevgeniya Konoshenko Deputy Head, Department for International Economic Relations – Head of Division for
Cooperation with Foreign States
Mrs. Zhanna Ksenzhik Deputy Head, State Property Department
Mr. Oleg Lagunovich Deputy Head of Department – Head of Labor and Social Policy Division
Mrs. Renata Marchuk Deputy Head, Department for Legal and Staffing Provision - Head of Legal Division
Mrs. Edita Savchuk Deputy Head, Finance Department
Mr. Denis Sobol Deputy Head, Control and Revision Department - Head of Division for Complex
Revisions and Reporting
Mrs. Tatyana Zayats Head, Statistics Sector, Department for Analysis, Forecasting and Statistics
Ministry of Health
Mrs. Yelena Bogdan Head, Main Department for Organization of Medical Care
Mr. Anatoly Grushkovsky Head, Division of Foreign Relations
Mrs. Anna Gusakova Chief Legal Advisor, Legal Department
Mr. Dmitry Kalistratov Head, Department for Entrepreneurship, Pricing and Management of State Property
Mr. Oleg Levshukov Head, Department for Medical Equipment, Material and Technical Supplies and
Construction
Mrs. Yelena Mokraya Head, Department for Methodology, Organization of Accounting and Reporting
Mr. Dmitry Pinevich First Deputy Minister
Mrs. Alla Samuseyeva Head, Control and Revision Department
Mrs. Yelena Tkacheva Head, Department for Economic Analysis and Development of Healthcare
Healthcare Committee of the Minsk City Executive Committee
Mrs. Tatyana Belogorova Deputy Head
Mrs. Natalya Predko Head, Department for Medical and Preventive Help
Healthcare Institution «City Clinical Hospital №2»
Mrs. Larisa Katilevskaya Chief Accountant
Mr. Sergei Prusevich Head Doctor
Mrs. Alla Yalovchik Head, Economic and Planning Department
Ministry of Education
Mrs. Irina Bebekh Head, Department for Socioeconomic Development
Mrs. Svetlana Dormeshkina Deputy Head, Department for Socioeconomic Development
Mr. Valery Gavrilov Head, Department for Accounting and Control and Revision Activities
Mrs. Natalya Kravtsova Chief Economist, Department for Socioeconomic Development
Mrs. Sergey Rudy Deputy Minister
Administration of the Pervomaysky District, Minsk
Mr. Gennady Merkul Deputy Head, Division for Education, Sports and Tourism, Department for Financial
and Economic Activity of the Pervomaysky District, Minsk
Gimnazium №11, Minsk
Mrs. Olga Boyko Director
Ministry of Labor and Social Protection
116
Name Position70
Mrs. Taisa Dovzhonok Head, Department for Accounting and Reporting
Mrs. Svetlana Gurinovich Deputy Head, Department for Planning and Financing
Mr. Valery Kovalkov Deputy Minister
Mrs. Galina Kulakovskaya Head, Division for Organization of Work of State Employment Agency, Department for
Employment Policy
Mrs. Olga Likhtarovich Head, Division of legal Issues Related to Social Protection, Legal Department
Mr. Nikolai Orel Deputy Head, Department for Standing Social Services Institutions and Capital
Construction
Mrs. Olga Ostrovskaya Head, Department for International Cooperation and Social Partnership
Mrs. Yelena Podvigina Head, Control and Revision Department
Mr. Valery Ryndin Head, Department for Handling Complaints of Physical and Legal Persons and
Internal Control
Mr. Viktor Sidorovich Deputy Head, Department for Employment and Remuneration
Mr. Oleg Tokun Head, Employment Policy Department
Standing Commission for Foreign Affairs of the House of Representatives
of the National Assembly
Mr. Adam Vashkov Commission member
Standing Commission for Budget and Finance of the House of Representatives
of the National Assembly
Mrs. Tatyana Belskaya Consultant Advisor, Department of Provision of Activity of the Standing Commission
Mr. Valery Borodenya Commission member
Mrs. Natalya Davidovich Chief Advisor, Department of Provision of Activity of the Standing Commission
Mrs. Ludmila Dobrynina Chairperson of commission
Mrs. Valeriya Grakhovskaya Head, Department of Provision of Activity of the Standing Commission
Mrs. Marina Kiseleva Chief Specialist of Department
Mrs. Alexander Miakinnik Deputy Chairperson of commission
Mr. Ilya Murashko Commission member
Mr. Vladimir Shitko Deputy Chairperson of commission
Standing Commission for Economy, Budget and Finance of the House of Representatives
of the National Assembly
Mrs. Olga Bekasova Head, Department of Provision of Activity of the Standing Commission
Mr. Vladimir Pantyukhov Chairperson of commission
Belarusian Chamber of Trade and Commerce
Mr. Vyacheslav Reut First Deputy Chairman
Public Association “Belarusian Union of Entrepreneurs”
Mrs. Tamara Chekhovskaya Director General
Belarus World Bank Country Office
Mrs. Elena Klochan Senior Country Program Officer
Delegation of the European Union in Belarus
Mr. Alexey Vavohin Projects Coordinator
United Nations Development Programme Office in Belarus
Mrs. Julia Dzingailo UNDP Programme Analyst
117
Annex 6: List of Documents Consulted
Laws:
Administrative Offence Code of the Republic of Belarus dated April 21, 2003 №194 -3
Budget Code of the Republic of Belarus dated July 16, 2008 №412 -3
Constitution of the Republic of Belarus, 1994.
Customs Code of the Republic of Belarus dated January 4, 2007 №204 -3
Draft law “On the state indicative planning of socioeconomic development of the Republic of Belarus”
Labor Code of the Republic of Belarus dated July 26, 1999 №296-3
Law of the Republic of Belarus “On accounting and reporting” dated July 12, 2013 №57 -3
Law of the Republic of Belarus “On accounting and reporting” dated October 18, 1994 №3321 -XII
Law of the Republic of Belarus “On approval of the report on execution of the republican budget for 2010” dated
July 14, 2011 №294-3
Law of the Republic of Belarus “On approval of the report on execution of the republican budget for 2011” dated
July 11, 2012 №402-3
Law of the Republic of Belarus “On approval of the report on execution of the republican budget for 2012” dated
July 12, 2013 №41-3
Law of the Republic of Belarus “On audit activities” dated July 12, 2013 №56 -3
Law of the Republic of Belarus “On audit activities” dated November 8, 1994 №3373 -XII
Law of the Republic of Belarus “On civil service in the Republic of Belarus” dated June 14, 2003 №204 -3
Law of the Republic of Belarus “On Enterprises” dated December 9, 1992 №2020 -XII
Law of the Republic of Belarus “On local government and self -government in the Republic of Belarus” dated
January 4, 2010 №108-3
Law of the Republic of Belarus “On Mass Media” dated July 17, 2008 №427 -3
Law of the Republic of Belarus “On public procurement of goods (works, services)” dated July 13, 2012 №419 -3
Law of the Republic of Belarus “On ratification of the Agreement on the Customs Code of the Customs Union”
dated July 2, 2010 №158-3
Law of the Republic of Belarus “On state forecasting and programs of socioeconomic development of the
Republic of Belarus” dated May 5, 1998 №157-3
Law of the Republic of Belarus “On the budget of the state extrabudgetary Social Protection Fund of the Ministry
of Labor and Social Protection of the Republic of Belarus for 2010” dated December 29, 2009 №73 -3
Law of the Republic of Belarus “On the budget of the state extrabudgetary Social Protection Fund of the Ministry
of Labor and Social Protection of the Republic of Belarus for 2011” dated October 15, 2010 №173 -3
Law of the Republic of Belarus “On the budget of the state extrabudgetary Social Protection Fund of the Ministry
of Labor and Social Protection of the Republic of Belarus for 2012” dated December 30, 2011 №329 -3
Law of the Republic of Belarus “On the Council of Ministers of the Republic of Belarus” dated July 23, 2008
№424-3
Law of the Republic of Belarus “On the electronic document and electronic digital signature” dated December 28,
2009 №113-3
Law of the Republic of Belarus “On the republican budget for 2010” dated December 29, 2009 №73 -3
Law of the Republic of Belarus “On the republican budget for 2011” dated October 15, 2010 №176 -3
Law of the Republic of Belarus “On the republican budget for 2012 ” dated December 30, 2011 №331 -3
Law of the Republic of Belarus “On the State Control Committee and its territorial bodies” dated July 1, 2010
№142-3
Tax Code of the Republic of Belarus (General part) dated December 19, 2002 №166 -3
Tax Code of the Republic of Belarus (Specific part) dated December 29, 2009 №71 -3
118
Edicts of the President of the Republic of Belarus:
“Issues of the Administration of the President of the Republic of Belarus” dated January 23, 1997 №97
“On amendment of selected parameters of the republican budget for 2010” dated December 27, 2010 №679
“On amendment of selected parameters of the republican budget for2011 and <…>” dated November 14, 2011
№524
“On amendment of selected parameters of the republican budget for2012 and <…>” dated December 29, 2012
№577
“On amendment of the limits of the domestic state debt and on increasing the statutory funds of selected
organizations” dated December 29, 2011 №608
“On approval of the Concept of State Safety of the Republic of Belarus” dated November 9, 2010 №575
“On approval of the key parameters of socioeconomic development of the Republic of Belarus forecast for 2010”
dated December 7, 2009 №595
“On approval of the key parameters of socioeconomic development of the Republic of Belarus forecast for 2011”
dated November 19, 2010 №596
“On approval of the Regulation on external state loans and external loans attracted against the guarantees of the
Government of the Republic of Belarus” dated April 18, 2006 №252
“On approval of the Regulation on formation, approval of the State Investment Program, and on reporting on its
implementation” dated May 5, 2006 №299
“On approval of the Socioeconomic Development Program of the Republic of Belarus for 2011-2015” dated April
11, 2011 №136
“On approval of the State Investment Program for 2010” dated December 17, 2009 №636
“On approval of the State Investment Program for 2011” dated December 20, 2010 №660
“On approval of the State Investment Program for 2012” dated February 17, 2012 №75
“On contract bidding in construction <...>” dated February 7, 2005 №58
“On customs duties” dated July 13, 2006 №443
“On departmental control in the Republic of Belarus” dated June 22, 2010 №325
“On electronic auctions” dated December 30, 2010 №708
“On electronic auctions” dated February 27, 2012 №112
“On establishing of the state extrabudgetary Civil Aviation Fund” dated October 23, 2003 №465
“On financing the development of the public telecommunications services” dated February 20, 2007 №96
“On granting and usage gratuitous (sponsor) aid” dated July 1, 2005 №300
“On improvement of the control (supervision) in the Republic of Belarus” dated October 16, 2009 №51 0
“On improving cooperation of public bodies and other public organizations with the mass media” dated February
6, 2009 №65
“On Interdepartmental Commission on the Safety in the field of Economic Security under the Council of Safety of
the Republic of Belarus” dated July 10, 2002 №371
“On measures to improve remuneration of labor of budget financed organizations employees” dated December
28, 1999 №770
“On measures to improve the usage of the national segment of the Internet” dated February 1, 2010 №60
“On public procurement in the Republic of Belarus” dated November 17, 2008 №618
“On selected issues of declaring the debt as a bad debt, and its writing off” dated June 13, 2008 №329
“On selected issues of public procurement of goods (works, services)” dated December 29, 2012 №576
“On selected issues of securities market regulation” dated April 28, 2006 №277
“On selected issues of the guarantees of the Government of the Republic of Belarus for loans provided by banks
of the Republic of Belarus” dated June 30, 2008 №359
“On selected issues related to the functioning of the Executive Office of the President of the Republic of Belarus”
dated November 13, 2001 №660
“On selected issues related to the functioning of the State Control Committee of the Republic of Belarus” dated
November 27, 2008 №647
119
“On selected measures for optimizing the system of the public bodies and other public organizations, as well as
the number of their employees” dated April 12, 2013 №168
“On the key parameters of socioeconomic development of the Republic of Belarus forecast for 2012” dated
December 23, 2011 №590
“On the procedure of formation and usage of the innovation funds resources” dated August 7, 2012 №357
“On the Social Protection Fund of the Ministry of Labor and Social Protection” dated January 16, 2009 №40
“On the structure, functions and number of employees of the local executive and administrative bodies” dated
October 23, 2006 №631
“On wages of civil servants and military personnel" dated June 4, 2013 №254
Resolutions of the Council of Ministers of the Republic of Belarus:
“Issues of the Ministry of Finance of the Republic of Belarus” dated October 31, 2001 №1585
“On approval of the Guidelines on the procedure for formation of the contract pricing and transactions bet ween
the customer and the contractor when building and constructing sites, and on the procedure for organizing
and holding the contractors bidding for building and constructing of the sites” dated March 3, 2005 №235
“On approval of the procedure and conditions of calculating length of service of civil service ” dated May 13, 1997
№471
“On approval of the Program of actions of the Government of the Republic of Belarus for 2011 -2015” dated
February 18, 2011 №216
“On approval of the program of improving general secondary education in the Republic of Belarus for 2007-2016”
dated May 31, 2007 №725
“On approval of the program of improving preschool education in the Republic of Belarus for2009 -2014” dated
August 19, 2008 №1193
“On approval of the Regulation on the procedure and purposes of the extrabudgetary centralized investment
funds” dated January 5, 2013 №9
“On approval of the Regulation on the procedure of formation, financing and monitoring execution of the national,
regional, and sectoral programs <...>” dated March 31, 2009 №404
“On conducting the republican volunteer Saturday work in 2013” dated April 9, 2013 №275
“On defining solvency assessment criteria of business entities” dated December 12, 2011 №1672
“On drafting the forecast of socioeconomic development of the Republic of Belarus for 2011” dated May 27, 2010
№802
“On drafting the forecast of socioeconomic development of the Republic of Belarus for 2013, and of its key
parameters for 2014-2015” dated April 5, 2012 №305
“On establishment of interagency working group to prepare draft fiscal and financial policy guidelines for 2012
and the medium-term fiscal framework for 2012-2014, and to ensure their consistency with key
parameters of socioeconomic development forecast and parameters of the key monetary indicators of the
Republic of Belarus” dated March 7, 2011 №278
“On establishment of interagency working group to prepare draft fiscal and financial policy guidelines for 2013,
and the medium-term fiscal framework for 2013-2015, and to ensure their consistency with key
parameters of the socioeconomic development forecast and monetary policy guidelines of the Republic of
Belarus” dated March 13, 2012 №224
“On establishment of the interagency working group to prepare draft fiscal and financial policy guidelines for 2013
and the medium-term fiscal framework for 2013-2015, and to ensure their consistency with key
parameters of the socioeconomic development forecast and monetary policy guidelines of the Republic of
Belarus” dated March 13, 2012 №224
“On indicators of the socioeconomic development of the Republic of Belarus forecast for 2012” dated December
30, 2011 №1779
“On measures to implement the Edict of the President of the Republic of Belarus dated February 27, 2012 №112”
dated March 26, 2012 №261
120
“On measures to implement the Edict of the President of the Republic of Belarus dated December 30, 2010
№708” dated December 31, 2010 №1923
“On measures to implement the Edict of the President of the Republic of Belarus dated June 30, 2008 №359”
dated October 6, 2008 №1458
“On measures to implement the Law of the Republic of Belarus “On state forecasting and programs of
socioeconomic development of the Republic of Belarus” dated August 20, 1998 №1321
“On measures to improve remuneration of labor of budget financed organizations employees” dated December
31, 1999 №2070
“On selected issues of maintenance and usage of a unified controlling (supervisory) agencies information
database including the data on entities inspected and on their allocation to corresponding risk
groups<…>” dated January 30, 2013 №74
“On selected issues of public procurement” dated December 20, 2008 №1987
“On selected issues of the Internet sites of the government agencies and organizations <...>” dated April 29,
2010 №645
“On selected measures to implement the Law of the Republic of Belarus “On public procurement of goods
(works, services)”” dated August 22, 2012 №778
“On the correlation of classes of public servants and public positions in republican government bodies, local
government and self-government bodies” dated June 29, 2013 №564
“On the rules of procedure of the Council of Ministers of the Republic of Belarus” dated February 14, 2009 №193
“Selected issues of the Ministry of Economy of the Republic of Belarus” dated July 29, 2006 №967
Resolutions of the Ministry of Finance of the Republic of Belarus:
“On approval of the Instruction on organizing accounting at budget organizations and centralized accounting units
servicing budget organizations” dated February 8, 2005 №15
“On approval of the Instruction on organizing and executing expenditures of the republican budget, local budgets,
budget of the state extrabudgetary Social Protection Fund of the Ministry of Labor and Social Protection of
the Republic of Belarus <...>” dated July 27, 2011 №63
“On approval of the Instruction on selected issues related to the issuance and registration of securities” dated
December 11, 2009 №146
“On approval of the Instruction on the procedure for keeping records of the debt of the local gove rnment and self-
government bodies, debt guaranteed by the local executive and administrative bodies, and on local
executive and administrative bodies reporting to the Ministry of Finance” dated August 9, 2013 №55
“On approval of the Instruction on the procedure for preparing and submitting accounting reports on the budget
funds and the funds from the income-generating activities of the budget organizations <...>” dated March
10, 2010 №22
“On approval of the Instruction on the procedure of issuance, placem ent, circulation and redemption of selected
types of state securities of the Republic of Belarus <…>” dated August 18, 2003 №118
“On approval of the Instruction on the procedure of planning, accounting and usage of funds received by the
organizations financed from the budget from the income-generating activities" dated November 12, 2002
№152
“On approval of the Instruction on the procedure of recording international technical assistance funds by the
public bodies” dated April 26, 2010 №51
“On approval of the Instruction on the procedure of registration of external state loans and external loans
contracted under the guarantees of the Government of the Republic of Belarus, and of keeping record of
the external public debt and external debt guaranteed by the R epublic of Belarus” dated November 21,
2006 №142
“On approval of the Instruction on the procedure of settling bills for construction and repair works at the expense
of the budget” dated December 17, 2001 №120
121
“On approval of the Instruction on the procedure of settling pecuniary liabilities of budget funds recipients” dated
June 29, 2000 №66
“On approval of the republican budget ROSPICE for 2012” dated January 17, 2012
“On approval of the Treasury Chart of accounts for the bookkeeping of the budgets execution” dated October 26,
2010 №123
“On budget classification of the Republic of Belarus” dated December 31, 2008 №208
“On the procedure of transferring the funds earned during the republican volunteer Saturday work in 2013” dated
April 12, 2013 №22
Orders of the Minister of Finance of the Republic of Belarus:
“On setting up the process for International Monetary Funds’s Special Data Dissemination Standard and
Government Finance Statistics data compilation” dated September 11, 2013 № 311
“On the methodology of calculation of grants, expenditure needs norms, , and adjustment factors for the
expenditure needs norms” dated July 11, 2011 №163
Resolutions of the Ministry of Economy of the Republic of Belarus:
“On approval of the Instruction on the procedure of posting (publishing) information on public procurement” dated
January 15, 2009 №8
“On approval of the Instruction on the procedure of processing public procurement complains by the Ministry of
Economy of the Republic of Belarus” dated December 22, 2012 №11 6
“On approval of the Instruction on the procedure of the functioning of the information analytical system of
monitoring of business planning and financial status of organizations, and on the content of the
information necessary for the system functioning” dated August 13, 2007 №146
Others:
Decision of the Customs Union Commission “On the unified customs and tariff regulations of the Customs Union
of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation” dated November 27,
2009 №130
Decree of the President of the Republic of Belarus “On state registration and liquidation (closing down) of
business entities” dated January 16, 2009 №1
Developing the medium-term and program frameworks for the budget /Duncan Last, Jason Harris, Allan
Gustafsson. May 2011. International Monetary Fund
Dubinina, Irina. April 14, 2011. Report on the Multitopic Statistics Mission – Government Finance Statistics.
International Monetary Fund
International Monetary Fund. 2013 Article IV Consultation and Fourth Post-Program Monitoring Discussions.
Report №13/159, May 9, 2013
International Monetary Fund. Staff Report for the 2011 Article IV Consultation and Proposal for Post-Program
Monitoring. Report №11/66, February 17, 2011
International Monetary Fund. Staff Report for the 2012 Article IV Consultation and Second Post-Program
Monitoring Discussions. Report №12/113, April 18, 2012
Order of the Ministry of Labor and Social Protection of the Republic of Belarus “On application of the Unified
Tariff Scale of workers of Belarus” dated January 21, 2000 № 21
Resolution of the Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus
"On approval of the concept of the gross external debt of the Republic of Belarus management, and the
action plan for its implementation” dated May 6, 2011 №574/12
Resolution of the House of Representatives of the National Assembly of the Republic of Belarus “On the
procedural rules of the House of Representatives of the National Assembly of the Republic of Belarus”
dated October 9, 2008 №1033-PZ/IX
122
Resolution of the Ministry of Finance of the Republic of Belarus and the Ministry of Economy of the Republic of
Belarus “On approval of the Instruction on calculation of the solvency ratios and financial status a nd
solvency analysis of business entities” dated December 27, 2011 №140/206
Resolution of the Ministry of Finance of the Republic of Belarus, Board of the National Bank of the Republic of
Belarus “On approval of the Instruction on executing local budgets in terms of their revenues” dated
December 23, 2005 №159/176
Resolution of the Ministry of Finance of the Republic of Belarus, Board of the National Bank of the Republic of
Belarus “On approval of the Instruction on revenue execution of the republican budg et and the budget of
the state extrabudgetary Social Protection Fund of the Republic of Belarus” dated December 8, 2005
№143/171
Resolution of the Ministry of Labor and Social Protection of the Republic of Belarus “On remuneration of the civil
servants employed by the government agencies” dated June 17, 2013 №56
Resolution of the Ministry of Labor and Social Protection of the Republic of Belarus “On measures to improve
remuneration of labor of the employees of the budget financed organizations and ones receiving state
support” dated January 21, 2000 №6
Resolution of the Ministry of Trade of the Republic of Belarus “On approval of the Instruction on the procedure of
processing public procurement complains by the Ministry of Trade of the Republic of Belarus” d ated June
26, 2013 №12
Resolution of the National Statistical Committee of the Republic of Belarus “On approval of the state statistical
report template 2-PROVERKA (Minfin) “Report on departmental control”, and the compilation instructions”
dated December 29, 2010 №284
Resolution of the National Statistical Committee of the Republic of Belarus “On approval of the state statistical
report template2-PROVERKA (Minfin, “Report on departmental control”), and the compilation instructions”
dated September 29, 2011 №269
Timofeev, Andrey; Martinez-Vasquez, Jorge. Belarus - Technical note on the methodology for the allocation of
intergovernmental grants in the Republic of Belarus. 2010. World Bank
Treaty on Unified Customs and Tariff Regulations of January 25, 2008
World Bank. Belarus — Report on the Observance of Standards and Codes: accounting and audit. Report
№62545, November 2009.
World Bank. Belarus Public Expenditure Review: Enhancing public services in times of austerity. Volume 2.
Report №74148-BY, February 21, 2013.
World Bank. Belarus Public Expenditure Review: Fiscal reforms for a sustainable economy recovery. Volume 1.
Report №63566-BY, August 15, 2011.
World Bank. Budget System Reforms - Selected Issues in medium term budgeting and sectoral performance
budgeting. June 22, 2012.
World Bank. Country Partnership Strategy for the Republic of Belarus for the period FY2014-FY2017. Report No.
77458-BY,June 2013.
World Bank. Debt Management Performance Assessment (DeMPA), May 2011.
World Bank. Doing business 2012: Doing business in a more transparent world. Washington, D.C.: World Bank
Group
World Bank. Doing business 2013: Smarter regulations for Small and Medium-Size Enterprises. Washington,
D.C.: World Bank Group
123
Annex 7: Disclosure of Quality Assurance
Mechanism
The following quality assurance arrangements have been established in the planning and preparation of the
th
PEFA assessment report for the Republic of Belarus, final report dated June 5 , 2014.
PEFA Assessment Management Organization
• Government PEFA working group:
Mr. Maxim Ermolovich (Deputy Minister of Finance of the Republic of Belarus), Chair of the working group
Mr. Yury Seliverstov (Head, BPD, MoF), Deputy Chair of the working group
Mrs.Yelena Abakunchik (Head, Accounting and Budget Reporting Division, Treasury, MoF)
Mrs. Natalya Aleynikova (Deputy Head, Department for Forecasting and Analysis of Investment Activities,
MoE)
Mrs. Tatyana Astreiko (Head, Local Budgets Division, BPD, MoF)
Mrs. Valentina Borisova (Consultant, Consolidated Budget Division, BPD, MoF)
Mr. Dmitry Gritskevich (Chief Economist, Budget Execution Division, Treasury, MoF)
Mrs. Tamara Gruzinskaya (Deputy Head, Treasury, MoF)
Mrs. Ludmila Guryanova (Deputy Head, Division for Methodology, Organization of Work and
Departmental Control, KRU, MoF)
Mrs. Yelena Lubinskaya (Consultant, Planning, Accounting and Payments Division, PDD, MoF)
Mrs. Svetlana Napreyenko (Consultant, Accounting Methodology Division, Department for Regulation of
Accounting, Reporting and Audit, MoF)
Mr. Alexander Odinets (Consultant, State Procurement, Division, MoE)
Mr. Valery Rumyantsev (Deputy Head, Department for Analysis, Planning and Coordination of Control
Activities, MoTL)
Mrs. Svetlana Okolova (Deputy Head, Division for Control over Local Administration Bodies and Budget of
the Department for Control of Budget and Finance Sphere, SCC)
Mrs. Viktoria Shilovich (Head, Division of International Cooperation, DIFR, MoF)
Mrs. Diana Shket (Deputy Head, Department for Accounting of Taxes, Reporting and Collection of
Payments, MoTL)
Mrs. Nadezhda Sudnik (Deputy Head, Tax Policy Division – Head, Unit for Taxation of Revenues,
DTPBR, MoF)
Mrs. Olga Tarasevich (Deputy Head, BPD – Head, Division of Methodology of Budget Process, MoF)
Mrs. Marina Tikhonovich (Consultant, Division of Methodology of Budget Process, BPD, MoF)
Mrs. Olga Vikhotskaya (Deputy Head, Division for Fiscal and Tax Policy, Department for Financial, Credit,
Fiscal and Foreign Exchange Policy, MoE)
Mrs. Natalya Zvorono (Deputy Head, Legal Department, MoTL)
• World Bank PEFA Assessment Team:
Mrs. Elena Nikulina (Team Leader, Senior Public Sector Specialist, ECSP4)
Mr. Sebastian Eckardt (Co-leader, Senior Country Economist, ECSP3)
Mr. Andrew Mackie (Senior Financial Management Specialist, ECSO3)
Mr. Mark Silins (Consultant, ECSP4)
Mrs. Yelena Slizhevskaya (Consultant, ECSP3)
Mr. Kiryl Haiduk (Country Economist, ECSP3)
Mrs. Maryna Sidarenka (Analyst, ECSP3)
124
Review of Concept Note
• Date of reviewed draft concept note: September 12, 2013
• Invited reviewers:
Mr. Maxim Ermolovich (Deputy Minister of Finance of the Republic of Belarus)
Mr. William Dorotinsky (PRMPS, World Bank)
Mr. Oleksii Balabushko (PEFA Secretariat)
IMF team for Belarus
World Bank team for Belarus
• Reviewers who provided comments:
Mr. Maxim Ermolovich (Deputy Minister of Finance of the Republic of Belarus) – September 21, 2013
Mr. William Dorotinsky (PRMPS, World Bank) – September 23, 2013
Mr. Oleksii Balabushko (PEFA Secretariat) – September 17, 2013
Mr. Julien Hartley (Fiscal Economist, IMF) – September 26, 2013
Mr. Marius Koen (Lead Financial Management Specialist, ECSO3, World Bank) – September 18, 2013
• Date of final concept note: October 5, 2013
Final concept note and matrix of team responses circulated to the peer reviewers – October 15, 2013
th
Final concept note shared with the Belarus MoF – October 28 , 2013
Review of the Assessment Report
• Dates of reviewed draft reports:
st
1 draft – January 13, 2014
nd
2 draft - April 21, 2014
• Invited reviewers:
Belarussian Authorities (Ministry of Finance, Ministry of Taxes and Levies, Ministry of Economy, State
Control Committee, State Customs Committee, Parliament)
World Bank team for Belarus
Mr. Maxim Ermolovich (Deputy Minister of Finance of the Republic of Belarus)
Mr. William Dorotinsky (PRMPS, World Bank)
PEFA Secretariat
Mr. Julien Hartley (Fiscal Economist, IMF)
• Reviewers who provided comments:
Belarussian Authorities (Ministry of Finance, Ministry of Taxes and Levies, Ministry of Economy, State
Control Committee, State Customs Committee, Parliament) – January 27 – February 11, 2014
Budget Policy Department of the Ministry of Finance – May 5, 2014
Mr. William Dorotinsky (PRMPS, World Bank) – May 5, 2014
Mr. Marius Koen (Lead Financial Management Specialist, ECSO3, World Bank) – May 5, 2014
Mrs. Barbara Ziolkowska (Procurement Specialist, ECSO2, World Bank) – May 6, 2014
Mr. Philip Sinnett (Head, PEFA Secretariat) – May 3, 2014
Mr. Julien Hartley (Fiscal Economist, IMF) – May 6, 2014
125
• Date of the World Bank review meeting – May 6, 2014 (all written comments and matrix of team responses
th
circulated prior to review meeting, May 5 )
• Date of final report – June 5, 2014
Final report shared with the Belarus MoF – June 11, 2014
Final report circulated to the peer reviewers – July 16, 2014
126
Annex 8: Assessment Team Composition and Roles
Unit /
Name Title Duty Role
station
Mrs. Elena Nikulina Senior ECSP4 / TTL (coordination of the team work,
Public HQ compilation of the report, summary
Sector assessment, legal and institutional
Specialist framework for PFM and government reform
process)
Mr. Sebastian Eckardt Senior ECSP3 / Co-TTL (country economic situation,
Country HQ budgetary outcomes, lead responsibility for
Economist assessment of PIs 1-3, 10-12 )
Mr. Andrew Mackie Senior ECSO3/ Technical expert on accounting,
Financial HQ procurement and auditing (lead
Management responsibility for assessment of PIs 19, 21-
Specialist 28, D1-3 )
Mr. Mark Silins Consultant ECSP4/ Technical expert on revenue administration
HQ and budget execution (lead responsibility
for assessment of PIs 4-9, 13-18, 20 )
Mrs. Yelena Consultant ECSP3/ Local PFM expert (communication with the
Slizhevskaya Minsk counterparts, collection of the data sources
CO and relevant documentation, compilation of
the source data annex)
Mr. Kiryl Haiduk Country ECSP3/ Country economic situation, budgetary
Economist Minsk outcomes
CO
Mrs. Maryna Sidarenka Analyst ECSP3/ Country background information and
Minsk quantitative data analysis
CO
127