By Aleś Hudzija
In late December Alaksandar Łukašenka approved a state budget with expenditures at 44.7 billion rubels and revenues at 39.9 billion rubels. The government plans to take out loans to cover a shortfall of 4.8 billion rubels.
Although the principles of spending in Belarus and in democratic countries are similar, the Belarusian state budget is a formalistic document. Its adoption does not involve substantive debate. Although the parliament is responsible on paper for distributing public funds as directed by voters, in practice it has no powers to alter the budget.
Nevertheless, despite its formalism, the Belarusian budget reflects the potential and priorities of the fiscal system.
Defense spending hike
The budget deficit is not a surprise, but rather a standard measure for an economy in crisis. An increase in government spending is usually accompanied by growing debt and should, in theory, spur economic growth.
The largest share of public spending (18 percent) goes toward social payments, such as education, healthcare and social programs. Since the heaviest burden in the social sphere falls on local budgets, the total social spending accounts for about half of the consolidated budget.
In 2024, social spending will rise by 6-18 percent, while defense spending is projected to increase by one third.
In real terms, the security and defense spending increase will exceed even pessimistic inflation forecasts, while civil servants are unlikely to get richer.
National budget, billion rubels
Russia invests in war
Unlike Belarus, whose parliament is not a venue for budget discussions, Russia still uses its Federal Assembly as a platform for fiscal debate. Although the 2024 budget passed, many lawmakers opposed it.
Russia’s federal budget is based on the assumption that the economy will grow by 2 percent. This will allow for a significant increase in military spending. Moreover, for the first time in a long time, military spending will exceed social spending.
The 2024 budget provides for an increase in military spending by almost 70 percent compared to 2023, to about 10.8 trillion Russian rubles, while only 7.7 trillion rubles will be allocated for social needs.
The Russian government will cut spending for the national economy, physical education, sports and mass media. The central government is to reduce its support for the regions.
Russia’s finance ministry says that the government has enough money for a sharp increase in spending. However, many, including government experts, stress that additional revenue is needed.
Budget revenue is unlikely to grow without a rise in taxes on businesses and households and cuts to the national welfare fund.
Poland: grandmother’s allowance and other bonuses
The 2023 election in Poland changed the political landscape and has had an impact on the 2024 budget. The new government maintains the level of social support set by the previous cabinet, but has cut spending on the state media.
The 2024 expenditures are estimated at PLN 866 billion, while revenues are projected at PLN 682 billion. The forecast is more optimistic than that of the previous government, which called for a wider budget deficit.
The Polish government plans to increase the salaries of teachers by at least 30 percent. Other public sector employees, including soldiers and officers, will also see their salaries rise, for instance customs officers are looking forward to a 20-percent increase.
Poles can expect an increase in social benefits, such as the Active Parents program. It includes the so-called “babciowe” (grandmother’s allowance) of PLN 1,500.
The budget also provides for an increase in pensions and the payment of the 13th and 14th pensions.
The government has also set aside funds for the study of the Silesian language.
Lithuania: Teachers to benefit
This year’s budget passed by 73 votes to 52 with one abstention after a heated debate in the Seimas. It reflects the government’s priorities, including education, higher personal income, enhanced security and investment.
Lithuania’s 2024 budget was drafted under pressure from teachers demanding higher wages. An additional €390.7 million has been allocated for education, of which €219 million will be used to increase teachers’ salaries and more than €84 million to pay educators, researchers and non-teaching staff.
The planned minimum wage increase to €924 euros will require €1.7 billion.
The budget also provides for a 12-percent increase in pensions, which amounts to about €70 euros a month per pensioner.
Defense spending is to double amid rising tensions in the region to €2 billion and account for 2.75 percent of Lithuania’s GDP.
More than €30 million will be spent on preparations for a possible accident at the Belarusian Nuclear Power Plant in Astraviec, reflecting the government’s concern about cross-border security.
Latvia: Higher revenue at expense of smokers and gamblers
Latvia’s 2024 budget revenue is expected to total €14.5 billion, while expenditures are slated at €16.2 billion. Compared to the previous year, revenue will increase by €1.76 billion and expenditures by €1.54 billion.
The budget deficit is projected at €1.3 billion, or 2.8 percent of GDP.
Given the current geopolitical context, the threat of hybrid warfare, and economic constraints, Latvia’s 2024 budget focuses on strengthening national security and sustainability.
Additional funds will be allocated for defense, education, and health care.
Defense spending will account for 2.4 percent of GDP, gradually increasing to 3 percent by 2027.
Like Lithuania, Latvia will raise teachers’ salaries. Higher education and science will also receive additional funding.
To increase budget revenue, Latvia is raising taxes on tobacco products, e-cigarette liquids, tobacco substitutes, alcohol, gambling, and fuel used in special economic zones and free ports.
Countries tackling challenges differently
The budgets are projected with a deficit amid economic uncertainty and security challenges.
In addition, the spending patterns are linked to electoral cycles. This year will see elections for the European Parliament and presidential elections in Lithuania and Russia. The new leaders and parties that won the recent elections in Poland and Latvia are expected to start working to deliver on their promises.
Belarus’ budget looks poor and lackluster, to put it mildly. It holds little promise for economic growth and is not based on different points of view and a balance of interests.
Officials claim that Belarus is encircled by enemies. “They tried to bring us to our knees, to strangle us economically,” Alaksandar Łukašenka said in his New Year Day’s greetings.
All economies in the region are struggling, but use different mechanisms to overcome difficulties. The Belarusian government declared 2024 the year of quality, but unfortunately the quality of its budget leaves a lot to be desired.