Russia to cut payments to Belarus by 1.4 billion rubles. What lies behind the "gratuitous" budget money?

According to the draft republican budget for 2027, gratuitous transfers will amount to 8.065 billion rubles, compared to 9.464 billion initially planned for 2026.

The difference is almost 1.4 billion rubles, or 14.8%. Moreover, almost all of the reduction falls on transfers from foreign states.

In 2026, they were planned at 6.672 billion rubles, while in 2027, only 5.281 billion are expected. The decrease is 20.8%.

Why Russia transfers billions to Belarus

The main reason is related to Russia's tax maneuver in the oil industry. Previously, Belarusian oil refineries received Russian oil on preferential terms. Russia gradually reduced export duties on oil while simultaneously increasing the tax burden on its extraction.

By 2024, the export duty was reduced to zero. As a result, the previous price advantage for Belarusian refineries disappeared, and the Belarusian budget lost part of its revenues related to oil trade. To compensate for these changes, the countries agreed on interstate budget transfers.

In other words, Russia transfers money not simply out of generosity. It is part of an agreed mechanism designed to compensate for the consequences of changes in Russian tax rules.

Billions in exchange for tax integration

These are provided for by the "Agreement between the Russian Federation and the Republic of Belarus on General Principles of Indirect Taxation." The document was signed in Moscow on October 3, 2022, and entered into force on January 31, 2023. Based on it, Russia transfers billions to Belarus.

At first glance, this is a standard tax agreement. However, it provides not only for monetary transfers but also for the convergence of the tax legislation of the two states.

According to Article 8 of the agreement, Russia undertakes to provide Belarus with monthly interstate budget transfers. But there is a fundamental caveat: the Belarusian side must fulfill all obligations arising from the agreement.

And the obligations are quite interesting. Belarus and Russia coordinate rules for VAT and excise tax, exchange tax information, and use an integrated system for administering indirect taxes.

Moreover, the agreement provides for the creation of a Supranational Tax Committee to monitor the implementation of the agreed rules.

Thus, oil compensations have become part of a much broader economic integration.

"Free money" with conditions

The word "gratuitous" here has a budgetary, not an everyday, meaning. The money does not need to be repaid like a bank loan; however, its receipt is regulated by an interstate agreement.

In accordance with the agreement of October 3, 2022, Russia allocates monthly transfers to Belarus upon fulfillment of certain obligations.

These concern, in particular, the harmonization of legislation on indirect taxes and the exchange of tax information. The amount of transfers depends, among other things, on oil prices and the calculation formula provided for by the agreement.

This results in an interesting construct: the money is formally gratuitous, but the mechanism for receiving it is linked to specific economic and legal conditions.

Where do the remaining 2.8 billion rubles come from?

It would be a mistake to claim that all 8 billion rubles are received by the republic from Russia or in the form of foreign aid. Of the total amount of gratuitous transfers for 2027, about 5.3 billion comes from foreign states.

The remaining 2.784 billion rubles relate to other gratuitous transfers, primarily the redistribution of funds within Belarus's budgetary system.

But the main question is different: why are transfers from abroad being cut by 1.4 billion rubles all at once? One possible reason is related to changes in the calculation parameters for oil compensations.

There is also a problem of transparency. Since 2022, the Ministry of Finance has not published data on all budget adjustments during the year in the previous volume. Therefore, comparing the initial plans for 2026 and 2027 does not show how much Belarus actually received from Russia.

Formally, Russia transfers gratuitous funds to Belarus. But within the framework of the same agreement, Belarus undertakes obligations to harmonize tax rules and shared administration.

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