Belarus relies heavily on imported energy resources (mostly natural gas from Russia) to meet domestic energy demand. In 2009, the cost of natural gas imports constituted 5.2 percent of GDP. While still below the European market prices, import prices of natural gas have been increasing sharply over the last 5 years, as a result, the cost of district heating services has also increased increasing the fiscal burden to the government. The objective of this project was to understand the incidence of current energy subsidies in Belarus, to estimate the poverty and social impacts of proposed tariff and subsidies reform, and to identify and strengthen mechanisms to mitigate negative impacts of tariff increases.