Stanislau Bahdankevich: Belarus’ draft budget for 2015 is not a development budget

The state budget for 2015 is a special one: this is the period of president elections. However, this time external economic conditions don’t allow the authorities to openly buy votes.

Next year the authorities will have to save money. As the Minister of Finance Vladimir Amarin stated on December 8 when speaking in the parliament, the draft budget takes into account “sharp slow-down in development of the world economy, as well as absence of GDP growth in Russia due to considerable decrease in oil prices”.

In this situation there are reduced opportunities for populism. Even the perspective of maternal capital that is widely promoted these days looks very unclear, as the state suggests using ten thousand dollars for the third and next child only after 18 years.

In the situation when there are few hopes to receive financial aid from Russia, on the threshold of president elections Aliaksandr Lukashenka underscores his proved supporters – law enforcement structures and the power vertical. “EuroBelarus” Information Service discussed peculiarities of draft budget for 2015 with Stanislau Bahdankevich, the former head of the National Bank.

- What can we say about the budget for the next year? Is it a budget of development, savings, and social support?

- As for the social orientation of the budget, there is something sound in it; however, over the last years budgets don’t differ much from one another and mostly aim at support of law enforcement agencies. These features characterize the next year’s budget.

The draft budget for 2015 cannot be called a budget of development, as its main social and economic development provisions lack tax digression, reduction of loan prices, and so on.

No sane investor will give us money for industry, as to do so he or she will require giving loans at 30-50 per cent a year, which is inadmissible for normal development.

The budget for 2015 is a project to support the existing status quo.

- The draft budget for the next year was formed with a surplus of 15 trillions of rubles. Does it say about the confidence in collecting profit or conversely, about a forced decrease of expenses?

- It speaks about the possibility to provide nominal profitable part of budget with the help of inflation and receipts tax in the situation when its real cost becomes devaluated. Recently we did the same to provide nominal price of goods on expense of inflation.

Quite the opposite, we need to normalize the economy in the country. First of all, we should provide a stable national currency that would be a base for assessing increase in production, income, and well-being. When inflation is a two-figure number, it is impossible to make statistics and real budget.

It goes without saying that surplus not only indicates the growing income, but also the lowering expenses. Currency is being devaluated.

Recently balanced budget is typical of Belarus, but this is not the main thing. If the budget is balanced, what for do we get external loans? They should be given for insufficient resources that can’t cover expenses. We seem to have balanced budget, but for some reason external debts are growing from year to year.

- Is the world decrease in oil price essential for Belarus?

- Well, the decrease in fuel price is a good thing since costs for the real economy sector are reduced, even though petroleum refineries suffer losses.

However, the living conditions of the population shouldn’t decrease. But in real Belarusan conditions, due to the lack of economic sovereignty and presence of needless financial and economic dependence on Russia, decrease in oil prices, and recession in Russia it will have a negative effect on the situation in our country.

- Starting from January 2015, the Eurasian Economic Union Treaty is taking effect. Russian ruble has considerably gone down. Belarusan budget for 2015 was formed basing on the average annual price of about 11 thousand Belarusan rubles for a US dollar. What do you think, will the authorities be able to keep ruble at an estimated level if we assume that Russian ruble will be going down?

- I think they won’t. Of course, if all calculations in Belarus were made in US dollars, not in Russian rubles, we wouldn’t have the need to seriously consider devaluation.

However, our calculations increasingly more include national currencies, and Russian ruble, too. It is also seen from the statements, which suggested switching to calculations in national currencies within the EEU.

That is why nothing will save us; we should devaluate national currency in real proportion.

If we make calculations in US dollars, we can preserve certain stability in relation to the Russian ruble, Euro, and other currencies. But if the estimations in Russian rubles take increasingly more space, we need to speed up devaluation; otherwise the economy won’t endure it.

- If we consider the draft budget for 2015, do you think that it is the budget of the year when the president election takes place? Does it have provisions with which the authorities want to “buy” the population?

- I would say that I have a feeling that the authorities decided to rely on the law enforcement structures, which is seen from the increased spends on security agencies and the apparatus of state power.

- Is it because there is not enough money for everyone?

- It looks so. Lukashenka would probably like to help the rest of the population but we don’t have enough money for that. We only have money for the structures that are responsible for the results of the election. We don’t have democracy to carry out fair election.