Stanislau Bahdankevich: Belarusan economy has to be reformed

The former chief of the National Bank responded to the statement of Siarhei Rumas, the head of the Development Bank. Earlier Rumas spoke about lack of progress with the recovery of Belarusan economy.

On a request of EuroBelarus Information Service Stanislau Bahdankevich, an economist and former head of the National Bank of Belarus, diagnosed the state of the Belarusan economy.

- “January preliminary calculation shows that Belarusan economy hasn’t started its recovery yet”, - stated Siarhei Rumas, the head of the Development Bank, on February 12. Before the neglected illness is treated, we have to diagnose it. Thus, what is your diagnosis?

- We have long ago established the diagnosis: we have to reform the economy. We should leave at least 50 per cent for the domestic market, while now it is only 30 per cent. We should exempt small and medium-sized businesses from taxation for the period of 2-3 years, so that its share in GDP would make 50-60 per cent, not today’s 20 per cent.

55-60 per cent of Belarusan export goes to Russia, in some points this figure makes up to 99 per cent. But we could have surmounted our complete dependence on Russia during these 20 years, couldn’t we?

In the situation where we are completely dependent on Russia, Russia has entered WTO and choses more qualitative goods, which makes Belarusan production uncompetitive in Russia.

We should break our unilateral attachment to the East, which allocates money only to preserve the status quo; we should go to the West, where new technologies and investments are concentrated.

Belarusan economy suffers from low productive efficiency: old equipment, old management, old ideas – everything is outdated.

There is an established monopoly of power in the country. Without political competition no economic competition is possible. Even if Rumas understands that he won’t voice that.

Miasnikovich has headed the government and preserves status-quo, not changing anything.

- What are the major challenges that Belarusan economy faces?

- Decline in profitability and low productive efficiency, which is linked to the low competitiveness of our goods. Working efficiency in Belarus is 4-5 times lower than that in the developed European countries, like Finland, Sweden or even Poland. We work only to cover the self-cost of the production.

We need new government, which would introduce new economic program and new economic policy. Why does the problem of inflation remain to be urging over the 20 years? We make loans at 50-100 per cent interest per annum, which was common for money-lenders in 17-18 centuries. However, we can’t lower these numbers with a scratch of the pen; to do that we need high rivalry at domestic market, which we don’t have.