Stanislau Bahdankevich: Right declarations didn’t lead our economy to the necessary results

Without structural reforms the government only drives itself into the corner. And one more common action plan of the Council of Ministers can’t lead to anything concrete.

On February 23 the Council of Ministers approved the government’s action programme for 2015, and two days later the House of Representatives ratified it.

The programme consists of seven chapters and covers different directions of government’s work. Each chapter indicates aims, goals, mechanisms of realization, and responsible executives. Certain chapters are dedicated to the main directions of regional politics, preservation and strengthening of human potential, as well as providing for the economic safety of the country.

The main aim of the government’s work for this year is the provision of macroeconomic and social stability in situation of enhanced external challenges and threats, the completion of the current five-year program, and creation of conditions for the Belarus’ dynamic economic growth in 2016-2020 as well as in the long-term perspective. Among the most important goals of the program is the conduction of the effective macroeconomic and monetary reform, modernization of the system of the state regulation of economy, competition development; minor, medium, and large entrepreneurship’s development; enhancement and diversification of export; consistent extension of integration within the frames of the Eurasian Economic Union; development of social and economic development program for 2016-2020.

- The program is too generalized, - stated Stanislau Bahdankevich, the former head of the National Bank in the interview with EuroBelarus” Information Service. – There are quite a number of right declarations and slogans in the program; however, specific goals that result from the crisis state of our economy are not specified.

The program’s theoretical directions are mostly accurate; for instance, the need to gradually decrease inflation by less than 10% a year, revive the economy, develop minor business, and so on. However, I didn’t see any concrete steps and instruments of how to reach that in the program.

We have been putting a question about the reduction of inflation and prices’ stabilization for 20 years now; but right declarations never led us to the required results. There are no measures for stop of money’s buildup due to ineffective loan-resulted production of goods that are impossible to realize at the market.

The program tells about the absence of live capital at many Belarusan enterprises. However, the task of providing for restoration of commodity restoration at these enterprises isn’t set. Statistics says that 25% of our enterprises have completely lost the minimum of commodity restoration that is required for paying salaries and in order to have minimal raw materials inventory in stock.

These global issues are not raised in the program. Indeed, it is written very beautifully; but it contains no figures.

- Why did the government decided to reject the idea of pointing the quantitative indicators in the program? Is it afraid to make forecasts in today’s harsh economic situation?

- The program contains references to the high dependence of the Belarusan economy on the foreign markets, but today the price on oil, the rate of the Russian ruble, and the rate of Russian ruble against dollar are unclear. It also contains information about Belarus’ non-independence in these questions. It also says that there are certain prognoses re what happens if, for instance, the price on oil will make $40 or $60.

But I think that for the independent country and intellectual government these approaches are wrong. We need to set tasks and resolve them.

The program doesn’t provide for these tasks. Vice versa, certain provisions from the program of the monetary politics are rewritten, but they are unclear, too.

Monetary politics plans inflation at 18% plus-minus 2%. Such inflation is unacceptable for the economy, as it requires loans. If banks will be getting resources at 20%, loans will be given at no less than 25%. The program doesn’t explain how the economy will be getting cheap loans in the situation of absence of circulating assets.

There are no tasks dealing with the growth of GDP neither. There is an assumed prognosis about the alleged 0.27% growth; however, it is extremely unacceptable for supporting the existing status quo in situation when the remains of the unsold production increased by 4 billion rubles.

Nothing is said about the bankruptcy, about how technological capital of $6-$8 billions can be attracted, what would help to stabilize the currency exchange market and so on.

There are favorable wishes in the program, but nothing more than that.

- What do you think about how soon the government will have to review the parameters of budget for this year?

- I assume that the government and Lukashenka will be intensively fighting for getting help from Russia. I think Russia will allocate funds, as it does have considerable resources. Russia has huge problems, but it still has more than $300 billions.

It seems that the government is expecting to get help so that to preserve the elements of stability at our market.

But simultaneously with that the problems with unemployment are expanding. Many enterprises work 3-4 days a week. And I didn’t see that the program provides for the resolution of these problems.

There is also a problem with impoverishment of population. Due to the collapse of the exchange rate medium salary now makes less than $500. And it might decrease in the future.

- What should the government do in this situation?

- To step out of the crisis we need to change our model and our economic course. However, the government can’t do that, as Lukashenka said that he would be supporting the model he created until he dies.

- This year Belarus will have to pay $4 billion returning the external debt. In your opinion, will the government find this money or the debts will have to be restructured?

- I think that the government will be trying to hold restructuring and gett new loans. Probably, the government is already working on that in eastern direction – with the Eurasian Development Bank and with Russia. However, we should also work with the West and with the IMF. Although the program has a reference re the need to improve the relations with the European Investment Bank.

Belarusan economy can be rescued by foreign investment. It is quite real. I think that Cambodia got $33 billion foreign investment last year; so why can’t we do the same? We have resources at the international investment market; we just need to attract them. But for that we need to change the model of the country’s economic development.