Stanislau Bahdankevich: To introduce structural reforms, Belarus needs new government and President

Government’s plans for the country’s social and economic development are quite real, but they are unfeasible in the existing state model.

Belarus’ Council of Ministers elaborated a new program of social and economic development of Belarus for 2016-2020. The government has optimistic plans. According to the webpage of the Council of Ministers, “thanks to the different structural reforms tempos of economic growth of Belarus towards the end of the next five-year period will be bigger than world average, without macroeconomic misbalances and accumulation of external depts.”

- If we conduct bold structural reforms, create competitive environment, equal for all economic entities regardless of their governance it is possible, stated Stanislau Bahdankevich, former head of the National Bank, commenting upon the situation to the “EuroBelarus” Information Service. – But the state still should provide for the macroeconomic stability, decrease of inflation by up to 3%, loan interest rates by less than 10%, and establish total of taxes by no more than 30%.

In this situation we can quite reach economic growth of more than world average (now the world average is 3-4%). We need 5-7% for catching up with the civilized world; these are normal wishes. But to realize them, we need direct investments of $5-7 billion.

We can do that. This year we will reach the bottom, after which we can start rising up.

- Are these just wishes or real plans?

- If the authorities had announced that they find their administrative and command model wrong, I would have believed their plans. But this system has led to the crisis. Transfer to a market economy, free competition, developed entrepreneurship, privatization during one-two years of privatization of unprofitable sector of economy might create really competitive economic environment.

In this case the plans outlined for the next five-year period will be right. However, we don’t admit the fallacy of the chosen economic model, almost 50% unprofitableness of industry (including work for the stock). We have to admit all that and introduce structural reforms starting from reduced taxation, reviewing state’s functions as an owner and regulator, with decentralization of power, leaving creation of conditions for realization of development programs for the minister and the government.

If the renovation of state apparatus at the level of governments and regions was introduced, if the change of model of governing real sectors took place, if the conditions for normal development of entrepreneurship were established, if the main slogan – freedom of competition was announced, Belarusans would be able to provide economic growth by 5-7%.

Besides, profitability should be the main indicator of economic development, not GDP’s growth. The whole sectors of our economy are becoming unprofitable. And if we count according to the world standards of accounting, half of our banks would turn to be unprofitable, even though they are profitable according to our Soviet system.

- Is growth by 5-7% possible in today’s situation of Belarus’ dependence on Russia?

- It is impossible in today’s situation. Government’s plans are based at common sense.

First, we need to cancel tasks for industrial growth; secondly, we need to start lawsuits against those who produce goods for the stock. Light industry has six-month stock of ready-made goods. If no one is buying it is a crime with our limited resources.

To introduce reforms we need to renew the state apparatus, we need new government and President. We have to admit our errors, compare ourselves with Poland, not with the oligarchic Russia.

We are not more stupid than the other nations. I am convinced that we can provide for the growth of GDP by 5-7% a year and common profitability by 15-20%.

- So you don’t believe in transformation of Belarusan government, do you?

- Lukashenka said that his model is ideal. But this is the model that led us to the crisis. We need to change the model and the team. We need tough program of country’s modernization.

Enterprises should compete between each other, not be subject to the presidential Administration with special terms of existence.

- As is reported, the development program for the next five-year period has a list of 115 largest investment projects for the sum of $30 billion. In your opinion, how real are these figures?

- If we sum up all the investments, altogether we have very few of them. If we talk about attracting direct investments these are normal figures. If we consider all savings to the main funds, this indicator is understated.

Besides, we never fulfill plans for foreign investments – they are quite low for several years in a row. Even if we have them they are from Russia oligarchs and do not bring new taxes and equipment. These are Russian assets that hardly affect efficient development; we need innovative capital with the market outlets of the civilized world.