Stanislau Bahdankevich: It isn’t normal when all economic profit is only covering losses

The World Bank’s evaluation of Belarus’ way out from the economic crisis is relatively positive. But only if the structural reforms are organized, which Belarusan authorities still cannot decide on.

On November 2 the representative office of the World Bank submitted a prognosis of the macroeconomic review of the economy’s state as well as prospects of its development.

According to the assessments of the World Bank, the economy is expected to contract by 3.5 percent in 2015 and by 0.5 percent in 2016 due to weak external and domestic demand. It is also possible that in 2017 a small growth – by 1% - will follow. The Bank forecasts that reduction of investments in fixed assets in 2015 decreased by 3.5%, in 2016 - by 0.5%.

At the same time, Young Chul Kim, World Bank Country Manager for Belarus, claimed that the steps taken by the National Bank this year, prove the devotion of the authorities to undertake reforms.

- I agree with the fact that the National Bank really agrees to reforms when it comes to monetary, percentage, and monetary management, - stated Stanislau Bahdankevich, ex-chairman of the National Bank “EuroBelarus” Information Service. – The National Bank fulfills the necessary transformations. For example, from January 1, 2016 a new regulation model at the currency and consumer markets.

As for the entire government, I would doubt the statement of the representative of the World Bank. Because the government represented by the President stated that the Belarusian model is excellent and the best in the world and will remain, even though improved. But, in my opinion, it brought the country to a deadlock and crisis.

- In your opinion, are the forecasts of the World Bank about a gradual decline in inflation realistic: in 2015 - up to 17% in 2016 – up to 15.2%?

- In fact, the reduction should be taking place if the National Bank will adhere to the declared policy of reducing the broad money supply, as well as other areas of monetary policy. Reducing of inflation will occur if the National Bank will be able to withstand the pressure of other authorities, the President in particular and won’t be providing resources for lending to unprofitable state-owned companies, who work for the warehouse rather than for a competitive market. If there is no increase of resource-free remission, a gradual reduction in inflation and further stabilization of the exchange rate is possible.

- Another optimistic forecast of the World Bank: in 2017 a small growth of GDP – by 1% - is possible.

- It is hard to answer such questions, not knowing whether the authorities will carry out structural, institutional changes. If they will, it is quite possible.

If the authorities will be guided by an inefficient development model, stagnation and deterioration of the standard of living will continue and stocks in warehouses won’t become less.

It all depends on whether we have a new reformist government, if it together with the National Bank decides on the deep transformation of the economic management system, improvement of the economic model for the transition from the authoritarian model to a market economy. If that happens, then I think Belarus will conditionally restore the situation in industry and other fields.

But I do not see that yet. The President said that the government is good and the model is excellent. Only the results are grim. In Belarus salary dropped from $600 per month to $380-390.

However, the people decided that this is right, having unanimously supported the government in the presidential election. Probably, I don’t know something. In other countries, if the situation deteriorates, the government is changing and leaders are changing, too. In Belarus, on the contrary, support for Lukashenka increased by 3-4 percentage points. This means that the people are satisfied. What is there to ask Bahdankevich, who supports modernization of the economic system and transition to a market model?

- Why, do you think, Lukashenka doesn’t want to undertake structural reforms in economy? The elections happened already; so he has room for maneuvering.

- I think he might as well decide on them. Perhaps, he makes populist statements so that to not admit his fault for the deplorable condition in which our economy is. Maybe he will still go for the change in the membership of the government and grant it the authority to carry out reforms.

I think that he will choose this path he won’t be given money for nothing. In this case, we will have to decide on the fundamental transformation of the country’s economic model, not the mere improvement of the model, which has brought Belarus to a dead end.

We need to reduce budget spending; without it it even lowering of inflation and stabilization at the currency market are impossible.

On the need to revive the economy by lowering taxes, by eliminating layers of public sector that has provided hundreds of millions of dollars in losses over the last two years.

It’s good that we have chemical industry that provides significant profit. But it is not normal, when the entire income goes to cover the losses.