Stanislau Bahdankevich: Lukashenka wants to outstay the crisis and redistribute the resources

The Decree No.78 is aimed at conservation of the administrative-command model.

On February 23 Lukashenka signed a Decree No.78 “On measures to improve the effectiveness of the social and economic complex of the Republic of Belarus”. Basically, this regulatory enactment repeats Lukashenka’s statements that he made during the latest meetings regarding the socio-economic crisis: to reduce prime costs by at least 25 per cent; to develop bona fide competition on the home market; to increase and diversify export and rational import substitution; to accelerate the development of small and medium businesses; to stipulate mobilization of the available workforce; to attract foreign capital into the establishment and development of manufacturing enterprises, to gradually decrease interest rates on loans.

The official propaganda calls the Decree No.78 an “anticrisis” one. However, the former head of the National Bank Stanislau Bahdankevich considers it to be an attempt to preserve the administrative-command economic model.

Stanislau Bahdankevich explained his viewpoint to the “EuroBelarus” Information Service.

- This document is aimed at conservation of the administrative-command model. Lukashenka wants to outstay the crisis ends and redistribute the resources, thus avoiding radical changes. The Decree has a lot of slogans that are easy to understand for school and first-year students of economic universities: to reduce expenses, to increase profitability, to support small and medium businesses, to create competition. But has it been a secret over the former 21 year?

The Decree has no revolutionary offers for reforming the economy. The revolutionary solution would be to withdraw the 150 state-owned enterprises from the Presidential Administration, pick up several hundred companies from the hands of the Ministry of Industry, and thousands of companies – from the Ministry of Agriculture and Food and pass them over to the management of these enterprises on a competitive basis.

In the situation of the economic crisis (in 2015 the GDP fell by 4%, and in January 2016 the fall has already amounted to more than 4%) and rise of unemployment the Belarusan authorities have arranged the persecution of the small and medium businesses. Is it something that is worth doing in time of a crisis? Let people work, let people think whether they need foreign clothes or Belarusian.  

Is it an adequate decision to increase the utility tariffs at a time? These steps are necessary; however, they should be introduced gradually, not altogether. Lukashenka allegedly condemns the “mayhem” of the vertical, but nothing in Belarus is done without his consent.

- The Decree demands to lower the expenses of organizations that provide utility services, and gradually increase the compensation for utility services by 50% in proper time. But few days ago Lukashenka said that Belarusans are already compensating for 80% of the expenses...

- It’s hard to comment upon Lukashenka’s statements. He claims that there’ll be no reforms, but at the same time he wants to get the loan from the IMF. The IMF has the right to withhold the money without structural reorganization of ineffective economy; but Lukashenka pretends that he doesn’t understand.

- This Decree is primarily addressed to the IMF, isn’t it?

- The IMF expects the global program of economic restructuring. Loans are allocated to stabilize the situation, provided that the country itself carries out the structural reforms aimed at improving the economy. In this Decree I see Lukashenka’s attempts to improve the economic governance system, not to improve the economy; he doesn’t offer deep, structural changes.

If the privatization isn’t carried out, then the structural reforms in the management of state-owned enterprises are needed: state-owned enterprises exist in France and in other countries, but they are profitable there. Whereas the leading Belarusian state-owned enterprises produce goods that can’t be sold in the market. Then what for do they produce it?

Lukashenka speaks about a competitive economy – why not give freedom to the managers: let them bear the full responsibility for the profitability, for sales, for the structure of their factories, and the number of workers. But the Decree doesn’t provide for such reforms. If the IMF wants to be deceived – it will be, especially since Belarus repays all the loans in due time, which is good for the Fund.

- Is the IMF ready to allocate the loan despite the awkward attempts of the Belarusan authorities to follow the recommendations of the IMF?

- I assume that other talks with the IMF are needed. Lukashenka calls upon enterprises to reduce the prime costs by at least 25 per cent. But it’s impossible to do it in a year.

Interest rates should be lowered. But they can be reduced, if the monetary and foreign exchange markets are stable: if the inflation is 3%, then the interest rate may be 5-7%. But Lukashenka doesn’t explain how to achieve these figures.

There are a lot of right slogans, but they give nothing new – the old model is preserved.