15 December 2019, Sunday, 7:36
The Wait Is Nearly Over

Lukashenka’s Promises Are Akin to Attempts to Teach A Donkey How to Speak, Economist Says

Lukashenka’s Promises Are Akin to Attempts to Teach A Donkey How to Speak, Economist Says

Only a "bitter mixture" can save the Belarusian economy.

The World Bank mission for Belarus has made another forecast on the situation in our country. Experts predict stagnation in our country, while Belarusians are urged to prepare for "a belt-tightening". The inefficiency of the public sector, the crisis in the processing industry, "glass ceiling" are one of the key problems. They hinder the development of small and medium-sized enterprises.

In addition, experts say if Russia refuses to compensate for half of the oil tax manoeuvre, this forecast will fail. Everything will be even worse.

Should the Belarusian authorities wait for compensation for the hydrocarbons? Should Belarusians be prepared to tighten their belts? Why does Lukashenka ignore forecasts of international organizations? Charter97.org asked the economist Leu Marholin all these questions.

- The prognosis is basically realistic. In addition, we must bear in mind that we have inflation. The current GDP growth is stipulated by the price growth, not by the growth of strategic volumes. Inflation is planned at the level of 5-6% (I don't know what it will be like in reality). To compensate for the price growth, the forecast should at least match that of the World Bank. Greater growth of the Belarusian economy is impossible, as there is no growth of investments and they are not expected.

As for the tax manoeuvre, I do not think any compensation will be provided. The Kremlin clearly stated that if we wanted some compensation, let's step up the "integration" process.

If Belarus refuses, there will be no compensation. Therefore, we can assume that even this forecast of the World Bank is quite optimistic.

- Experts say that the country has a "glass ceiling," which prevents the private sector from developing. Is this true?

- "Glass ceiling" exists, and it's multi-layered. The first layer is one mentioned by the World Bank. It's the wrong distribution of resources. The public sector gets more, though it' s not very effective. On the other hand, it's the lack of an independent judiciary. The "glass ceiling" forces private enterprises to hide part of their products and also hampers development. Small and medium businesses do not develop but remain at the same level, which let them survive.

There is another layer of the "glass ceiling". It's a system of state orders. It has been long said that all types of property should be equal, but state enterprises have preferences with state orders. It all hampers developments of the private sector.

- Forecasts of international organizations are very similar to each other. The list of problems is almost the same every year. Does it mean that the authorities stay idle?

- Yes, they do. Moreover, when the United Civic Party brought the program of economic development in 2009, and since then we have been presenting it with minor adjustments. But the authorities resent that "it's all the same".

And what should one expect if the state does nothing? The same problems are registered by international institutions, independent experts, missions of the International Monetary Fund and the World Bank, but Lukashenka's strategy of economic existence remains the same. Notice that I do not use the word "development", because it can barely be called development.

- Such a forecast of $100 billion of GDP promised by Lukashenka is a figure to forget.

- It's all described in the parable about Haju Nassredin, who promised the Padishah that he would teach the donkey to talk in ten years. And when Haju Nassredin was asked how he was going to do it, he replied that in ten years either the Padishah or the donkey would die. Anything can be promised, but we have all witnessed what these promises lead to many times.

- The World Bank said that the Belarusians would have to "tighten their belts". What is your forecast?

- I believe that the Belarusians are already tightening their belts. This process will continue and grow steadily.

- Isn't there a "bitter mixture" that would help to improve the Belarusian economy?

- Everyone knows it and Lukashenka has been asked to sign it many times. But he refuses. This recipe is "system reforms". If Lukashenka really had a desire to carry out reforms, we would see a result within two years.