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Lukashenka Economy Is Squarely Bankrupt

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Lukashenka Economy Is Squarely Bankrupt

The authorities are relying on the outdated and obsolete.

Last year's economic results are now available, and this year's trends are also showing up, creating an interesting perspective. Here are some examples.

For the first time within the last 6-7 years Mazyr Oil Refinery has worked off the quarter with the loss. As we said earlier, it entailed the revision of some provisions in the collective bargaining agreement. The situation at Naftan is also complicated. By the way, OJSC Ivatsevichdreu, the head enterprise of the Bellesbumprom Concern (the state-owned stake exceeds 98%), has reported on the year 2020. The report shows huge losses. If a year ago there was a net profit of almost 3.5 million rubles, now the loss is more than 64.6 million.

Everything is so "good" with the Belarusian nuclear power plant that it is necessary to exempt it from taxes until the end of 2041! As the Economy in Belarusian Style telegram channel reminds, according to Belenerha, the nuclear power plant is an insolvent organization. Officials forecast that it will come out of technical bankruptcy only in 2024. According to forecasts by Russian experts on the day-ahead market, the profitability of supplies from the Belarusian nuclear power plant to Russia looms at minus 75%. This means that we are facing an inevitable and strong increase in electricity prices. In Latvia, let's say, electricity prices are already turning negative from time to time. Well, not every day, or more precisely only at night so far, periodically, but nevertheless. In some European countries, this already happens periodically during the daytime as well, usually in the summer. And what is more important, to have affordable electricity or to be proud that we have a nuclear power plant? For adequate people it's the first one, but for our regime it's the second one, unfortunately.

And this happens everywhere. Almost all "traditional" enterprises and industries are either loss-making or their profits are so small that they are not enough to pay the accumulated debts, let alone pay them - even to service them.

To make matters worse: in January-February, for the first time in 8 years, Belarus suffered its worst budget deficit since the 90s. There has never been such a budget deficit in Belarus at the very beginning of the year - when budget expenditures in January-February far exceeded budget revenues. Except for the 90s, which the ruling regime frightens us with. In the seven previous years, there was even a budget surplus: from 2014 to 2020, in January-February, budget revenues exceeded budget spendings. And now, at the beginning of 2021, this has resulted in terrible figures of the budget deficit. They are impressive: the January-February 2021 budget deficit is measured in hundreds of millions of dollars in equivalent, and that's just for two months.

One more "achievement" of Lukashenka. According to the research of UN experts, in 2019 (the last known data at the time of the report), the highest price increases in the world were in South Sudan (more than +4500%), Venezuela (+1832%) and Belarus (408%). Sudan (+250%), Egypt (+188%), Ukraine (+80%), and Nigeria (+167%) lagged behind Belarus.

In general, the economy has stopped working, although it has to be admitted that not all of it has. The advanced, relevant to the economy of the twenty-first century, was developing and increasing profits even in the last, difficult year. Before that, they were doing it, too, of course.

EPAM Systems announced its results for the fourth quarter and all of 2020. They have been announced on the company''s website. For the fourth quarter, revenues were 14.3 percent higher than in the same quarter of 2019 and totaled $723.5 million. For all of 2020, EPAM's revenue was $2.66 billion, an increase of 15.9 percent compared to last year. At the same time, dev.by specifies: as for the results of the whole year, the received revenue was below the forecast.

The High Tech Park has demonstrated that it is one of the key drivers of the Belarusian economy, the HTP reported on its website. "In 2020, the Hi-Tech Park significantly increased exports - the growth rate was 125%. As a result, HTP's exports reached $2 billion 735 million. Total output was 7 billion 400 million rubles with a growth rate of 143%. This is an absolute record in the history of the Park".

So the smart thing to do would be to focus on the new and progressive. This does not mean that the wood processing industry, for example, has to be urgently abandoned. No, it can very well be competitive and profitable under a different system, a more progressive and market-oriented one. And many enterprises, especially non-state ones, used to be like that until "you know who" started "modernization" off the wall, without scientific approach and without analysis of market trends. But the problem is that the regime has decided to "root out them mercilessly."

However, they focus on the old and obsolete. For the regime, it is more familiar, more understandable, and more valuable. In other words, the Lukashenka economy is squarely bankrupt, but the regime does not want anything new. The whole point hinges on praising past merits and past achievements. And in order to demonstrate achievements and merits, we have to go deeper and deeper into history.

We can find these merits and achievements only by comparing them to the 1990s. After that, they do not seem to have existed. Lukashenka is in fact being promoted as a political figure of the last century. Back then, in the last century, he achieved this and that. And now he does not seem to be able to do anything positive, only to defend his former achievements. And also the right to work at a loss.

The system, uncompetitive and catastrophically lagging behind the developed world, generates little money, whereas losses - with great "success". After all, the world today, meaning the developed world, is dynamic today. While the Lukashenka economy spends 10 billion dollars and 10 years (which is more critical) on a nuclear power plant project, modern projects reach the payback period in six months, sometimes a little more, sometimes even less. Or they get closed in the same time.

What is also good, the unviable is eliminated quickly and without great expense. Naturally, in such an environment, the Lukashenka economy is doomed. And it has nothing to do with Tsikhanouskaya, it's just an archaic, outdated system. The more so since we, who have no underground resources of our own, should be even more dynamic than the others, but on the contrary, we are focusing on super-costly and inadmissibly long-term projects which will never pay off within a human life span.

Any movement forward, any changes for the better are taboo for the regime, it is afraid of everything new, unknown and progressive. And since it is necessary to move somewhere, it is decided to move backward. Not forward, because that would be very dangerous, but backward, back to the past, to downright Stalinism. Such a "perestroika" with a minus sign seems quite safe to the regime.

Yet this is a delusion: moving backwards can also easily bring down a rotting, frenzied system. And those who have eyes can see that this is already happening.

The system is degrading and collapsing at an accelerated rate precisely because it has begun to change rapidly. And it does not matter that these changes are negative, in fact, it accelerates the process of destruction. So it would be better to move into the future, along with the development of civilization. At least there were chances of success, and specifically for our society, pretty good ones. And if we move into the past, there is only collapse ahead, with no other options. Except for being absorbed by another system, which is in no way better.

Though it is obvious that these regime representatives are not ready to move forward under any circumstances, even under the threat of being absorbed.

However, this also means the loss of power, or even of the country. So it is better to try to move forward anyway.

Yury Pshonnik, Our Opinion

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