80-90% of salaries in Belarus paid at the expense of credits

At the session of the Council of Ministers Lukashenka’s aide Syarhei Tkachou entered into controversy with the first prime minister.

“In H1 the volume of manufacturing output dropped by 3.6%, and in the end of the year we expect manufacturing output at the level of 99-100% as compared to the level of the last year,” the first prime minister of Belarus Uladzimir Syamashka said.

He noted that by the end of the year warehouse inventory is expected to fall to 75% to the average monthly volume of production from 94.6% as of July 1, 2009, AFN reports with a reference to Interfax.

“So what is the basis for your optimism? Enterprises pay 80-90% of wages at the expense of credits.” Tkachou asked.

However Lukashenka’s aide hasn’t received a clear answer to his question.

“It’s true, enterprises use credits to pay wages, but they are revolving credits, and with rare exceptions, this mechanism is followed, and I general loan indebtedness is not accumulated,” Syamashka explained his forecasts on manufacturing output, noting that “in the beginning of the year 25% of production stayed in depots”.

However, statistics is a stubborn thing. And commenting on the situation with industrial production by ministries and agencies, Syamashka in fact explained the doubts of Tkachou.

As said by him, the main reason for decrease of industrial production in H1 of this year by 21.4% was unsatisfactory work of enterprises who provide gross output, which is manifested in a dramatic decrease of sales in Russia.

In 2008 MAZ sold 12,000 trucks to Russia, and in H1 only 786 items. MTZ sold 25,900 tractors to Russia last year, while in H1 of this year only 6,000.

As said by Syamashka, at year end Belneftekhim concern is to make industrial production grow by 9.5%, while in H1 the growth was 7.9%. It is expected that warehouse inventory at the enterprises of the concern are to drop from 37.8% to 26% of monthly output. Though Naftan has increased the manufacturing output by 17.2%, Mozyr oil refinery by 26.9%, in September-October Belarusian oil refineries are to decrease volume of work because of a scheduled renovation works.

In this connection the government expects that by August-September the Belarusian Potassium company is to reach the traditional monthly volume of fertilizers export of 400-600,000 tons. However, it should be noted that this would happen in case the contract with China would be signed.

However, as said by Syamashka, for increase of manufacturing output a number of system-level measures are to be adopted: to abandon turnover taxes in the nearest future, to take new administrative measures for defense of the home consumer market, to offer enterprises working for export favourable conditions for bank loans, to set up a state leasing company.

The official underlined the necessity to create favourable conditions for small and medium business enterprises with the aim to involve them into the process of export of Belarusian goods at least to the CIS Countries.

“They are to act like ants, who would dole out away our goods,” Syamashka said.

At the same time, the fact that it was Tkachou who started the debate with Syamashka, though Tkachou is not known among the members of the administration as a proponent of market reforms, is a sign that everybody is fed up with the attempts of the government to paint the situation in the Belarusian economy in rosy colours, and soon there would be the last drop which would make the cup run over.