Lukashists decided to finish off Belarusian economy

The authorities are returning to the economic policy which in 2011 resulted in collapse of the Belarusian ruble and hyperinflation.

It has become absolutely clear after the speech of Belarusian Vice Prime Minister Syarhei Rumas in the “chamber of representatives”, “Salidarnasts” reports.

“Considering the president’s commission key macroeconomic indices for 2012 have been determined. The growth of the GDP is forecast at a level of 105-105.5 %. The economy’s growth is to be based upon home and emission sources,” stated the high-ranking official (as quoted by Interfax.by) who is considered to be one of the key adherents of market reforms in Mikhail Myasnikovich’s cabinet.

It is obvious that it would be better for the estimate not to be based upon the commissions of the leader of the state, but on the real situation in the economy. But Rumas and Co have bowed to Lukashenka, which had recently torn them to pieces for “market economy”.

At the same time, the government demonstrates incredible optimism, estimating the near-term prospects. According to the draft forecast, in 2012 export is to surpass import by 1.3-1.5 billion dollars. And the real value of cash incomes is to grow by 3-3.5% as compared to 2011.

However, wait a minute. It turns out that from the point of view of Rumas, the real value of cash income of the population in 2011 “are to make at least by 100% as compared to the level of 2011”. That is, the authorities believe that almost threefold collapse of the ruble and price growth by more than 100% have not in the slightest decreased wellbeing of Belarusians. Come on…

Everything depends on the method of calculation certainly. For instance, the National Statistics Committee, as said by Rumas, does not confirm that labour migration has grown this year. But Vice Prime Minister has admitted that “such a trend is budding”:

“If we visit enterprises, almost everyone says that they lack skilled workers.”

As said by Rumas, today Belarusian citizens often leave for work in Russia, where wages are higher. So sometimes we have one situation on paper, and quite another in reality.

The Vice Prime Minister has also reminded the “deputies” that since January 1, 2012 the Single Economic Space is to start functioning. It its framework “free floating of not only capitals, but also work power would be ensured gradually.”

“It is a painful issue for us,” Rumas stated.

However, the deputy chairman of the Council of Ministers had cheered the public by saying that he expects considerable inflation slow-down in December. Among other things, it is to take place thanks to the fact that 11 more groups of goods are to be included on the list of socially important goods, prices for which are adjusted by the state. This being said, Rumas added that pork, cereals and detergents had gone down in value as early as in November! Where on earth have he seen that?!

The most interesting thing is that soon the Deputy Prime Minister started to contradict himself, stating that in December the government offers to increase controlled prices for a number of socially important goods. However, he refused to name these goods, for fear of the new wave of panic buying.

“I do not think that the measures for expanding the list of goods for which prices are controlled by the state are market measures. We (the government) understand the provisional character of these measures, and are doing that consciously. In the future the list of goods with controlled prices is to decrease,” Rumas afforded consolations.

Besides, Vice Prime Minister admitted that “enterprises are trying escape the home market by any means,” as economic feasibility of export deliveries is much higher.

“In fact, it is what we have been aiming at,” Rumas admitted, but he mentioned that achieving this aim under the conditions of disparity of prices with the neighbouring countries could cause severe shortage at the consumer market.

In particular, Mikhail Mysnikovich’s deputy told that “only thanks to “manual control” sugar plants were loading sugar for the home market.” As said by him, an analogous situation with deliveries to the home market of socially important milk goods is maintained.

Besides, Rumas expressed an opinion that in December money market rates in the country are to reach their maximum, and then, considering the expected decrease of inflation, they are to decline. He admitted however that even the Anti-Crisis foundation of the EurAsEc logically criticizes the Belarusian leadership for the refinancing rate being lower than the level of inflation.

The Vice Prime Minister has informed that the government of Belarus is preparing recapitalization of three state-owned banks (Belarusbank, Belagroprombank and Belinvestbank). The problem is that because of devaluation of the ruble large enterprises cannot receive sufficient volume of credit resources in one bank and they have to lend in two-three banks.

As said by Syarhei Rumas, at present the process of aligning with the state banks the sums necessary for banks’ recapitalization is being continued. He confessed that possibilities of the budget in this respect are limited. But Vice Prime Minister seems to be too reserved in that. S there have been a decision to make the printing press work to the maximum, possibilities of the budget are becoming limitless in a sense. It is certainly to cause a new leap of inflation (the inertial scenario announced by the government itself, envisages a price growth by 218% in 2012) and further devaluation of the ruble (22,000 Br per 1 USD by the end of 2012). Apparently, it was not enough for the silly fish to be caught twice with the same bait of the “unique economic model.”