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Oil and Gas Disputes and Trade Wars with Russia to Continue

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Oil and Gas Disputes and Trade Wars with Russia to Continue

The economic policy of the Belarusian authorities for 2017 will still be determined by external factors and the likelihood of reforms will depend on them as well.

BelaPAN experts express their point of view when making forecasts on the situation in the economy.

"It is hard to foresee intentions of the authorities, but still there is hope for changes in the economic policy line," expert of BEROC Katsyaryna Barnukova believes. According to her, reforms may be mandatory, such as cuts of concessional lending caused by budgetary constraints.

Flashbacks to the policy of previous years are hardly possible this year, Barnukova believes. "If the authorities decide to raise salaries up to $500, they will have to sacrifice tough and independent policy of the National Bank of Belarus," she stresses.

Barnukova does not expect any decisive steps in the public sector reforming as it is required by the International Monetary Fund Minsk asks for a new loan at. "In my opinion, the public sector is the main stumbling point in negotiations with the IMF. There is no understanding that no complex reforms in the public sector will cause other couple of years of recession. I do not expect any decisive steps in 2017," she added.

The expert is sure about compliance with the IMF's requirements to raise tariff rates for housing and utility services. "Tariff rate increase is determined by the budget and the government intends to cover costs up to 100% by the end of 2018," Barnukova recalls.

According to BEROC expert, the only "clear activity direction" is changes in the business sphere. "Tax reduction is barely possible, as well as equal conditions for private and public business owners. But the number of inspections and monitoring activity will likely decline," she believes.

With regard to privatization she believes that the revitalization process is not expected in this area in the coming year. "The basic premise for privatization is a complex financial state of state-owned enterprises and the state budget. The problem is that in this situation there are few of those who wish to buy assets. Perhaps, the situation will make the government allow privatization of small and medium-size state-owned enterprises or to sell shares of some large state-owned companies to the Russian side. Variants with establishment of joint ventures by foreign investors are possible. But revival of classic privatization is still not possible," the expert notes.

Expert of analytical community Liberal Club Anton Baltochka believes changes in economic policy of the authorities are inevitable, if disagreements between leaders of Belarus and Russia are not resolved soon.

"For the first time over the past years, oil and gas dispute and trade wars with the Russian Federation are not solved in the allotted time. De facto in economic terms the year 2016 does not end and gently flows into the next one," the expert notes.

Talking about the probability of structural reforms in 2017, Baltochka draws attention to the fact that the team negotiating for the IMF's loan hopes to balance between requirements of the Fund and real possibilities of the Belarusian economy.

"The chance of real reforms is directly proportional to the situation deterioration in the country and reduction of an economic support from the East. The vast majority of the government may accept the IMF's requirements, but Lukashenka may not sign the letter of intent at the last moment," the economist stresses.

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