Incomes of Belarusians Trapped

This is about the social structure.

On July 26 it became known that Belarus had developed draft amendments to the Tax Code, according to which the gasoline excise duty would be reduced by 25% in 2019. However, fuel excise duties are one of the major parts of the budgets.

How much will Belarus lose and how will it affect living standards of the population? Economist Leanid Zlotnikau answers questions of Charter97.org:

- I was surprised with this news. I think that these budget "activities" relate to initiated Russian tax "maneuver". After its completion, losses to the budget of Belarus will amount to $2.5 billion per year. Every year, given the growth of procurement prices for oil from Russia and dicrease of export duties, we will lose 17% of income.

In general, the main threat to the Belarusian economy lies beyond these 25% of gasoline excises. We experience even more disastrous processes, which consequences we are to have to deal with.

- What do you mean?

- Labour activity is decreasing all over the world, even in developed countries. Compared to developed countries, this process is more destructive in our country. It can be said that at the moment Belarus has run dry of industrial technologies.

The second acute problem of the Belarusian economy is the trap of an average salary. Both Russia and we have such a problem.

It means that no matter what statements are voiced by the government, it is not capable of raising salaries. Moreover, salaries will decline.

Because if countries with the "salary trap" take a slight increase of salaries, prices for products of this country immediately increase in the world market. Export turns into not a competitive one, and everything rolls back to low salaries. Low income is the bane of our system. A half of Belarusians earns less than $200. The average salary is a different figure, and real salaries of the population differ. Real wages are very low.

In order to get out of this trap, it's needed to "shake the entire industry off". Or it is even better to change the economic model.

At the same time, the rest of the world carries out a rapid use of new technologies even in traditional spheres such as, for example, trade, accounting, or bank transactions. Technological revolution is taking place in the agricultural sphere and industry in developed countries. As a result, after a while people in the West can work four hours a day, instead of eight.

And we look like aborigenes on this background. The lagging of our economy is great and the gap is constantly increasing. We managed to get some profit due to fast world's economic growth last year and the year before last. But it can end at every moment.

- Does the same concern Russia’s oil and gas subsidies?

- That's right. Some call the income from the resale and processing of Russian oil a "safety cushion" of Lukashenka's regime. However, this is not so. The safety cushion is what we earned, accumulated and kept in the "cupboard", while oil revenues remain Russia's help. It deliberately helped the Lukashenka regime. The Kremlin believed that it was necessary to buy the political loyalty of the official Minsk. Many in the Russian Federation still believe this.

Lukashenka has no safety cushion. What he has is simply Russia’s payment for obedience.

Now, in connection with the tax maneuver in Russia, it will be more difficult for him to rely on this payment. The oil prices for Belarus will grow significantly.

- Recently, Russian Ambassador to Belarus Surikov said that Belarus should transfer internal gas networks to Gazprom. How far will the Kremlin go, using the new situation with the oil prices for our country?

- Gazprom has already received what it needs in Belarus and has secured its gas supplies to Europe via the Druzhba gas pipeline. I think that the Russians are interested not much so in our internal networks, but in another main gas pipeline, apart from "Druzhba." We still have a branch of the gas pipeline that leads to Lithuania and the Baltic countries. This is exactly what Gazprom may be interested in. In this direction, the pressure on Minsk may increase.

- Will the social situation in Belarus worsen after the fall in the budget revenues from oil refining? How can this affect the standard of living: the salaries of the population, the inflation index and consumer prices?

- It should be noted that not only the revenues of the state budget will be reduced. The problem is that prices for the Russian gas and crude oil will rise for Belarus. This can objectively lead to an increase in the cost of utilities and prices for Belarusian goods. The cost of living will go up, and salaries will decline - because of the same "income trap", which leads to saving on people to reduce the cost of production.

As for the state budget, the consequences for it will be very serious. Just imagine: even this year, despite high oil export revenues, which increased by 47% due to the growth in world prices, we survived only thanks to the "eating away" of $ 2.5 billion from the budget.

That is, even under favorable conditions, when Russia sells cheap oil, when prices for Belarusian potassium and metals that we export have grown, the government spent an additional $ 2.5 billion to maintain our already low living standard.

The country's economy has turned into a "black hole": we "eat" much more than we produce. Further, our backlog will