22 November 2019, Friday, 4:05
The truth about «elections»

Leanid Zaika: The Government Just Jumps in Place

Leanid Zaika: The Government Just Jumps in Place

The economy is managed carelessly.

The government of Belarus has to urgently revise the forecasts of economic development for the next year.

The fact is that the parameter of "GDP growth" of 2.5%, proposed by the government, seemed to Lukashenka "not intense enough."

Many government agencies and even the "Council of the Republic", headed by former Prime Minister Mikhail Miasnikovich, take part in the discussion of the issue.

What result can one get? The head of the analytical center "Strategy", economist Leanid Zaika answers questions of Charter97.org.

- How do you assess the fact that Mikhail Miasnikovich was involved in the discussion of the country's economic development? By the way, he almost literally repeated Lukashenka's demand and said that "the tasks of 2020 should be very intense".

- Frankly speaking, the GDP growth of 2-2.5% is very small for any country with a low standard of living. If we put it into the language of macroeconomic aggregates, it's less than two per cent of the income growth, which is extremely bad. By now, the official income growth in Belarus is already 12%. That is, these figures make no sense to discuss.

- One of the proposals discussed by the authorities is to "spur" the economy next year through "investment lending". Should the economy be "spurred" and what is this "investment lending"?

- In general, about 45% of "investment lending" is provided by self-financing of enterprises - that is, half of them. Now the profit in the banking system is about 40%. Banks feel free.

No matter what the government says, the model of investment development is the same here for 15 years - maximum $17 billion of annual investment. Approximately half of them are the money of the enterprises. The population is not involved. There are a lot of unrealized opportunities in investing.

- One of the "concerns" of the authorities is that 2020 is the last year of the "five-year plan", and the plans for it were not implemented during the previous 4 years. To approach the "five-year plan" target next year, the GDP growth should be around 6%. Is this achievable in the current situation?

- The games of "pumping" GDP growth are not interesting enough here. First, they are not professional. Second, there are no investments, there are just budget subsidies for enterprises.

It's all about the investment process, although the money is usually buried and burned. For this reason, as long as this subsidizing continues, there will be absolutely no effective investments. Either private individuals, investors, or large businesses should do it.

- Do we need five-year plans and a indicators race, as in the USSR, when they reported on the "five-year plan" at four or even three years?

- As for the methodology, no one should forbid the government to make any plans. According to the budget policy, there should be two-year plans and five-year plans for the dairy industry.

If this is a plan-forecast, which, frankly speaking, has never been fulfilled in Belarus, then let the government play these games. But the promising development program of certain economy sectors is more interesting; for example, the education sector, IT, electric transport, etc.

This methodology of a comprehensive nature - as in the materials of the CPSU - is not effective. That is why this is a careless approach.

- Finance Minister Maksim Yermalovich announced the formation of a deficit budget for the next year. Given the "investment lending" proposed by Miasnikovich, won't it lead to a sharp increase in bad debts of enterprises?

- Yermalovich graduated from NarKhoz University.

I will give you an example of one of the most "glorious" structures in Belarus. Once my colleagues from Germany arrived here and I showed them the work of the National Bank and the Ministry of Finance. They were shocked by the work of the latter. I hope some other people work there now.

The Ministry of Finance should not be engaged in any investment programs. It should work on the budget implementation and should not get involved in any other issues.

- Labour productivity is 6 times lower in Belarus than in the EU. At the same time, the country's leadership regularly reminds officials of the need to raise salaries for the electorate because of the "elections". What can such approaches result in?

- There is a violation of economic laws. We have about 1% GDP growth and 12% nominal wage growth. It leads to imbalance. Under Stalin, they would have executed for it. In my opinion, the current situation in Belarus is even worse than it was during the Soviet period.

Labour productivity is a rather complicated indicator in Belarus. Most likely, they measure labour output rather than productivity. Many people simply do not understand the difference between these two concepts. This is the result of bad command of the question.

- What can the idea lead to in general? Will the economy be artificially stimulated before the "elections"?

- I wrote in the 90s when Uladzimir Shimau used to be the Minister of Economy, that the economy was using Keynesian economics (economic output is strongly influenced by aggregate demand).

For some reason, this term has been used again, but I do not see any reason to say that it is "stimulation". Most likely, this is just an attempt to jump in place. A step to the left, a step to the right is a jump in place. Unfortunately, there is no "stimulation" of the Belarusian economy.