What Looked Good On Paper, Went Down The Drain

When will Rumas resign?

A serious shadow is apparently hanging over the government. “If we are doing very poorly with our own plans, which we set for ourselves,” said Aliaksandr Lukashenka, “the question arises: why should we even get together in this format on the eve of the year and consider certain plans and forecasts if we do not fulfill them”.

Indeed, disgrace: the former government assured Lukashenka that the forecast for 2019 was “absolutely verified, justified and calculated.” Therefore, everything that was planned should have been implemented. And here's the trouble: what looked good on paper went down the drain in the reality. Now the successors of the Kabiakou team have to answer for this.

“Whoever works today and fulfills forecasts, plans, benefits the country, will work naturally,” Lukashenka warned. The question is point-blank: “if the development parameters for 2019 are not fulfilled, all those responsible, starting from the Prime Minister - will resign.”

The current results are really not encouraging. At the time of the meeting, four indicators out of seven, approved for 2019, were fulfilled. According to the latest Belstat data - only three. The GDP for eight months grew by only 1.1% compared with the forecast for nine months of 3.1%, exports generally fell by 1.9% instead of 4.2%, and the balance of foreign trade in goods and services amounted to 1.2% to GDP against the planned 0.1%. The labor productivity grew by only 1.5% against the plan of 3.2%. But the real disposable income of the population increased by 7.1% with a forecast of 3.1%. And there is still a requirement to increase the salaries of state employees to at least 80% of the national average, as well as increase the income of the lowest paid workers.

The government cannot but understand that this imbalance will still be affected by inflation, which so far is safe. The prices for eight months rose by 2.9% compared with the forecasted 3.7% for three quarters. Foreign direct investment on a net basis is 23.1% more than forecast, although it remains 16.8% less than a year earlier. However, a lot remains unclear with regard to their effectiveness of the result.

According to Belstat, in the first half of 2019, of $ 5.1 billion of foreign investments (including debt obligations), only 1.9 billion was used to purchase fixed assets and intangible assets, and to pay for inventories and goods. What happened to the rest of the investments, the statistics remain silent - this makes us suspect that a significant part of them are “phantom”.

Apparently, catching up with lagging indicators before the annual forecast will fail. There is little chance of achieving a five-year program. But such defeatism, it turns out, is unacceptable. There is no need to be content with fictitious, written on paper balance and wait for favors from the economy. Moreover, the population has been promised so much good.

Now those “responsible” have to choose. It is possible to provide the required short-term growth at the cost of serious troubles that will inevitably happen in subsequent years. Corresponding calculations were presented at the previous meeting, but Lukashenka was not convinced. An alternative is to retire with a clear conscience, not burdened by participation in the impending collapse of the economy.

Of course, “modest and extremely unstable” growth will not bring people “a continuous increase in well-being and quality of life.” But the consequences of artificial warming up the economy for the people whom Lukashenka cares about will turn out very sadly.

Unfortunately, we are not going to change the tendency to ignore economic laws. Therefore, the question “What needs to be done to make the economy strong?” remains a rhetorical one. If the authorities are concerned about the successful outcome of the next political campaigns (no matter how much this is denied), then long-term “strength” is always sacrificed to them. But if the answer “to carry out reforms” is obviously not accepted to the question “what to do?”, then, indeed, it is easier to “retire”.

After all, the main obstacle to the normal development of the economy remains manual command and control, a hopeless public sector and populist promises. Because of them, neither public nor private investments can be effective, and the percentage growth of individual indicators does not make anyone happier.

Even those who receive bonuses for these percentages. The problem cannot be solved either by benefits for individual sectors, territories and “Tabakerka” kiosks, or by personal responsibility of officials, nor by attempts to strengthen discipline and reduce corruption, or by Chinese loans.

Even the digitalization of administrative procedures and business processes will not help.

And while point preferences are heard, the rest of the economy brings less and less money to the treasury. Therefore, Lukashenka is increasingly having to upset subordinates with a warning that it will be possible to get money for some projects only “on the basis of a clear calculation that investments will pay off and will bring a positive effect”. Cognitive dissonance arises. On the one hand, decrees regularly appear to extend the terms for the sale and repayment of loans for once magnificently advertised megaprojects. And on the other hand, Lukashenka requires ministers and the heads of regions for these installments to demonstrate positive dynamics, “the effect of taxes, loan repayments, salaries, production and exports.”

For example, at a meeting on September 24 when discussing a draft decree on opening four more duty free stores, Aliaksandr Lukashenka tried to find out how this type of trade affects producers of similar Belarusian goods and a trading network where there are no such “carrots, preferences and benefits”.

That duty free is good for people, the authorities somehow made sure. Now they wanted to broaden their horizons and, over time, analyze what “these 70 shops gave us happiness”. Probably, having bought whiskey or perfume there, any traveler takes away a piece of happiness in a company package - the size of the difference with the price in the stores, deprived of preferences. Of course, the four structures that monopoly share duty-free zones earn good money on this. Something goes to the state. But this has little effect on economic growth and general happiness.

It is not enough to bang your fist on the table so that the factors that can cause economic imbalances disappear and the growth promised in the forecasts magically becomes a reality. Goods and services will not become better and more competitive on world markets, no matter how much personal responsibility may be assigned to the vice-prime ministers. Officials of all ranks will find hundreds of explanations for the failure to comply with indicators and instructions.

Moreover, many tasks should not concern them at all. Technology and other promising innovations are not the work of ministers, but sowing, cleaning, mowing, hauling, and preserving are not something the heads of regions and districts should do. Businessmen and farmers will cope here themselves - if no one bothers them. But at the meetings no one dares to say that the most “troubling issue” is faith in the bureaucracy as the main driving force of the economy. And while this faith remains the main state ideology, economic growth, prosperity and happiness will no come.

Leanid Frydkin, BelGazeta