Is Belarus on The Verge of Another Devaluation?

Salary "of five hundred dollars" is a fantasy under Lukashenka.

The problem of low efficiency of state organizations has long been on agenda. Independent experts believe that the reforming of the public sector can be the solution. However, the Belarusian authorities do not rush to carry out them, Ezhednevnik writes.

Meanwhile, the seminar "(Re)assessment of the role of state-owned enterprises in Central, Eastern and South-Eastern Europe" held in Minsk with representatives of the IMF repeatedly drew attention to the problems of the Belarusian public sector.

According to the IMF, there are 380 state-owned enterprises per million people in Belarus, about 260 in Slovenia and Croatia, 220 in Russia, less than 50 in Latvia and Lithuania. It was also noted that state-owned enterprises in all CEE countries (including Belarus) have lower productivity than private ones.

Therefore, the IMF recommends to carry out diagnostics of the public sector and assess the role of public property in general and what goals it pursues in the country.

Finance Minister Maksim Yermalovich agreed that the problem of inefficient enterprises had to be solved.

"We intend to freeze the provision of government guarantees to businesses. Direct support in the form of subsidies for lowering interest rates will also be reduced. Only export support will remain," he said.

The motivation for state-owned enterprises should be changed

When discussing the efficiency of the public sector, Pavel Daneika, Director General of the IPM Business School, tried to justify why the management system of public companies is less effective than of private ones.

"The entire management system contains two sets of tools: a stick and a carrot. In Belarus, there is a huge stick and a very small carrot for state-owned companies. If you have violated something or failed to do something, the punishment will definitely follow. If you have done something useful for the company, it is not even a fact that you will be praised," he said.

The expert believes that the very motivation system for the public sector should be changed, otherwise no positive results can be achieved.

Why do we need to restructure the public sector?

The discussion also touched upon restructuring of the Belarusian public sector. Independent experts explain the necessity of reforming and restructuring of state enterprises by lack of prospects for the present public sector.

"If no restructuring is carried out in Belarus, the domestic debt of Belarus will increase, which inevitably leads to devaluation. And another devaluation will devalue $500 of average wages," Daneika said.

He points out that socio-political consequences in such a situation will be much graver than those of the public sector restructuring.