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Lukashenka Is Blowing Another Bubble, Economist Says

Lukashenka Is Blowing Another Bubble, Economist Says
Leanid Zlotnikau

Living standards can drop by more than 30%.

Economists point out that Lukashenka is ready to practice populist methods to meet the predicted socio-economic indicators on the eve of "elections".

Thus, at a recent meeting on the "operation of the Belarusian economy," the dictator threatened to resign the government, headed by the Prime Minister, if the "development parameters" are not met in 2019.

In this regard, some factors are noteworthy: artificial payroll calculation in Belarus is about six times higher than GDP growth, while in 2019, state budget expenditures grew ahead of schedule.

What consequences can this bear? Leanid Zlotnikau, economist, answers the questions of Charter97.org.

- Is Lukashenka's ultimatum related to what he called "mayhem" - "parliamentary" and "presidential elections"?

- I guess so. "Elections" are an essential moment for him. And the words said at the meeting on economic indicators should be considered from this angle.

But I'd like to say that the main economic indicators are very far from being met - even 50% of these figures are unlikely to be achieved.

The real GDP growth rate of 2-3% is so modest that given the Belarusian statistics, it actually tends and is actually equal to zero. The same can be said about the ruler's demands for wage growth. They cannot be met.

The economy of Belarus does not evolve according to Lukashenka's orders or the government's resolutions. Economy grows when business produces 70-80, or better - 90% of GDP. Then some real development can be stipulated. We just don't have such an economy. Therefore, I do not even monitor Lukashenka's requirements to the forecast indicators and their implementation by the government.

Naturally, Lukashenka's "elections" require some figures for the electorate. But in fact, only the inability to meet certain indicators is growing in our economy.

I'll cite only one example. In the first half of this year, Belarusian enterprises gave to banks only a quarter of their revenues - loans, interest on loans, penalties for overdue payments. , the Belarusian enteхуйня r late payments. Their rate of return is less than 10%. It turns out that our enterprises pay more (8-10% more than last year).

Non-repayable debts to banks are growing. That is, the economy does not even provide itself. In many cases, people receive wages at the expense of loans and not proceeds. Around 60% of enterprises are loss-making. It drives into a deadlock, into the state of vast insolvency and inability to modernize something. That is, the economy is dying out under Lukashenka. This 2-3 %, he imposes on the government, cannot make a difference. No government cannot make this system work until it is modernized.

- Can we say that another "bubble" is maturing in the Belarusian economy now?

- Yes. It is happening in many countries, and Lukashenka is not an exception here. During the "elections," the government wants to "jolly" the population along without being much concerned about consequences.

Over the past two years, there has been an artificial payroll calculation, while the pension fund's revenues are not enough, and the state pumps it with money from the budget.

Yes, the "bubble" is growing: the figures are allegedly increasing, and the dollar is not growing yet. It is stipulated by the growth of the public debt of Belarus. Our ability to repay billions of dollars is decreasing.

All resources are spent on pumping up the incomes of the population before the "elections. But after the "elections," the income of citizens may fall significantly. By the way, next year the budget will face no surplus, but deficit. It will cause even more external borrowing.

Given the long-term perspective, the authorities do not have resources to maintain even the current standard of living. Look how it was: after 2011, the income of the population was pumped up much faster than the economy's capacity allowed. The crisis began with a decline in incomes in the second half of 2014.

The overall situation in the economy of Belarus shows that there will be no "improvements": some pumping can be done before the "elections," but further on it will be rolled back.

- How grave will this rollback be? Some experts believe that the Belarusian ruble will devalue by 50%. How do you assess the development?

- No precise calculations can be made. What is interesting is that 2021 will be a special year for Belarus: in January we have to repay Russia's loans, at the expense of which Astravets NPP is built. Given the interest rate, this is another billion-dollar additional burden on the economy.

If there are no special factors in the economy, I think that in three years, the standard of living in Belarus may drop by about a third.

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