Will Lukashenka Sell Belarusian Refineries?

The dictator is facing hardships.

The uncertainty of the results of the Belarusian-Russian negotiations on energy supplies and "deeper integration" will test the ongoing "economic policy" in Belarus, said analysts of Fitch Ratings.

Is there a real threat to the Belarusian economy? How are the authorities going to compensate for the budget losses?

Senior analyst of Alpari Vadzim Iasub in his comment to zautra.by agrees with the conclusions made by the experts of Fitch Ratings.

- The key word here is "uncertainty". Indeed, no one knows when and how our next oil war with Russia will end. The best option is to agree to Russian prices, given the supply bonus they want. Obviously, any alternative supplies will cost more than Russia's, even with the tax manoeuvre and the bonus for Russian oil suppliers.

In any case, this will mean lower direct budget revenues from the export of oil products, lower refinery revenues, and therefore lower taxes they pay to the budget. The year will be tough.

- Has it ever happened before in relations between Belarus and Russia that no agreements on energy supplies are signed by February?

- There was a year when they agreed on oil by the end of the first quarter. There were cases when there was no Russian oil and we tried to replace it with Venezuelan, Azerbaijani oil. Of course, it was expensive, there were logistical challenges, but then we reached an agreement with Russia. That is, there were technical alternatives before, but they were never more advantageous, but at least comparable in price to Russian oil.

- How risky is the reduction of revenues from oil products export for the Belarusian economy as a whole?

- It is difficult to say, no figure indicates the decline in these revenues. This figure is not available because no one knows whose oil we will consume and at what price. The second uncertainty is the reaction of the government to the decline in oil revenues. If the government carries out reforms, reduce subsidies and benefits to the most unprofitable enterprises, it will be one story. If no reforms follow, it will be another story.

- How are the authorities going to compensate for the losses?

- So far, they have no plans to replace anything at all. This follows from a recent statement of the Minister of Finance. He says the oil war is not an occasion to revise the budget yet.

The other thing is that if this story lasts until the end of the first quarter. Then the budget may be revised and even cut. But this year social sphere will unlikely to suffer. Before the election, they will try to keep everything as it is. Maybe they even increase budget revenues. After the elections, another scenario may be practised: when support from the population is not so relevant, it may result in lower average wages across the country, as well as higher prices. The planned growth of children's allowances and the minimum wage has been included in the budget earlier. Their shortage may become tangible in a quarter. So far, there is unused money in previous years.

- Proposals to get rid of refineries in case of oil shortages are already voiced. Is it real?

- Given Lukashenka's attitude to "family silver," this is the most extreme option. In fact, refineries and enterprises producing potash fertilizers are the ones which operate properly. There is a price issue. On the one hand, the government keeps saying it is ready to sell everything if there are decent offers, but it has a very peculiar interpretation of what price is decent. So I do not consider this sale real.