8 August 2020, Saturday, 12:31
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Leanid Zlotnikau On Lukashenka’s Words: We Are Quickly Going To Default

Leanid Zlotnikau On Lukashenka’s Words: We Are Quickly Going To Default

The model is obsolete, and is rapidly crashing.

Renown economist Leanid Zlotnikau comments on Lukashenka’s economic theses for thinktanks.by.

Bad trends for all of us

“I do not see a meaningful program; there is little practical use here. Changing nothing is a trend that pulls us in the bad direction,” said Leanid Zlotnikau. “We see that there is an increase in the debts of large state enterprises, which seems to be going rather quickly, I would say, with acceleration. Bad debts - that is, bad bank loans, payments on which are past due. The share of such debts in the state banking sector is 9.5% - a lot, and they are growing. 140 billion rubles is already more than the country's GDP. ” According to the economist, it is the inefficiency of large state-owned enterprises and the public sector that leads to a massive increase in debt: “salaries at such enterprises are growing at the very least, but the GDP is not, this is the paradox of the Belarusian model.” “So, following Lukashenka’s message, we don’t change anything, we leave everything as it is and quickly go to default,” said Leanid Zlotnikau. Evidence for assessing the sustainability of the Belarusian economy can be seen in the value of the Belarusian Eurobonds. They are placed at 5.875% and 6.378% per annum depending on the term, while, for example, bonds of Austria are traded at minus 0.2%, Germany - at minus 0.4%, Japan - at 0%, Poland - at 2.125%. “This is a percentage for the lack of reforms, in the West they know the Belarusian economic situation - they don’t give loans with a low rating at normal interest rates,” the analyst noted.

Foreign trade is also bad, “our main sales market, the Russian one, is rapidly declining for us, even agricultural products are losing ground, they have already lost at least 15% of agricultural exports there, and in the near future we will be even more moved from this market.” “There are no direct investments - tiny, 1.5-1.9 billion a year, I mean direct investments, and not what buyers of our goods owe us - Belarusian statistics also relate these debts to investments,” emphasized Leanid Zlotnikau.

Belarusian leadership finds the market incomprehensible and unpleasant

According to Lukashenka, “one of the main focuses on the upcoming five-year plan is import substitution.” “I think it should be done the other way around. We need to open the economy - it would give some prospects. But here, Lukashenka and our circle have only reached the level of the theory of Adam Smith, who believed that two countries at the same level of development can trade, while the poor and rich do not, since it will become even poorer. But there is a theory of David Ricardo, which, incidentally, lies in the basis of the WTO activities. There is no division on trade within the worlds - developed and less developed. But politicians like Lukashenka simply do not understand that such trade can be beneficial for the country. That a country that has lagged behind in development must open the economy to everyone, and when there is nothing to lose, like Belarus now, the main development path is to open the economy through trade,” says Leanid Zlotnikau. - The most striking and recent example is Estonia after the collapse of the USSR. The country has taken the path of maximizing the opening of its economy: trade what you want, carry wherever you want and where you want with a number of minimal restrictions. And this country, as we know, really showed everyone an example of development in the region.”

“The market is an unacceptable thing for Lukashenka. How it all began? We will build a market economy, but do not rush into this so as not to hurt the population. As a result, the population suffered, if only if we take the level of salaries - Poland, Lithuania, Latvia, have already overtaken us in this by an order of magnitude. And we all talk about the notorious thousand rubles. That is, here history has already confirmed the “success” of the Belarusian model. Well, when in 2019 Lukashenka said that business would not feed us ... It’s clear that he simply doesn’t need a private initiative, he does not understand, and does not need it. Equalizing justice drives him, he probably believes in it, but the results are so-so,” said Leanid Zlotnikau.