A week earlier Deputy Economy Minister Alexander Yaroshenko and Deputy Finance Minister Maxim Yermolovich communicated with the relevant committees of the lower house of the National Assembly on the same occasion. It would seem that nothing prevents parliamentarians to discuss budget. But in fact legislators could not start discussing the country's economic future without one more consultation. This time it was necessary to know the opinion of higher level executives.
Such long-term discussion of the main directions of social and economic development for the next year is likely caused by the poor indicators of the current year. The reality does not correspond to the parameters of economic development and monetary policy approved in 2013.
President of Belarus Alexander Lukashenko ordered the deputies “to prepare these documents more actively and critically”. He said it at the meeting with the chairman of the House of Representatives of the National Assembly Vladimir Andreychenko on September 16. I must say that next year is pre-election one. So the President especially needs the positive economic forecast or at least the valid argument.
Also Alexander Lukashenko said he wants to review documents taking into account all points of view on a particular issue: “Recently it happens that everything that we have planned, does not always work. At the same time it seems that we do everything right. It would be useful if deputies have analyzed the situation and have watched on the work of the government with a critical eye. It means not only the budget and basic indicators, but plans for the coming year in general”.
Difficult times
Prime Minister Mikhail Myasnikovich and Economy Minister Nikolai Snopkov at the joint meeting of both houses of the National Assembly named causes of the difficult situation. Myasnikovich’s version is “unfavorable external conditions and internal factors”. “Terms of trade in potash and oil spheres have worsened. According to the estimations, due to the deterioration of these factors the Belarus economy failed to get 5.4% of the GDP,” – he said. It is important that GDP growth forecast is 8.5%, the real figure for the current 10 months - 1.1%.
As he said, BelAZ is also passing through times of troubles. Coal companies in Russia and other countries have started to save, in particular to save on procurement of mining equipment. He also noted that when recycling fee for BelAZ is introduced in Russia “we will get the additional complexity, including the Russian market”.
M. Myasnikovich touched on the idea of buying “Rostselmash”. “We were ready to find the money to buy “Rostselmash” and to merge companies into one, but nobody heard us,” - said the Prime Minister.
“If we have joint venture companies, multinational corporations – we will have equal condition. But now, of course, everyone wants to support its own”. According to his words, the potential CU and CES “is used from bad to worse”, but it is necessary to integrate.
Almighty dollar
Despite all these difficulties and an extremely low rate of GDP growth in the current year, the Prime Minister found a way out of “deadlock”. He proposed a formula from which we can reach a much higher rate of GDP growth.
He predicted that the GDP for the year will reach a historic high - about 70 billion USD. It will provide an 11% increase in dollars.
Mikhail Myasnikovich said: “if we take the rate of the Belarusian GDP in dollars of 2010, for three years of the five-year plan we gain 14.5 billion USD, or on average 8.1% every year. These are good indicators”.
He also stressed that though all Belarusians talk about stagnation, industrial production will reach 75.5 billion USD, it means 135% comparing with the indicators of 2010. Obviously, all these calculations have been made without any expectation of a sharp devaluation of the end of this year, which is good.
Juggling dollar indicators was used in the level of income assessment. Thus, the Prime Minister promised 598 USD wages (the national average) to the end of the year. He also noted that the average wages in 2010 were 408 USD, and on the basis of this index Myasnikovich counted a dollar increase of 44%.
At the same time, he said, the dollar prices increased to a much lesser extent. “So the real purchasing power of the people has increased significantly,” - concluded the Prime Minister.
Thus, the price of pork and sausage products rose (in dollars) to only 8%, oil - to 14%, milk – to 27% if compare to 2010 – the Prime Minister listed, without explaining why the dollar prices in general grew in Belarus much faster than in the country where those dollars are printed.
But the price of housing services such as heat, water, maintenance, in dollar terms fell to 55-70% at all (compared to 2010), continued calculations Myasnikovich. The only non-positive thing he admitted is slight increase of prices for electricity (16.3%) and for gas (4.8%).
It should be noted that the next growth of electricity tariffs is scheduled on December 1. It was announced by Deputy Prime Minister Anatoly Kalinin on the day before the debates in Parliament.
In turn, the Minister of Economy Nikolai Snapkow announced the growth of tariffs for housing services from 1 January 2014.
“From January 1 it is planned to raise payments for housing services and utilities for the typical apartment in the amount equivalent to 5 USD, followed by quarterly indexation which is proportional to the nominal wages growth,” – the Minister announced another formula.
He also led the calculation according to which payments for housing services and utilities for a family of 3 living in a 2-room apartment with the standard services consumption will increase compared to December 2013 to 117 thousand BYR and will amount in December 2014 almost 444 thousand BYR.
We can only rely on the fact that 117 thousand BYR and 5 USD will not be equivalent to each other by the end of 2014 (although once the President forbade to raise utility tariffs for more than 5 USD per year). Because otherwise we are facing a minimum of two devaluations in the coming year.
However, to calculate the contribution of “quarterly indexation due to the growth of nominal wages” into utility bills growth is rather difficult, as the Minister of Economy announced the growth rates of wages for the next year only in dollars and only on the average for the year. In his words, average annual estimation of the average wages of Belarusians in 2014 is $ 625 USD, and real wages will increase to 4.6%.
Inflation for 2015 is projected at 11%. This is a plus to 15-16%, which are planned by the end of this year.
According to Nickolay Snapkow, the estimated figure overrun of 12% for 2013 is caused by reduction of the budget and cross-subsidies, growth of utilities and urban transport tariffs, petroleum products excise taxes, the price of wheat, as well as growth of rents for more than expected.
Moreover, state-regulated prices are the cause of the main additional growth - to 3.25 out of 4% (the 12% excess of the forecast level). He said it is a deliberate step to “unload “monetary overhang” of 2014”.
In general, all these figures, taken together, do not give a clear idea on changing utility tariffs in dollars, as well as on the rate of exchange at the end of 2014.
A few words about privatization
Meanwhile, the question of future development of our country's economy in 2014 taking into account the dollar rate is still open, although a trend toward reduction in gold reserves in recent months is already taking a threatening nature - they are below 7 billion USD in the international definition.
Snapkow said that in the next year it is planned to accumulate 8.5 billion USD of gold reserves, or 2.1 months of import.
“This is an important psychological factor for the people in terms of devaluation expectations, and for the investor in terms of entry to the financially stable country,” - stressed minister who believes that it would be good to do it through privatization.
Myasnikovich noticed that he expects to obtain 2.5 billion USD from privatization next year. Also he said: "We believe that we should increase gold reserves and pay international debts only through privatization. Then we will be able to maintain the normal state of the payment balance and to ensure economic security".
With this in mind it became clear that it is necessary to add “if” to the words “good” and “safe” because debt repayments should amount 3 billion USD next year, plus at least USD 1.5 billion must be added to gold reserves. Total amount is 4.5 billion USD. Besides the government's ability to implement the privatization plan and gain at least USD 2.5 billion is also very doubtful.
There is also the modernization, which has not been cancelled. According to Mikhail Myasnikovich, it’s required 13.5 billion USD for the modernization of enterprises.
The Prime Minister again named foreign investment and privatization as the main sources of money for the modernization. Profit from foreign investment and privatization should reach 4.5 billion USD.
So we cannot execute the next year's plan without further external borrowing or selling something major for the amount of at least USD 4.5 billion.
However, government members modestly passed that matter by, but spoke out in favor of privatization in general. For example, the Prime Minister believes that the privatization is an important tool of macroeconomic and monetary policy.
But it is his personal opinion, because not the government in our country makes decisions about privatization. The one person who has a right for the final word has not expressed his opinion yet about the size of privatization next year.
According to Nickolay Snapkow long-awaited meeting with the President, where the major economic documents for the next year will be discussed, is to be held this week.
Thus, we will find out the size of new taxes and fees in 2014, as well as the parameters of economic development for the coming year in the last weeks of the passing year.
Irina Krylovich
Belmarket.by
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