Academician Mikitsenka: country may face social explosion

If nothing is changed in Belarus, the country can repeat history of the Soviet Union, thinks the director of the Economics Institution of the National Academy of Science of Belarus.

Academician Pyotr Mikitsenka, the director of the Economics Institution of the National Academy of Science of Belarus, told “Belorusskie Novosti” about state and prospects for the Belarusian economy, plans and possibility of joining the World Trade Organization.

–Let’s imagine Belarus is a member of the World Trade Organization. The WTO is not a charitable organization. We have gained access to the world legal environment and are able to defend our export from discrimination by other countries. Will our producers be able to resist foreign competitors? What should the government, which regulates the home market by all possible restrictions and custom duties, do? Producers of Belarusian electric water boilers, irons, TV sets, and other home appliances will go begging...

– After joining the WTO, we’ll need to remove restrictions on import. Many kinds of national products are not noncompetitive on the world market. Supporting such producers will be too expensive, so, we can lose them. In any case, whether we’ll join the WTO or not, we must take measures to restructure many kinds of products: either to stop producing them, or to improve their quality. Most Belarusian products need imported raw materials and component parts. Many industry sectors are in the same situation. We depend on import. In fact, we are an assembly room of the world. It’s not bad, we should develop in this direction, but the question is in the quality of our assembly.

– This theme is very popular today: we should create commodity distribution networks and learn how to trade. Why wasn’t it done earlier? Ten years ago, for example?

– This is our psychology, the way of our thinking and understanding. Many structures still don’t have other understanding. We sell a tractor, for example, but we can’t offer good after-sales service. We don’t have a systematic approach.

– When a director has the sword of Damocles of dozens of schedule rates, even a plan of foreign investments, over his head, it’s hard to believe in development of the Belarusian economy...

– Market system can’t develop if it follows orders of a chief, not the marker laws. But here we have everything, but won’t be responsible for anything. Our plant directors want the state to give preferences, to insure against risks. What is the world economy? This is risky economy. Another question that out managers would like to hide is prime cost. Our methods of forming prime cost are not market. All coats of goods promotion, preferences, payment, amortization, fines and other things are included in prime cost. As a result, our goods cost more than similar foreign goods. Our producers are ordered to sell goods at prime cost, but its formation doesn’t depend on economy. This approach allows shadow economy to grow. According to international and national procedures, it comprises 30–50%. It means that a half of the gross domestic product is hidden from tax system.

– Do you criticise the government?

– I do not criticise anybody, this is a system.

– But it is created by someone...

– Sure. But we speak about necessity to improve economic mechanisms. If nothing is changed, the country will face a social explosion sooner or later. We can repeat history of the Soviet Union. The inflation bubble was growing and... We take loans, we are in debt. We spend loans on payment, but payment doesn’t depend on income. Stores are overloaded, but enterprises pay wages not to allow a social explosion. The system got used to this state. We are making debts for next generations.

– The total foreign debt of Belarus exceeds 17 billion dollars. How will it be paid? Interests are growing!

– Yes, they are growing. In a slow but confident way. Why did the prices go up 1000-fold after the Soviet Union had collapsed? Because we lived in a closed system, everything was regulated, nonproductive expenses and personnel were growing. The number of people in the inflation economy, let me call it so, is up to 30%. Almost a third of labour force in the country work in paper economy: they carry out audits, analyses, document management, control... There are thousands of indexes that must be calculated and taken into account. Every index has an educated person, with a computer and a heap of paper. Accounting is very important, but we must have the optimum, not a bloated system.

– Classical questions: who is to blame for and what should be dome?

– As usual: a guilty will do something, but as a rule, science is to be blame for.

– Unlike the government, you are not optimistic. The government say we have good economic characteristics and bright outlooks...

– I am not very optimistic now. Characteristic can be made by everyone, it’s not s secret. But taking into account competitive ability on the world market, we have little economic content. We stay afloat due to the independent banking system that was created in time. Due to this, mush has been done in agriculture, agricultural equipment and technologies have been upgraded. By the way, our agricultural complex met all requirements of the WTO. Another case is improving the current economic mechanism we inherited from past.