“People will take to streets if enterprises close”

More than one third of Belarusian enterprises are insolvent, as of October 1.

The National Bank reports about the deterioration of the financial state of the country's enterprises and organisations for the January to September period 2013.

“More than one third of enterprises under review are insolvent, i.e. have both the working capital ratio and the current ratio below the norms,” the analytical review of the National Bank says.

As of October 1, 2013, almost 2,900 enterprises, or 35% of the total number of enterprises, were insolvent in Belarus, according to the National Bank.

Why do these enterprises continue to live? Why weren't they closed down? Doctor of Economics Prof. Barys Zhaliba spoke to Salidarnasts.

“If these enterprises are closed, people will take to the streets. It will be a social blast,” the expert forecasts. “The authorities fear it most of all. The sculpture “Stone as a weapon of the proletariat” appeared not without reason. All insolvent enterprises will continue to live.”

Barys Zhaliba turns attention to the fact that the share of loss-making enterprises changes.

“When the economy was in a bit better state, the number of such enterprises could be fewer by a quarter. Their number has increased today. They live only due to loans. If they are owned by the state, they can have easy loans, the so called directed loans. Banks can receive recommendations to set interest rates and sums of loans. Private companies are in worse conditions. They return loans out of production costs, but in this case they cannot develop.

If a company is loss-making, it should be either closed or improved, reorganised – this is a market economy. The authorities don't allow closing state-owned enterprises, and private companies, as Lukashenka says, flounder. Belarus is unlikely to carry out shock reorganisation, as it was in Poland. We will continue to flounder.”