Groundhog Year

Belarus is entering 2014 on the verge of another economic collapse.

The tasks of stabilizing the financial market and eliminating imbalances, set for 2013, were never executed. For the Belarusian economy it became the year of expecting money. Precisely expecting, since no serious measures were taking for money inflows. The year started, we would remind, with great promises. On the eve of new year, when everyone was expecting the end of the world, Lukashenka tried to reassure Belarusian citizens and promised to attract numerous billions of dollars into the economy, Belarusians and Market reports.

Thus, according to Lukashenka, he asked Russia for couple billions in loans in order to modernize our enterprises and got surprised that he was not refused, but was even asked for a specific list and timeframes. It was first of all the matter of creating joint enterprises with the participation of Russian and largest Belarusian enterprises, which became known as “five integration projects”.

It was exactly for that purpose that the Russians were going to (if they were, of course) provide Belarus with money. It was supposed that $1 billion would be allocated for the creation of joint enterprises and another billion – for all the rest. The year’s result in that direction is zero – neither one nor another billion ever came.

Also unfulfilled turned out the information piece about a possible $1 billion loan from China in cash. It appeared later that “in cash” meant a loan in yuans, which means this loan was in fact supposed to become the refinancing of China’s earlier lied loans, which the time came to pay back in money.

Having created a bunch of administrative restrictions and oral bans, the National Bank managed to keep the foreign currency market within the frames, but the prime rate, frozen at the level of 23.5%, completely lost its regulatory importance, because it no longer corresponded to the inflation, which the government failed to keep under 12%, or the money values, which accounts for 40-50% a year, just like a year before.

Sensible steps, aimed at changing something or at least managing to get actual new loans, were not taken in the year passing. Although there was a sluggish attempt to hold negotiations with the IMF. In the spring the Ministry of Finance and the Ministry of Economy suddenly stated that they wanted to prepare the theses for possible reforms for the yearly IMF and World Bank session. It almost looked like the initiative was their own, but apparently it did not find support and vanished. The thesis plan of alleged reforming of the economy, drawn in October jointly by the government and the National Bank, does not look like an actual reform plan. Did not they really want to get one?

Will the Belarusian economy be able to last another year on such an “enthusiasm” of the Belarusian authorities and patience of the citizens? Looking back at the year passed, it is probably possible to say it will. Although, another “groundhog year” will apparently be worse and gloomier, while foreign reserves will fall down to the critical level without large scale external infusions.

The main lesson of the year passed would be the confidence that even having reached the verge of yet another economic collapse the authorities would still not carry out decisive market reforms or sensible privatization.