Half of processing enterprises of Belarus are loss-making

Recently, the economic situation in Belarus has significantly deteriorated: many enterprises have a part-time work week, incomes are decreasing.

Radio Racyja discussed with economist Leanid Zlotnikau the dynamics of Belarusian economy.

- How could you in general describe the current situation of Belarusian economy?

- There is a significant decline in population's incomes, if we take August 2014 and March 2015 as an example. Here I note the retail trade turnover, which had a downturn, volumes in public catering are lower than those last year, that is, they began to fall in relation to the prevailing level. Population's purchasing power affects the decline in retail sales, that is, the standard of living has declined. The competitiveness of our economy has reduced. In the first two months this year the export fell by 25-30% as well as the import. Since mid-2012 industrial output has been declining as well as financial effectiveness in almost all sectors. There is a sharp increase in payables. If, for example, in January 2014 it increased by 1-2% in different sectors, then in January 2015 it increased by 15-17%. Enterprise solvency's losses have accelerated. This year the insolvency crisis develops especially quickly. We used to have an advantage - low energy costs against Poland and Lithuania. That is how good we are! Now we are not. It was a bunching loss of competitiveness. It will be hard to restore exports and incomes.

-This situation would affect the employment in different spheres.

- According to the statistics, we have already had more than 100 thousand people in each case. In particular, it affected Minsk. Processing industry suffered the most. The only exception is the export of potash and nitrogen fertilizers. In the past two months exports of fertilizers has increased by 60-70% against two months last year. If there are additional costs during the production, the finished product is uncompetitive. And here we have raw material, which is difficult to "spoil". Therefore, it is still being sold and supports the economy. Green wood is still popular.

- What could you say about the agricultural sector?

- Belarusian competitiveness in agriculture has decreased. Our prices remain unchanged. On the world market the situation is different - there is a lower cost of agricultural production due to fall in oil and gas prices. In other countries -Poland, Germany- oil and gas prices became lower, and the cost of agricultural products as a result includes expenses for oil and gas, it is about 20% of the total cost. When, accordingly, oil and gas fall in price, agricultural products are getting cheaper. It means great losses for our agricultural exports. In the first two months it fell by 15-20%. For some products this figure is more significant.

- How much Belarusian enterprises are considered loss-making in such circumstances?

- In early 2014 the share of loss-making enterprises in Belarus fixed at 20%, and in early 2015 it made up 28.6%. In other words, their number has increased. But above all losses of these enterprises increased. Even large enterprises have become loss-making. In early 2015 a half of all processing enterprises considered unprofitable! There were only 32% of them in early 2014. First of all it touches the engineering industry. The amount of losses has increased dramatically. In January last year the losses amounted to Br2 trillion, in January this year - Br52 trillion, that is, the figure increased by 26 times! In other words, we have a very rapid loss of enterprises' solvency; a crisis is rapidly approaching...

–Does the leadership of Belarus take some steps to prevent it? Does it look for some ways to resolve the problem?

No. They are mostly concerned about how to maintain socialism - to monitor prices not to let the World Bank put pressure on privatization and so on. They want everybody work - they introduce the anti-sponger tax. They do not even come with an idea to change the situation.