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Ahead, to the Minefield!

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Ahead, to the Minefield!

"$500 for everybody" has become a meme in Belarus.

By order of Aliaksandr Lukashenka the vertical economic took that sacral hill twice (average salary of a Belarusian in the overseas equivalent is meant), but then ignominiously fell back under blows of relentless economic laws. And now other order to take the hill is voiced. Ahead, to the Minefield!

Being mindful of the previous debacle, on November 14 in Mahilyou Lukashenka stressed: "It means that labour efficiency will have to beincreased, this is natural. Unearned money should not be paid. No way. Otherwise, we'll be back to what we started from two years ago."

According to experts, economic authorities either ignore the new task or have to turn on a printing press.

Sisyphean Toil of the Government

First, the "$500 for everybody" task was set and fulfilled before the presidential election in 2010.

Then independent economists told that such printing would backfire on the economy. It happened in 2011 when the country was quaked with two disastrous devaluations; an average salary in currency equivalent rolled back and the devaluation amounted to 109%.

Lukashenka's statements, who got used to plentiful Russian subsidies that assisted him in his triumphant populism, made it clear that the crisis of 2011 had seriously hurt the official leader. By the end of 2012 his goads forced the vertical to raise salaries over $500. But two years later, again everything collapsed. Now the average salary of Belarusians is even below $400 (in September, based on data of the National Statistics Committee, it equaled to approximately $376).

Elementary calculations show that it is needed to increase labour efficiency by third within a year to take the sacred hill without violating the outrunning growth principle. That is absolutely unreal.

According to the same statistics, in the first eight months this year the labour efficiency in GDP equaled only to 98.8% against indicators last year.

Moreover, a new introductory of Lukashenka sharply exceeds numbers of the five-year plan, adopted at the 5th all-Belarusian Assembly in June. Even this pompous "Veche" (still in their minds organizers of the show had raising awareness of the crisis) approved more modest GDP (12-15%) and real monetary income growth (9.5% -11.6%) for the period up to 2020. And here comes other great shift!

Members of the government should begin to grumble like heroes of "Kidnapping, Caucasian Style": "It is impossible to work. - Schemes are chimerical. - Well... this is..hm...voluntarism."

But it is clear as a bell that it won't be said aloud. How will the vertical deal with it not to get into hot water and not to damage the economy?

Will the printing press be turned on?

The Belarusian ruler and his Administration understand that "people are tired of the economic crisis", and wait for improvement, economist and political scientist, head of the Kosht Urada project within the BIPART project Uladzimir Kavalkin said.

However, he believes that the head of the state faces a crisis of ideas, because ideas are repeated. Last week, the expert recalls, Lukashenka again expressed concern over the cut of officials ("old PR position" when the president protects people from negligent bureaucrats), and now he turns to $500 of the average wage. According to the interlocutor, it looks like a PR-campaign, an attempt to play on people's feelings.

According to Kavalkin, the highest officials more likely "just derail the order", because they understand it makes no sense to suffer the sad experience once again. In addition, "there is a clear interaction program with the IMF, which should be performed".

At the same time, an economic analyst, chief editor of the online-media Belrynok Iryna Krylovich believes that since the task to raise salaries up to $500 is set, then the government will attempt to fulfill it. "It cannot be done without additional money."

In the immediate future "it will cause the growth", at least next year the GDP indicator "will be positive", Krylovich notes. She believes that the government hardly thinks over long-term perspectives.

Focus on an Old Model

Past experience shows that additional money accelerates inflation. And current attempts to restrain it may become useless.

Forced salary growth may additionally complicate the position of the Belarusian side in the negotiations on a new IMF's loan, because it just cautions against such adventurous scenario. And new tranches of the Eurasian Fund for Stabilization and Development also warn Minsk against shady business with monetary policy.

Since the government finds itself between Scylla and Charybdis, the scenario when bureaucrats swear actions within the agreed paradigm and then give them the bag to hold is possible. Anger of the local chief is harder than reasons of foreign gentlemen.

It would be real to more or less seriously raise wages in case of massive cuts at work (hidden unemployment is really high), bankrupted enterprises are zombies, but in Mahilyou Lukashenka once again warns the vertical: "Nobody will allow to close down enterprises or mindlessly sell them... They should be saved to let people work. Then you send there anyone you want to, it's your business and run it unless it reaches the norm.

The new result is desired under old rules.

Economy Will Take Revenge

Another "$500 for everybody" (to say nothing of once promised $1000 until 2015) looks like a bad joke.

If every time the domestic economic model is smashed when trying to reach the desired level (speaking frankly, a mere thing for a European country), a common sense dictates that the model is unsound.

Can Lukashenka understand it? Even if the answer is Yes, then he is not ready for complex reforms. And in Mahilyou he did not say a word about factors and growth mechanisms. He stated: "Be ready to pay an average salary of $500 next year... We must stimulate heads of private and state-owned enterprises to get close to $500."

Key words are "be ready" and "stimulate". Well, speaking frankly, an administrative pressure is intended. Other significant thing is that no difference between private and the public sphere is made.

The Belarusian official leader still tends to run the entire economy. The economy allows no orders and always takes revenge.

Aliaksandr Klaskouski, Naviny.by

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