Are Belarusian Authorities Getting Ready for Selling Largest Enterprises? :: Charter'97 :: News

A New Year oil and gas conflict with Russia could cost Alyaksandr Lukashenka more than simply a budget deficit. Belarusian Economy Ministry has prepared a vast programme of state enterprises privatization. Talks with investors have started on some of enterprises. Belarus is getting ready for considerable foreign loans. It could bring an end to the modern economic model, Russian “Vedomosti” writes.

2006 was finished with a credit balance deficit of $1.663 billion, or about 4.5% of GDP by Belarus. Gas price hike from $46.7 to $100 per cubic metre and imposing an oil duty for oil to Belarus by Russia ($53 per cubic ton) would cost $2-2.5 billion for the country, Belarusian economists believe.

An offer to start privatization of state share in largest enterprises of the country is stated by the Plan of measures on stabilization of situation in internal currency market and achieving positive balance in foreign trade in 2007. The plan has been developed by Economy Ministry of Belarus on the instructions of the government, concerned by deterioration of foreign trade structure after Russian oil products price hike.

Authors of the programme offer to hold contests on selling large oil refineries and chemical enterprises in 2007, including “Naftan” oil refinery, Mozyr oil refinery, Polimir, Belshyna, Hrodna Azot, Mahilyou Khimvalakno.

A possibility of converting enterprises into joint-stock companies with the further aim of selling to strategic investors largest Belarusian unitary enterprises, like Minsk automobile plant, Beltelekom (monopolist on communications and Internet market), Belarusian cement plant, Hrodna tobacco factory “Nyoman” is offered for consideration. A possibility of selling state parcels of shares of large enterprises of food industry like Minsk plant of sparkling wines, Homel fat-products industrial complex, Skidzel sugar industrial complex, Haradzeja sugar industrial complex, Zhabinka sugar plant. It is supposed to sell 30-40% of shares of largest breweries, joint stock company Krynitsa and malt joint stock company Belsolad.

According to the head of Minsk Scientific Research Mises Center Yaraslau Ramanchuk, selling out state property against the background of state debt growth could become a beginning of the end of current Belarusian economic and political system. To settle with creditors, Minsk would have to strike new privatization bargains. An active struggle between Belarusian establishment clans for control over enterprises is possibly to start. According to Ramanchuk, in the near future the president could sign a decree on speeding up sale of loss-making enterprises, and “officials would have a temptation to make unprofitable as many enterprises as possible”.

Large-scale privatization, firstly of oil refineries and machine manufacturing enterprises, is hardly possible in foreseeable future, the leader of Minsk-based analytical center “Strategia” Leanid Zaika said. Largest Belarusian enterprises like MAZ have an important social function. They offer employment and infrastructure, that is why Lukashenka won’t lose his grasp. Development of such a vast privatization program was rather “a panic reaction” of Economy Ministry to the consequences of energy resources prices, Zaika believes.

Belarus remains a country inhospitable for foreign investment, a representative of Privatization and Management Institute, Alyaksandr Chubrik reminds. According to the national law, government can get control over earlier privatized enterprises back any time, but introducing a “golden share”. That is why a hard-driving privatisation campaign would be impossible without Belarusian legislation alteration.

Though political factors will slow down structural reforms of Belarusian economy, termination of subsidising by Russia make the large-scale privatisation in Belarus inevitable in the next few years, he believes.

Under Alyaksandr Lukashenka, who holds office since 1994, privatization has a pinpoint character in Belarus. All large enterprises are owned by the state. If implemented, the programme of Economy Ministry would mean a radical change of economical policy of Belarus in general, told the head of economic analysis deportment of the Economic research of Economic research institute by Economy Ministry of Belarus Alyaksandr Hatouski told.