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Economists: Future to Meet Us With Inflations and Devaluations

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Economists: Future to Meet Us With Inflations and Devaluations
Vadzim Iosub

No indicator of the current five-year plan is fulfilled.

The Belarusian government has voiced "Key Objectives of Socio-Economic Development of the Republic of Belarus for 2016-2020 Years" which are subject to the All-Belarusian Assembly. Catching numbers on the paper are a relief to the eye: in 2020 GDP growth will make up 12-15%; real income increase of the population - 9.5-11.6%; rates on credit - 9-11%. Every Belarusian family will have a chance to build a house or an apartment; life span will reach 75.3 years. Is this another Belarusian economic miracle, isn't it?

Does a real economic ground comply with figures voiced?

Senior analyst of Alpari Vadzim Iosub answered questions of the EuroBelarus.

- Prime Minister Andrei Kabyakau gave a positive assessment of the previous five-year plan and stated that the state had completely fulfilled its social commitments towards citizens. Is this true that the state has met the social contract?

- The term "social contract" has different meanings. But the current programme for five years has a number of numeric variable affecting the economy growth, income increase, rise in exports and imports. As far as I remember, no indicator of the programme was met.

It is possible to use terms, blame the world crisis and oil price drop. But there is the truth: indicators are not met. One needs to possess sufficient courage and rich fantasy to assert the opposite.

- But the government tables "Key Objectives of Socio-Economic Development of the Republic of Belarus for 2016-2020 Years" which makes a precise forecast of growth of the real income of the population in 2020 - 9.5-11.6%. Can this be real?

- I guess the only indicator such forecasts are based on is the world oil price. On this basis one can assume rise in exports of oil products, revenue growth based on oil refining, growth of oil duties, rise in demand of oil products on the part of Russia. If a consistent growth of oil prices within next five years is observed, then economic growth and real income of the population would be possible.

But if the scenario with oil prices fails, then there will be no sources to change the economy. Thus, if there is no consequent growth of oil prices, it is possible to predict that the government will put the blame for failure to meet economic indicators on external problems - the world crisis, low prices on raw materials.

- Considering fluctuations of oil prices within the past year, the expectancies of the government do not make any sense.

- Well, nobody is going to make long-term forecasts towards oil prices. There are some reasons: high current volatility, high level of uncertainty in supply and demand for oil (demand strongly depends on economy of China that is decelerating), constantly changing forecasts of the economy growth in the US, Europe, developing countries. Oil prices have already reached $50 per barrel - this is the highest price which is followed by supply on the part of shale fields in the USA and Canada. It is hard to place a premium on the scenario with no guarantees. In fact the Belarus' government relies on growth of oil prices.

- Drop of living standards, as well as the economic crisis is evident. And only Lukashenka constantly says that "crisis exists only in people's mind." Why does the government deny the economic crisis?

- If it is done then it is possible to enumerate reasons which have caused it. Constant references to external factors, the world economic crisis which is not real will not work anymore; reference to oil prices also raise certain questions- why does our economy so strongly depends on a single indicator?

Acceptance of the crisis means recognition that so-called "unique economic model" - a feather in Belarusian government's cap - has been the reason for the crisis over 20 years. The model also involves support of loss-making enterprises. The story has been telling that they will not give money anymore, but the cart remains there still: loss-making enterprises are still being supported. One of the reasons is that our welfare State totally lacks support of people who lost their job. On the one hand, it is needless to support enterprises (waste of poor money), and the shut-down of such enterprises does not look wise: it means unemployment with the benefit of €10 - this is starvation. This is the result of the unique Belarusian economic model.

- How can you see the development of the Belarusian economy in the near future?

- It is impossible to make any forecast, the economy misses direction. And it depends on absolutely unpredictable actions of the government.

On the one hand, it is possible to make forecast, if the government does what is required: work on inflation decrease; no turn-on of the printing press, reforms which are recommended by creditors. And after a year or two of the economy slowdown, it may take a certain growth. It is evident that such scenario is not totally reliable. It is still being discussed in different branches of the government, public press, supporters of responsible financial policy and printing press turn-on. We all know what the turn-on of the printing press resulted into, stably high inflation, regular devaluation within past 20 years are a good example.

If supporters of a printing press take the floor then it will turn into inflations and devaluations in future.

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