Delays In Wages And Stalled Factories: It's Just Beginning

According to the IMF report, the number of unprofitable enterprises has increased by more than three times for the last four years.

First, the banks were underpaid, then – energy workers, suppliers, and after that – the budget. Finally, it came to salaries. According to Belsat’s sources, employees’ salaries and maternity payments at the Barysau Plant of Aggregates arrive a few months later.

Independent trade unions claim that a worker of the Minsk factory of automatic transfer lines made similar complaint in July. And although such cases are still selective, there is a tendency of their expansion.

“Now the situation is difficult. It is due to the fact that the government is carrying out strict monetary policy. They tightened the money supply. There are no credits, the working capital is being squandered,” – Chairman of the Free Trade Union of Metalworkers Aliaksandr Bukhvostau said.

Defaults, loans and redundancy

According to the International Monetary Fund report, the number of unprofitable enterprises has increased by more than three times for the last four years, and now amounts to more than a third of all the companies. During that time the profitability of the business sector has decreased by more than 10 times and got close to zero as far back as last year.

“The Ministry of Finance has recently announced that seven companies will default on their bonds. And nobody knows exactly, how many enterprises are the potential candidates for default on their loans and bonds,” – Economic Newspaper’s chief editor Leanid Frydkin said.

To stabilize the currency market, the government started to reduce the money supply last year. In other words, they have begun to limit granting of new loans to the plants to pay off the old ones. As a result, this year the plants’ overdue debt to the banks has increased in one and a half times and has reached $ 600 million. The debt to power companies - approximately the same amount. Overdue debts for the components, the so called accounts payable, amounts to $ 1.5 billion. Moreover, the IMF experts believe that the national accounting system understates these figures.

“At any moment, if any of the major borrowers or big banks encounters serious problems, it will threaten to cause a chain of defaults,” – Leanid Frydkin explained.

They will hold back wages

Independent trade unions explain: if a plant begins to hold back the wages, it means that it is on the last verge of lack of working capital and all other attempts to restructure the payments have failed. According to the forecast of the chairman of the Free Trade Union of Metalworkers, large amount of state plants may start to approach this threshold closer to November.

“The scheme, which used to be effective previously – a loan for a loan – does not work anymore, so, I think, delay of salaries should be expected, and perhaps some enterprises may even seize working,” – Leanid Bukhvostau thinks.

The International Monetary Fund addresses the authorities of Belarus with the following recommendation: if there are no funds to maintain public plants, they should be privatized or should go through the process of bankruptcy. But the privatization process in our country is, among other things, hampered by a lack of independent parliament and courts. For investors this means, correspondingly, unpredictable rules and lack of protection of their investments.