Belarusian economy not in a position to justify government’s inflated forecasts
The main reasons for why 2013 forecast indicators were far from being met include the low quality of the so-called ‘forecast’ as well as significant changes in key external markets for Belarus. However, for political reasons, Belarusian authorities are not prepared to give up ambitious ‘growth rates’ for next year. They risk not only repeating past mistakes, but also continuing along the dangerous path of unbalanced economic development.
On October 31st the first vice-prime minister, Semashko, spoke at Belarus’ parliament and announced a potential two-percent fall in the volume of industrial production by the end of 2013. (According to government plans, the yearly growth in the industrial production index was expected at 7% based on 2012 prices).
In the first nine months of 2013, industrial production fell by 4.6%. Two of three of the most tangible industries - chemical industry and oil refining - show a significant fall in the same period of 2012. Only the food industry noted some growth in production, however, this dynamic is far from the parameters forecast. Of 15 subsections of industry, six recorded drops in production and only 3 peripheral branches exceeded the projected growth of 7%.
The main reasons for the failure to fulfill forecasts include the low quality of the so-called ‘forecasts’ as well as significant changes in key external markets for Belarus. Ensuring significant paces of growth in 2013 seemed dubious from the outset due to the extremely high risk of the comparative base shaped in 2012 thanks to famous schemes for producing "solvent", "lubricant" and "biodiesel".
By late 2012, it was already clear that it was not possible for new schemes of a similar scale to emerge in the near future. However, such reasoning was ignored by experts compiling the forecasts, who set parameters for industry which were clearly unrealistic. The fall in demand on external markets for the production of machinery and problems in selling potash fertilizer as a result of the conflict concerning the Belarusian Potash Company merely worsened the situation. The overloaded warehouses and manipulation of statistical data also did not help in fulfilling these optimistic plans. Inflated parameters for industrial production also led to an entire series of corrections, above all, in budgets. Far from fulfilling the annual income tax plans, a shortfall of income from foreign trade may be observed. This meant that additional income sources needed to be identified.
Meanwhile, organizations and agencies specialized in producing forecast parameters for 2014 attempted to avoid past mistakes and compiled a much more modest and realistic plan for the paces of growth. However, Belarus’ senior management, for political reasons, is unlikely to give up their ambitious ‘development plans’ for the year preceding the presidential elections. This approach has already made itself clear; last month, the parameter forecast project for 2014 was corrected in a more ‘optimistic’ manner. It is evident that plans which do not correspond with the realities of the current situation (for example, totally unjustified rises in the volume of production and sale of potash fertilizer for export) will once again not be fulfilled in terms of many parameters.
And so, by rejecting realistic evaluations of the economic situation, Belarus’ senior political leadership will continue in 2014 along the dangerous path of unbalanced economic development.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.