Past economic mistakes will be repeated in 2013
A detailed analysis of the approved economic forecast for 2013 allows for conclusions that the authorities have not learned from the Belarusian economy crises experiences in the last 4 years. In the medium term, without substantial external financial support, the existing social and economic model will suffer from a repetition of the past crises.
On September 25th, 2012 the President signed a Decree № 418 “The most important parameters of Belarus’ socio-economic development in 2013”.
Inflated and unrealistic plans and forecasts of socio-economic development in Belarus became the norm. Several parameters envisaged for implementation in 2012 have not been met and will not be met by the end of the year, despite assurances of their fulfillment.
Projected indicators for 2013 are comparable with the pre-devaluation period. Growth in 2013 at 108.5% is an unattainable goal, against 102.5% in 2012. The authorities anticipate achieving the forecast via increased domestic demand. In particular, there is a significant increase in housing construction plans – up to 6.5 million square meters. The population has an active role in financing housing construction. However, the population is not prepared to buy ready-made housing in such quantities, therefore concessional housing construction loans will be issued on emission basis.
Real incomes growth is planned to be achieved due to the rapid growth in labor productivity. However, 2012 data shows that incomes grow faster than labor productivity, and there are no reasons to believe the circumstances will change.
The planned increase in exports of goods and services is only feasible if there is a sharp increase in prices for Belarusian exported goods. And reasons behind such a forecast are unclear. Moreover, Foreign Ministry officials claim that this forecast is underestimated, that there is much greater potential for exports growth rate in value terms.
The outlook for FDI has failed this year in fact it has never been implemented since its introduction. It is only feasible to reach the FDI forecast (USD 4.5 billion) if there is mass privatization of state assets. And the authorities’ reluctance to give away control over state property implies that this task will be failed next year too.
Thus, the outlook for 2013 is a slightly modified economic development plan from the past, which has repeatedly resulted in crises. Some financial support from Russia, i.e. reduced energy prices will keep the Belarusian socio-economic model afloat for a little longer than in previous years. Since no lessons have been learned from the past crises, crisis is likely to repeat, because there is a disparity between plans and the real economic opportunities.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.