Crisis of President Lukashenko’s legitimacy put on hold
On 27 May President Lukashenko held a meeting to discuss the current situation on the consumer and foreign exchange markets. The meeting was attended by the top officials of the country: representatives of the Government, the National Bank, the Presidential Administration, the management of the largest state-owned banks.
The Belarusian political elite are waiting for the President’s actions to overcome the financial crisis.
President Lukashenko senses that his domestic legitimacy is in danger and has to react within the frameworks of the failed talks with Russian leaders on 19 May and Kazakhstan on 24-26 May. The absence of positive information regarding the outcomes of these negotiations, indeed, reduces the credibility of the Head of State. Moreover, a number of statements made last week by Russian Prime Minister Putin and Finance Minister Kudrin concerning the conditions of issuing a stabilization loan to Belarus present the situation as if Russia is dictating to the Belarusian leadership what to do to obtain the credit and to overcome the crisis.
Following these media reports, Lukashenko had to justify himself vis-?-vis his subordinates and to convince them that he still controlled the economic situation and protected the interests of the Belarusian management. During the meeting the Belarusian President has repeatedly said that Belarus would not start the “collapsing” sale of assets.
The meeting was the first public statement by Lukashenko after the Summit held in Minsk on 19 May. Its emotional intensity proves the political stakes are high, at least until the next meeting of the Board of the Anti-Crisis Fund of the Eurasian Economic Community on 4 June, meant to decide on the allocation of the first transfer for Belarus. It is fairly safe to assume that the Belarusian elite will continue keeping the pause until that date.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.