Lukashenko plans to keep status quo until end of presidential elections
During a special session of the House of Representatives of the National Assembly of Belarus, President Lukashenko introduced Andrey Kabiakou as the new prime minister.
To date, the Belarusian authorities lack a vision for the country’s development which could be presented as an election program for president Lukashenko. The head of state is trying to focus the government’s attention on short-term tasks to control the current socioeconomic situation which is possible thanks to foreign borrowing. The urgent need for external financing to keep household income at an acceptable level before the end of the presidential campaign is pushing official Minsk to act more vigorously in order to normalise relations with the European Union and United States.
While introducing the new prime minister to the parliament, Lukashenko defined the main goals for Belarus’ socioeconomic and foreign policy development for the next year. Some experts noticed that the president’s speech contained a number of points of his program for the presidential election which is due to take place before November 2015. However, so far neither Lukashenko nor the government has any precise ideas on how to develop the country during the next five years which could be presented as an election program.
The president stated that he is waiting for fresh ideas from the government to develop a socioeconomic development program for 2016-2020. However, these ideas should be based on the current socioeconomic model: “Nothing new, we have been through this all”.
However, during his speech to parliament, president Lukashenko only gave answers on how to solve short-term socioeconomic development problems so as to conserve the current situation up until the end of the presidential campaign: “The most important thing is to not worsen the situation but also not to break the basic principles and laws of economics. I am not talking about market or administrative measures – this is not important. To not break them – in order for the enterprises not to be affected, for them not to close and not to put people out on the street”.
However, domestic resources have already proven insufficient for maintaining the current socioeconomic situation. During the special session, president Lukashenko assured deputies that he is trying to further normalise relations with western capitals. Ahead of presidential campaigns, official Minsk typically tries to improve its relations with the EU and US, although the Belarusian authorities’ main motivation for improving those relations is to find foreign borrowing. In addition, the Belarusian authorities intended to issue new Eurobonds this year but most likely they will abandon this idea because of the unacceptable interest rate.
The Kremlin continues to be official Minsk’s sole creditor. However, the head of state only brought up the topic of integration at the level of the Eurasian Economic Union when noting “one can notice blatant cases of one-sided actions of the participants of the Union sidestepping current agreements”. This year, the Belarusian authorities are trying to prepare for yet another “trade war” with its main partner, Russia, urging the state machine to act “harshly and preemptively in defence of national interests”.
Besides, as expected, the economic problems on the Russian market, which is the biggest market of the Eurasian Economic Union, means that this project is becoming less attractive for official Minsk. The President has chiefly tasked the new government with decreasing dependence on Russia and diversifying exports: “If we solve just one problem – the diversification of exports (in the sense of the falling sales of our goods in Russia) – and reorient our production to other markets, we will no longer have economic and financial collapses. That’s why diversifying exports is the most important issue.”
However, the president’s statements on smoothing relations with the West do not mean changes in domestic policy. The head of state underlined that he is not going to change anything about how elections are conducted, an issue which is traditionally criticised by human rights activists, opponents of the Belarusian authorities, and international observers: “They give us hints that we should be made to hold the election using international standards. Calm down – the election in Belarus will take place with exceptional honesty on the basis of the Constitution”. At the same time, the president has emphasised his reluctance to bring forward the elections date despite a number of reasons which push Belarusian authorities to do so.
Therefore, in the near future, it should be expected that official Minsk will make attempts to normalise relations with the West, which would then allow the Belarusian authorities to open up new opportunities for foreign borrowing.
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.