Despite Lukashenka’s Rhethoric Belarus Officials Worry about Economic Outlook
While Alexandr Lukashenka assures Belarusians of economic stability, other high-profile officials warn of foreseeable problems in the economy. The Government and National Bank sent a joint official letter to the Anti-Crisis Fund of the Eurasian Economic Community where they painted quite a gloomy picture.
They say that the macroeconomic situation in the country can worsen as a result of a number of internal and external factors. In particular, they anticipate that the foreign exchange and gold reserves will shrink to a critical level.
In reality, the situation might be even worse. As Belarus is facing a growing debt burden and several other economic risks, serious problems can arise already in 2013.
Lukashenka Promises Stability
In an interview on 9 August Alexander Lukashenka tried to disprove any worries about Belarus' financial stability. He stated that the country has enough resources to repay all its debts and also continue to raise salaries.
In 2012-2013 the government will have to pay about $5 billion of its foreign liabilities. In Lukashenka's opinion, that's nothing. He underlined that the country's foreign exchange and gold reserves had been growing since the beginning of the year. Moreover, according to him, the authorities already have some additional money to make the upcoming credit payments. The sources of that money remained unclear.
At the same time Lukashenka made two interesting reservations. Firstly, he said that if any problems with the debt repayment still arise, salaries will automatically stop growing. Secondly, he reminded Belarusians that they can always count on help from Russia: "Even if we see that we don't manage to return a billion dollars to the Russians this year, I will somehow find an agreement with the Russian president to extend the repayment by one more year".
Belarusian analysts know that Lukashenka's rhetorical style suggests that such reservations are usually meaningful. Most likely they indicate that Lukashenka himself expects a tough situation to develop with the debt repayment over the next two years.
The Government and the National Bank Are Less Optimistic
The Belarusian Prime Minister Mikhail Myasnikovich and the Head of the National Bank Nadzeya Yarmakova are even less optimistic about the near prospects of the country's economy. They co-authored a joint letter to the Anti-Crisis Fund of Eurasian Economic Community (EurAsEC) where they provided some details about the financial situation in Belarus.
They draw particular attention to the fact that in the months to come Belarus would have to repay part of its internal and external foreign exchange liabilities. This will cause the state reserves to shrink from $8.23 billion (as of 1 August) to approximately $6.4 billion in October. Given that the monthly level of imports in Belarus is nearly $4 billion, in October the state reserves will be enough to cover only $1.6 months of import.
The authorities then plan to attract more money from privatisation and foreign direct investments (FDI) in order to raise the level of the reserves to two months' imports by 1 January 2013. But this will still be quite low. International financial institutions (including the Anti-Crisis Fund of EurAsEC) normally regard state reserves as safe when they equal three months of imports.
The joint letter also emphasises that the Belarusian economy faces a number of serious risks, both internal and external. Among such risks it mentions:
- a possible decline in demand for Belarusian goods on international markets
- worsening of foreign trade conditions
- lack of FDIs in the economy (as a result of poor privatisation gains)
- restricted access to credit resources on international financial markets
- poor structure of external liabilities: short-term credit and loans prevail over long-term.
The Government and the National Bank conclude their letter by saying that the existing risks and the precarious situation with the state reserves create "an objective need for the continuation of the EurAsEC Anti-Crisis Fund's credit program for Belarus."
The Real Situation Might Be Even Worse
Last week it became evident that the real situation in the Belarusian economy might be even more precarious than what the joint letter by the Government and the National Bank describes.
On 8 August Nadzeya Yarmakova stated that in 2013 the outflow of capital from Belarus would amount to at least $8 billion. Out of this sum $4 billion are the government's internal and external foreign exchange liabilities. And another $4 billion — the export fee on oil products that Belarus will have to be transferred to the Russian budget.
These numbers look quite alarming. Especially if the government fails to build up the state reserves and if the demand for Belarusian goods in international markets declines. It becomes even more worrisome when one looks at a couple of other factors.
For example, FDIs in the Belarusian economy. As was mentioned above, the officials hope that FDIs will help strengthen the state reserves despite the expected outflow of capital. But the level of foreign investments is still very low in Belarus. The official statistics says that in January-June the country got $605.7 million in FDIs. The number itself is not very high. But even more importantly, most of this sum came as reinvestment of income from previous investments. It means that new investors are not in a hurry to come to Belarus.
To make matters worse, more and more old investors leave the country and close their investment projects. The latest example is the State Reserve Fund of the Sultanate of Oman. Back in 2010 it bought a sizeable plot of land in central Minsk where it wanted to build a multi-functional complex to include business centres, hotels and residential houses. The sum of investments equalled an estimated $150 million.
However, after the 2011 Belarusian financial crisis and the devaluation of the national currency, the investment project is no longer profitable for its investors. After a period of uncertainty they announced the termination of the project. And this is, unfortunately, a vivid example of the unattractiveness of present-day Belarus for investors even from countries that are friendly to Lukashenka's regime.
Thus, the Belarusian authorities can hardly rely on foreign investments. Nor can they count on income from privatisation as a source of hard currency. In January-June 2012 the state got only slightly more than $1 million from privatisation. And there is very little willingness to privatise more.
Therefore, the people of Belarus might feel the heavy burden of foreign debt already in 2013.
Yauheni is Policy Director of the Discussion and Analytical Society Liberal Club in Minsk
Belarusians Do Not Want Feminism – Digest of Belarusian Analytics
Belarusian analysts discuss recent foreign policy developments, the failure of the government to attract investors and two realities created by the state and independent media in Belarus among other issues.
In Belarus neither women nor men want feminism. A sociological survey of people’s attitudes towards feminism, undertaken in early August, shows that Belarus has the lowest level of tolerance towards this movement among the CIS countries. Head of the international Association on Gender Perspectives Alyona Alkhovka says that such attitudes of Belarusians towards feminism are caused by the distorted understanding of its core idea, which is differentiation between the biological and the social roles of genders.
Psychologist Vladlen Pisarev, on the other hand, explains the lack of sympathy towards feminists by their apparent harshness and aggression, as well as by the fact that a strong tie between the woman’s biological and social role is the natural order of things.
Diplomatic War Would Erupt Even Without the Teddy Bears. Aleksandr Klaskovsky discusses different sides of the teddy-bear scandal, its background and consequences.The journalist dismisses the version that the incident was planned by the European authorities, suggests that firing the two military generals was in Lukashenka’s plans anyway, and reaches the conclusion that the diplomatic war would have happened even without the teddy-bear scandal.
Lukashenka plays the Makey card. President Lukashenka has appointed the former head of Presidential administration Vladimir Makey as the new head of the Ministry of Foreign Affairs. Despite the fact that Makey is on the EU’s black list, experts see this step as an attempt to restart relations with Europe with a new person at the head of the diplomatic corps, and also release the pressure of strengthening geopolitical ties with Russia. But do relations between Belarus and Europe really depend on the figure of the Minister of Foreign Affairs? Meanwhile, the EU is going to work with Makey in the same way as it worked with Sergei Martynov, says the EU diplomacy head’s press-office representative Sebastien Braban.
The teddy bears turned out to be geopolitical bombs – Artyom Shraibman, an author from naviny.by, is analyzing how the teddy bear incident has triggered a serious geopolitical game between Russia and Belarus. The reporter implies that Russia will not hesitate to benefit from the upset of relations between Belarus and Europe, using it to deepen Belarus’ dependence on Russia as its only geopolitical partner left in the international arena.
BISS Trends for January-June 2012 are released. The report covers the following areas: political democratisation and liberalization; economic liberalisation; good governance and the rule of law; geopolitical orientation and cultural policy. While the first three remain mostly stagnant with few changes (e.g. few, though reversible, liberating measures implemented in the fiscal policy, while the old opaque privatisation schemes returned), in the geopolitical sphere noticeable progress has been traced in relations with Russia, while relations with Europe have deteriorated greatly. Last but not least, the cultural sphere demonstrates political polarization and a devaluation of the cultural product as itself.
NGOs and media
ACT presents the 2011 NGO sustainability index of Belarus. An assessment of the sustainability level of NGOs has been carried out in Belarus since 2000. Despite the fact that Belarus currently has the lowest position in the NGO sustainability index among 61 countries, experts point out the great resilience of Belarusian CSOs and their willingness to act. The legal environment and financial sustainability remain the most problematic areas for Belarusian CSOs, while organisational development is the strongest component.
First issue of the LawTrend Monitor is published. The Legal Transformation Centre has issued the first edition of the LawTrend Monitor magazine. The online publication, which is available in Russian and English, is dedicated to problems of freedom of assembly and fair trials in Belarus.
Two media realities: cause or consequence? – Journalist Andrei Alexandrov (mediakritika.by), on the basis of an analysis of state and independent news feeds and newspapers, captures the existence of two media realities which are created respectively by the state and independent media. "The different journalisms" in their focus provide different news and use different principles of information presentation. The expert is concerned about whether the two media realities are a natural by-product of a split society or its root cause.
Half of Belarusians want to leave the country. The recent opinion poll of IISEPS showed that half of the citizens of Belarus want to leave the country. Deutsche Welle interviewed experts who explained that the desire of Belarusians to leave the country is a result of low salaries. The majority of potential migrants would like to move to Germany.
Will Ales Bialiatski get a Nobel Prize? Andrei Eliseev tries to predict the chances of human rights activist Ales Bialiatski winning the Nobel Peace Prize. The expert notes that the list of nominees for the 2012 Nobel includes many famous personalities, but there are some positive factors that increase the chances of the Belarusian for the Award. In particular, chairman of the current Nobel Committee, Thorbjørn Jagland, knows Ales Bialiatski absentia quite well.
Governance and politics
The investment plans of the government have failed – Dmitry Zayats from Naviny.by presents an overview of the investing situation in Belarus in the first half of 2012, tracking the major investing sources and trends, analyzing their chances of fulfilling the government’s plans. In the article, the experts say that without any changes to the privatization policy and investment climate in the country, there should be no expectation of considerable economic growth.
Top 10 failed investment projects – TUT.BY analyses the most famous cases of failures of big projects with foreign investors in Belarus. The experts come to two obvious conclusions: half of the projects were the victims of a "bubble" that inflated before the global economic crisis, and the Belarusian authorities could not find a common language with other investors.
Government lobbyists do not have reform fever – Despite the deeply-rooted image of the sole ruler standing at the steering wheel of the country, some of the events which have taken place over the last two years in the politico-economic arena show that there are other internal forces close to the government that are able to influence the decision-making process in the country. Nikita Belyaev compares the Belarusian lobby with that of other Eastern European countries, explaining how these differences influence reform movements in the country.
Sergei Matskievich: authorities do not feel any responsibility for the country. Belarus Partisan interviewed the Chairman of the Working Group of the NGOs Assembly, Sergei Matskevich, on the following issues: why there is no "fresh blood" in civil and political activities; why official Minsk hinders the implementation of European programmes of the "Eastern Partnership" and "European Dialogue with Belarus", etc.
What will it take to get people out in the streets? – Tatiana Gurinovich from BISS explains the lack of protest potential in major groups of Belarusian society. The author suggests that the only solution to such situation is diminishing the role of the state in the economy and growth of private sector, which would lead to establishing a fair situation on the market and release it from the government’s control.
Belarus Digest prepared this overview on the basis of materials provided by Pact. This digest attempts to give a richer picture of the recent political and civil society events in Belarus. It often goes beyond the hot stories already available in English-language media.