How did 2016 begin for Belarus' economy?

How did 2016 begin for Belarus' economy?

Alexander Lukashenko demands that the government regroup in solving the tasks of socio-economic development of Belarus. On April 18, the head of state was presented a report on the results of the work of all sectors in Q1 2016. 

The event turned out to be really large-scale. 73 participants were sat in one of the largest halls of the Palace of Independence. These are chiefs of the National Bank, the Government, regional executive committees and the Minsk executive committee. 

Alexander Lukashenko, President of Belarus:
In the first quarter, we agreed to meet and listen to the reports of the Government, the National Bank and other officials on the implementation of the plans. The task matrix for the power vertical is on my desk: red means tasks that are not fulfilled and blue means successful figures and progress. Red not only prevails... The whole matrix is in red. I would like to hear an explanation in this regard. Everyone should have in front of their eyes this plan for the development for the forthcoming year. Therefore, please report to me how the plan was executed. If there were some problems, then tell me please about them.

The main outcome of the economic team's work will be known in the summer when a meeting will be held to decide whether the current economic team will continue work. 

Alexander Lukashenko:
We have identified some elements of our development and strategy, although two separate events will be dedicated to it this year. The first one is the message of the President of the Belarusian people and the Parliament. It will be brief and focus on this year, with some strategy elements. But most importantly - the All-Belarusian People's Assembly. During that assembly we will identify prospects for the next five years and beyond, taking into account our experience, achievements and shortcomings. In the past year, we agreed on the development of our country in 2016. Specific targets were set.

The government and the governors are usually to blame for the mistakes made in economic policy. But, according to the President, part of responsibility lies also with other highest officials. So if there is no result, then some personnel decisions will follow. 

Alexander Lukashenko:
We have such bad practice. If something is bad, then we blame the government. It is right. The government is the economic headquarters of our country. But we have 12 senior officials. Why do we need them? I want to say that if we don't show results, then you will be deprived of these offices. Prepare for retirement, whatever your age. This applies to everyone. Those to the left (No1, 2, 3, 5 and so on) and those to the right. Please do not take it as an offense.  Mr Myasnikovich and others, you have a quarter in order to regroup and show the corresponding results. If not, then other people will come to do it. So gather and act. If someone cannot pull off something, then make relevant suggestions. You will not be able to hide behind someone else.

Economic indicators are in the "red zone". Inflation for in Q1 was 5.7%. Moreover, in March it was less than 1%. The spring dynamics is a bit better.

Zhanna Kulakova, a financial analyst:
The National Bank is now actively pursuing a range of measures aimed at reducing inflation. This is primarily reflected in curbing the money supply. That is, we see that the amount of money in the economy is not growing. From the consumer point of view, maybe this is not very good because people cannot count on higher salaries but on the other hand, the purchasing power of salaries is kept because manufacturers and sellers do not increase prices.

Inflation in 2016 should not exceed 12%, according to plans. And the National Bank considers this task feasible.

Pavel Kallaur, chairman of the National Bank of the Republic of Belarus:
The government and the National Bank, using macroeconomic policy instruments and particularly monetary policy tools, will try to achieve the corresponding inflation projections - no more than 12%. And this will be the basis for improving the situation in the real economy.

Belarusian ruble is now floating, not fixed. The financial market is not in storm. Recently, the US currency became cheaper than BYR 20,000.

Belarusians have started to open more deposits in the national currency. During one month, the amount rose to BYR 400 billion. During the same time, investors withdrew only $10 million. In general, according to the Prime Minister, the economic situation is difficult but manageable. There is no growth but stability is still in place, without any foreign currency panic.

The main role in keeping the situation under control is given to the Presidential Administration. This is like a mission control center where operative information from government agencies flows. Thus, the whole vertical of power is involved in the process.

Alexander Lukashenko:
Once again I want to warn the President's Administration. All decisions are taken by me. Your job, as a political headquarters of the President, carrying out the main control over the work of structures subordinate to the President, is to clearly and unambiguously report what is happening and what we will do. Do not use red tape but don't miss any sensible proposals.

There are some sensible proposals on the part of Belarus' partners. Last week, in Turkey, the Vice-President of Indonesia told the Belarus leader how badly his country needs trucks and other equipment. Afghanistan is interested in Belarusian help to recover its economy. This is an untapped field for Belarusian exporters, who, according to the Prime Minister, need to forget about cheap loans. This is a very expensive load on the state.

Andrei Kobyakov:
Business entities should rationalize their production to the maximum, reduce costs in order to be competitive and to balance their financial reports. This is not easy work. Here, since the external factors remain complex and this situation will continue to persist, we need to do something else, not requiring low-cost loans and budget subsidies.

Nevertheless, the banking sector sees reserves to make loans in general more profitable. The following month, the National Bank of Belarus may once again lower the refinancing rate.