Updated at 23:19,25-10-2016

Will we go to shops like in museums?

16-11-2011, 00:28
Will we go to shops like in museums?

Aleksandr Lukashenka once again has ordered to stop prices. According to him, "in December we must finish everything, clean up and to rouse the people". The government till the end of the year should "curb" the inflation, as the head of state won't allow "to scoff at people and to stoop them down".

Lukashenka didn't explain how the authorities will fight with rising prices, which for 10 months of 2011 have amounted to 88.7%. It is even less clear how statements about beginning of the "crusade" against inflation relate to requirements of an increase in salaries in 2012 and the critic against "liberal experiments of Rumas-Myasnikovich", who proposed to reduce funding for state programs exactly in order to contain inflation in the next year.

UDF.BY asked the chairman of the Minsk Capital Union of Entrepreneurs and Employers Vladimir Karyagin and the head of Association of Small and Medium Business Sergey Balykin to clarify these questions.

"The economy doesn't allow shying. All necessary measures are contained in the president's Directive № 4. If what was declared is done, than we won't see such imbalances in the consumer and foreign exchange market, including inflation, as we don't see them in those countries, where there is a harmonious dialogue between business and government. The main troubles of economic policy now are an inconsistency and half-measures", Karyagin said in the interview to UDF.BY.

However, according to Balykin, the president can go by simpler and more usual way, known from the Soviet times.

"The inflation can be contained by administrative measures too. In order to do this, we simply have to issue a decree on freezing prices, and we will have zero inflation as in the USSR. The problem is, that it automatically leads to a total deficit and queues of many kilometers even for the most necessary commodities", the expert said.

President's statements that prices should be contained and at the same time to raise wages and provide GDP growth, according to interviewees of UDF.BY, looks like trying to sit on two chairs. Usually, such attempts lead to falling from both.

"The authorities appeared in a very unpleasant situation. For example, by "market" scenario the ruble money supply reduces, salaries are frozen, subsidies to the economy decrease, etc. It automatically hits the population, the most vulnerable class, that is, that of Lukashenka's electoral basis, - says Balykin, - If the old economic system of "overall welfare and prosperity" is saved and the rapid printing of money continues, then they are devaluing and transforming into simple pieces of paper. The faster the president distributes them, the faster they lose their value, and then the "pessimistic" forecast of the Economy Ministry on inflation of 218% in next year may be overfulfilled".

According to Karyagin, unreasonable wage increases outrunning the growth of labor productivity is particularly dangerous for the economy:

"Labor productivity growth in the coming year should outpace wages. One must live within one's means! If this is not done, we'll be dragged into a deep crisis threatening by default".

The expert notes, that it's hardly possible to give a forecast for total inflation in 2012. The reason lies in an extreme voluntarism and in an inconsistent economic policy, which depends "on solutions and understanding of a one man":

"At a time, when interventions in the government's actions occur, basing on certain political conjuncture, I can't give forecasts for inflation. Today there are no objective factors, but voluntarism and search for the guilty", Karyagin said.

"It's hard to tell what's going on in the mind of the head of state, - Balykin admits - Most likely, Lukashenka will seek to distribute the money, there are his ideas about justice. He can't do differently, because Lukashenka is a left populist in the highest degree".