Updated at 18:12,15-06-2018

Lukashenkas administration top official: No hope for loans for Belarus, reforms needed

Stanislau Ivashkevich, Belsat.eu/en

The last rubicon of the Belarusian economy has been passed. The government has no other choice than to finally heed the advice of independent economists. Reforms are needed. And with them should come greater independence of enterprises and income growth. The plan sounds very optimistic. But what is the reality?

Belarus is entering a new five-year plan with the highest level of debt in its history. It means there is no much hope for foreign loans, but there is a need to carry out structural reforms. Thats what Deputy Head of Lukashenkas Administration Mikalai Snapkou said opening in Minsk a conference called Belarusian economy Another Choice.

As Mikalai Snapkou explained to Belsat, the planned structural reforms consist of two parts. The first one is to stop giving enterprises orders on gross production figures, but only set indicative ones optional for completion.

Planning for the state is difficult. Planning should be done within the business units, in the holdings and enterprises, which, in fact, are capable of forming a plan says Mikalay Snapkou, Deputy Head of Lukashenkas administration.

The result should be greater freedom of action for the public managers in the field, allowing them to work more efficiently based on the most profitable strategies for their businesses. According to the economist Syarhei Chaly, the adoption of this reform can be explained not so much by economic but rather by the bureaucratic logic.

They are facing a challenge. The following year, under the current parameters of the world economy, they will have to plan for a decline in GDP. In terms of policy planning, to plan a downturn is a cognitive dissonance for all, who must carry out those plans. Thats the only reason why the next year these plans are optional, explains Chaly.

Mikalai Snapkou, however, believes in the measure, and for it not to drown in the telephone talks, when policymakers informally set performance targets, he plans to make the directors of factories no longer subordinate to the officials who are engaged in macroeconomic forecasting and control. This is the second part of the structural change.

Separation of the state into an owner and regulator is not privatization. It is the separation of functions, responsibilities and activity areas stresses Mikalai Snapkou.

But independent experts fear that achieving a real separation of competencies in a situation where all the power belongs to one person is unrealistic. Syarhei Chaly also explains these changes by purely bureaucratic reasons.

It was found in recent years that the performance of the enterprises controlled by the Ministry of Industry is worse than the others. Therefore, not to answer these questions, we decided to take these companies out of subordination and call it a beautiful word, assures the economist Syarhei Chaly.

However, even these initial reforms seem to impress the World Bank, which thinks it is better than nothing and hopes that these steps will contribute to a profound change in Belarus in the future. Therefore, the authorities are trying to attach this institution as an ally to the negotiations with the International Monetary Fund a new multi-billion stabilization loan.

Three bodies: the government, the IMF and the World Bank need to sit down at a table and have to make a program that will not only achieve the indicators set by the IMF, but also to create economic space, which will allow to neutralize the social consequences of those indicators that will be required of us, said Mikalai Snopkou.

Will the IMF agree to give Belarus a new loan under these limited reforms? It may become clearer during the next IMF mission, which is expected later this month. Independent experts also fear that the described reform plan in reality is a purposeful imitation, because it is likely that the government understands that the underlying economic changes are impossible without the obviously unacceptable for them changes in the political system of governance.