Business: Nobody knows how deep the crisis is in Belarus

• 28.12.2009, 10:26

The government hasn’t supported a number of market initiatives of the business. Businessmen state that the authorities cannot estimate the state of the economy realistically.

It concerns offers of the business-community to reduce payments to the Fund of social protection of the population, to repeal the unified wage rate scale for private enterprises and to widen use of free-of-control prices in the near future, BelTA was told by the deputy Economy Minister Andrei Tur.

As “Belorusskiye novosti” informed, the business-community offered to include these measures in the additional plan for liberalisation of the economy, which is being developed by the Economy Ministry now. According to representatives of the business community, these and other issues should be solved as soon as possible, as they are hindering work of enterprises and do not allow entrepreneurship to develop normally.

Rather many offers have been received, including the ones from business-associations, but “not all of them have a constructive character”, Andrei Tur said. An additional plan of liberalization, as said by him, includes “further stimulating of business and optimization of control activities”. However, he said he could not say exactly what activities would be included in it. The measures enumerated in the plan are planned to be implemented until the end of the first half of 2009.

In the memorandum of understanding signed with the International Monetary Fund, the Belarusian government admits that liberalization of the economy should become its priority. In particular, in 2009 the government committed itself to decrease tax burden for business, to decrease control over manufacturing enterprises, to speed up privatization.

Meanwhile, the government treats a number of initiatives of the business coolly, explaining that by the fact that enterprises have their interests; and the state also has its commitments to the population.

For instance, the issue of free price formation is uncomfortable for the state. The government is in no hurry to set free prices except the prices for socially important goods and goods of enterprises monopolists. The Economy Ministry believes that lifting limiting price indices since 2009 is rather a big step for the business, which would decrease document flow at the enterprises, save time for registration, calculation and reports. However, it had been done not on the initiative of the state, but after recommendations of the IMF. It was one of the conditions for receiving $2.5 billion stabilization loan.

But the state is not ready for quicker steps in this direction. “As long as economic preconditions are created, this work would be carried out on a staged basis considering the existing economic station, growth of real income of the population,” stated Deputy Economy Minister Uladzimir Adashkevich recently. Or in other words, by giving a possibility for free price formation, an avalanching price increase would take place, which cannot be allowed in the present situation.

However, the government is rather concerned not by liberalization, but by rescuing gross product forming enterprises. As said by Andrei Tur, additional measures for supporting main enterprises exporters, including by loans, are being worked out. Besides, the state is set to send at least 3.5 trillion Br for buying equipment for the internal market from the enterprises due redistribution of branch innovation funds. However, such a decision could not be called innovation. “Support for enterprises will be given, if they cannot sell so many items outside the country,” a chair of the “chamber of representatives” Uladzimir Andreichanka said on April 9.

According to Chairman of Kunyavski Business union of entrepreneurs and employees Ryhor Badzej, in order to overcome the crisis successfully, the state needs to cut down budget expenses and gradually decrease tax burden for enterprises. There are reserves and possibilities for that.

An analysis of the budget policy of recent years done by the business union shows that tax burden reduction is out of question. On the contrary, in 2008 it increased as compared with the previous years. Thus, consolidated budget revenues in last year increased by 36.7%, which is thrice higher than the GDP growth (10%). Besides, increase of tax burden is confirmed even when we look at the share of net tax income. In 2008 it was 36.3% of the GDP as compared with 35.6% in 2007 and 34% in 2006.

“In the conditions of announced liberalisation decrease of controlling agencies and controlling officials would be logical,” he noted. Expenses for the national economy should be treated with more attention. The expert believes that support of gross product manufacturing enterprises can give only transitory and momentary effect. “In the long run it could be a mistake, as nobody knows the depth of the crisis and the term of its overcoming. So it would be more reliable investment to support small and medium business, including innovation one. And very little is done in this direction so far ufortunately,” Ryhor Badzej said.

We remind that in January the government and the Presidential Administration adopted a joint plan for liberalization of economic conditions in 2009. Its measures, as told by Andrei Tur, were mostly planned for Q1. After summing up the results of the economy in January-March it would be decided what should be done in the next few weeks in order to improve the situation in the half a year in general, the deputy minister noted.