Belarusian government will not subsidise most hopelessly unprofitable enterprises in 2016
In 2015, 27 bankruptcy cases were launched in respect of enterprises crucial for the economy. Due to the deteriorated economic situation, in 2015 one in five enterprises was loss making. Budget deficit is likely to change the state policy regarding the support for insolvent enterprises, and more than 50 enterprises may be added to the list of bankrupts in 2016. According to the Supreme Court, as of January 1st, 2015, Belarusian economic courts started 70 insolvency cases in respect of companies that are important for the economy. On January 1st, 2015 there were only 43 of such cases. In December 2015 alone, five more enterprises filed bankruptcy cases and one of the eight largest alcohol distilleries is preparing to file a bankruptcy suit (Mozyr alcohol distillery). Bankruptcies have grown in number due to the deterioration in the economy. In January-November 2015, one in five enterprises in the country was losing money, and the amount of losses in comparison with 2014 has increased by 2.3 times. In agriculture, without the state support, more than 65% of enterprises are loss making. Cement producers have become completely unprofitable, the excise on alcohol policy has severely deteriorated financial health of enterprises in the industry and two producers of alcoholic products may become bankrupts. Only thanks to significant financial injections, such major engineering giants as MAZ, MTZ and Gomselmash are still afloat. Metallurgy enterprises require financial assistance too. In 2016, the state support policy for state enterprises is likely to change. The main reason behind this decision is austerity measures amid anticipated budgetary deficit. Since oil prices fell below those projected in the state budget plan and due to the devaluation of the national currency, the government will require additional resources to make the public debt payments. In addition, yet another planned source of budgetary proceeds – export duties on oil products – is unlikely to raise USD 1.1 billion, which would also require sequestration of budget expenditures. Funds allocated to support the economy and subsidise interest rate on loans is a budget line, which is likely to be substantially revised downward. The state will focus on supporting only the key enterprises of major socio-economic importance to the country, small businesses may be subject to readjustment process, and the number of state-owned enterprises that may file for bankruptcy is likely to exceed 50 by late 2016. Overall, economic recession in 2015 led to a growth in number of state enterprises to undergo financial recovery procedure. Given the limited budgetary potential in 2016, support for loss-making enterprises will be curtailed, which will lead to the bankruptcy of 50 or more enterprises not having crucial importance for the economy.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.