Economy: The lingering recession

January 03, 2017 11:56

Amid fewer benefits from economic cooperation with Russia, the main trend in 2016 was a large-scale revision of the financial support to different economic sectors due to insufficient budget revenues.

Due to the decline in social transfers (the share of state subsidies for housing and utility services reduced from 51.5% to 40% by late 2016), reduced soft loans for housing construction and slow wage growth, the population in 2016 started spending their currency savings.

The population became a major currency donor by selling USD 1.8 billion on a net basis.

Thanks to this, two tranches from the EEU and sales of currency bonds, the National Bank and the Finance Ministry made due internal and public debt payments in full.

By reducing administrative lending, Belarus stabilised the national currency, however, in the absence of cheap corporate loans, the volume of overdue debs on corporate loans increased dramatically - the share of problem assets in banks’ balance sheets increased from 6.8% to 14.9%, creating the preconditions for a crisis in the banking system. In order to address the problem with debts in agriculture, the government established the Asset Management Agency, aimed to clear the banks' balance sheets from bad loans of agricultural organisations. Consistently insolvent enterprises will be closed through the court.

Amid deteriorating price situation on foreign markets for Belarusian goods, the oil and gas dispute between Belarus and Russia had an additional negative impact on the economy. Russia unilaterally cut the monthly supply of oil from 2 million tons to 1.03 million tons, which resulted in reduced oil processing, industrial slowdown and decreased wholesale trade by 10%.

The economic result of the year was the abandonment of quantitative performance indicators, the decision on the financial restructuring of agriculture, and the shift of financial consequences of the economic crisis onto the population by reducing social payments and benefits.

In 2017, the government’s main task would be to hold a financial audit at public enterprises with subsequent layoffs, to adopt measures preventing the banking crisis and to search for new and additional sources of financing to service the public debt. Amid further cuts in financial aid from Russia, some social and economic reforms could be held in Belarus.

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Belarusian authorities resume political cycle: repressions follow liberalisation
March 27, 2017 10:42
Фото: Vasily Fedosenko/Reuters

The Belarusian authorities have revived the cyclical political agenda, including preventive crackdown with the use of force during the Freedom Day rally in Minsk and a loyal attitude to the participants in the opposition events in the regions. The protest rally in Minsk has evidenced that the Belarusian society has freed from the post-Maidan syndrome and showed high self-organisation capacity during the event in the absence of opposition leaders. In the future, the authorities are likely to expand the framework for sanctioned and legal activity for the moderate opposition in order to reduce the potential for street protests.

The Freedom Day march in Minsk on March 25th, 2017 was marked by unprecedented and brutal detentions before and during the event.

The Belarusian leadership has managed to stretch in time the political cycle - liberalization followed by repressions - and move beyond the electoral campaigns. Simultaneously, Minsk has demonstrated a rather high mobilisation potential under political slogans, despite the pressure from the state media and security forces before and during Freedom Day, including the presence of armed officers and new special equipment to disperse demonstrations in the streets of Minsk. That said, in other towns (Vitebsk, Gomel, Brest and Grodno) the Freedom Day march led by the opposition, was sanctioned by the local authorities (except Vitebsk), albeit there were fewer participants than in February and March protests against the decree on social dependants.

The Belarusian leadership has depersonalised (removed leaders) the protest, preventively weakened the protest movement, and has not opted for the harsh crackdown like in 2010 with many injured and hundreds arrested. For instance, some party leaders were preventively arrested or detained (Lebedko, Rymashevsky, Gubarevich, Neklyaev, Logvinets, Severinets) before the event. Nikolai Statkevich has disappeared and his whereabouts are currently unknown. Some could not pass through the police cordons (Yanukevich and Kostusev) or participated in the rallies in the regions (Dmitriev, Korotkevich and Milinkevich).

Despite the lack of protest leaders, some demonstrators managed to self-organize and march down the Minsk centre. The march was unauthorised but gathered several thousand participants. Many were detained by the law enforcement and later released without charges. In addition, the Belarusian law enforcers used some tactics of the western riot police against peaceful protesters, allegedly in order to mitigate the criticism from Western capitals.

Nevertheless, the Belarusian authorities have used the entire set of propaganda and power mechanisms applied during the highly politicised 2006 and 2010 elections - criminal prosecution of the opposition leaders, preventive detentions and arrests of activists, harsh propaganda campaign in the state media and, finally, the crackdown on the protest action in Minsk with the use of force.

Overall, the mobilisation potential of the Belarusian society remains high and the authorities are likely to expand the legal framework for public participation in politics in order to absorb superfluous tension.