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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Death penalty discussion in Belarus: yet not ready for either abolition or moratorium
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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.