Fall in oil prices prompt Belarusian government to lower 2015 economic development indices

April 22, 2016 19:02

The draft economic development forecast for 2015 presented by the Government on October 31st had to be revised as soon as the next month,.due to the lower oil prices and the further devaluation of the Russian ruble. If negative trends persist, the government might be prompted to revise GDP forecast for 2015 downward.

On October 31st, the Government presented the initial draft socio-economic development plan for 2015. GDP growth was projected at 2%. When calculating the forecast, the government assumed the average price on oil would be USD100/barrel and the average exchange rate RUR/USD at 39/1. On November 22nd, the government presented an updated version of the forecast with GDP growth at 0.5%. In the new draft, the oil price is at USD 83/barrel, and RUR/USD exchange rate is 43/1.

The government was prompted to revise the GDP forecast due to stagnation on the world oil market. The oversupply caused by a higher production of shale oil, among other factors, has led to a slump in oil prices. The OPEC countries have failed to agree on reducing oil production in order to reduce the supply, which should have increased oil prices. In Russia, the slumped oil prices, coupled with the western sanctions, have led to further devaluation of the Russian ruble. For Belarus, exports to Russia made up 42.4% of total exports in January- October 2014. The projected average annual RUR/USD exchange rate at 39/1 wasdeemed to be inflated, however, readjusting the average annual exchange rate upwards would imply a decline in foreign trade with Russia in dollar terms and a decrease in foreign currency proceeds in 2015.

The new draft forecast is also hardly feasible. Inflation forecast at 12% (December to December) is unrealistic due to cutbacks in state subsidised funding programmes and higher utility tariffs. Belarus has assumed that proceeds from export duties on oil products will be circa USD 1.9 billion and would be used to repay the public debt. Oil prices fell to USD 70/barrel, meaning that Belarus may earn less from export oil duties in 2015. The Russian rouble might strengthen only if oil prices go up again and if the West lifts its sanctions. Therefore, given the rapidly changing external situation, Belarus might readjust its 2015 forecast indices once again, projecting zero GDP growth. In the worst case scenario, the government might revise the GDP forecast and introduce negative GDP growth. 

The initial draft socio-economic development forecast disregarded the low oil prices factor. Since the Belarusian budget is highly dependent on this parameter, the government might come up with new forecasts with zero or negative GDP growth. 

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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.