The government is fighting inflation by increasing prices.

April 22, 2016 18:29

The National Statistics Committee reported 5.4% inflation in Q1 2013.

Devaluation is no longer behind the price increases. In Q1 2013 the main reason for the price growth was goods and services’ price regulation by the Economy Ministry. Quantitative plans for industries, widely practiced in the country, result in continuous price increases.

Consumer prices since March 2011 to March 2013 increased by 2.52 times. During the same period, national currency against currency basket depreciated by 2.75 times. At the same time, due to the spreading retail chains, particularly in the regions, and the increased competition in the food retail market, the prices should have had a downward trend. The number of products and services, which prices have not increased by the level of national currency depreciation, is negligible and declining.

Analysis of the price growth’s pace in Q1 2013 shows that prices grew faster for the goods and services, which are regulated by the Economy Ministry. This group includes tobacco, services of childcare facilities and public utilities. In 2012 public utilities tariffs and kindergarten services fees were not increasing as rapidly as other services’ costs due to their social importance. The government decided to hold back with increasing costs in this sphere, waiting for a favorable period, which may have been early 2013. Prices for alcohol and tobacco were increased due to Belarus’ commitment to harmonize excise duties on alcohol and tobacco with Russia, as well as for fiscal reasons. Alcohol is responsible for about 11% of the total retail turnover. Excise duty on alcohol and tobacco is one of the major sources of budget revenues, and when the economy is weak, it becomes one of the ways to compensate losses in other areas.

Another negative factor is the administrative management in the economy, which stimulates prices’ growth. In a market economy, when international economic situation deteriorates, an enterprise reduces dull goods production. But in a planned economy, the enterprise is forced to increase production for the sake of production plan implementation, illiquid products are sent to warehouses, costs increase, and output prices grow to compensate the increased costs. In addition the enterprise is restricted to carry out layoffs, therefore administrative wage growth results in inflated production costs and consequently in higher product’s final price.

Thus, the government becomes the main driver of the rising prices. If the government continues interfering in economic processes, competitiveness of Belarusian products may reduce not only in the international market, but also domestically.

Similar articles

Death penalty discussion in Belarus: yet not ready for either abolition or moratorium
September 18, 2017 10:43
Фота носіць ілюстрацыйны характар. Источник: Читать далее:

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.