Government seeks who to blame for the failure to meet GDP growth forecast

April 22, 2016 18:32

On June 14th, the government met to discuss socio-economic development performance in January-April 2013.

GDP growth pace in January-May 2013 slowed down to 101.1%, implying there are no chances to meet the GDP growth forecast for 2013. The negative economic situation forces government to consider who to blame for the economic failure. Under these circumstances, the probability of making controversial decisions which cannot improve the situation in the economy and make it worse, is increasing.

According to the National Statistics Committee, in January-May, GDP growth slowed down to 101.1% from 102.5% in January-April 2013. Industry is the main source of troubles in the Belarusian economy. In January – May 2013 production dropped by 3.5%. In May, the overall negative economic trends were complemented by a dramatic deterioration in the economic situation at Belaruskali – industry’s main driver in 2013. Belarus’ exports situation is not improving. As a result, the GDP growth forecast for 2013 will not be implemented.

Since the forecast will not be implemented, the government starts looking for a scapegoat. Industry explains the drop in production by external factors and expensive loans, the National Bank cannot lower the discount rate rapidly due to the potential increased demand for the national currency, which is undesirable because of the economy’s limited crediting opportunities. The Economy Ministry complains about poor diversification of Belarusian exports and proposes to set export plans using natural indicators. Instead of improving coordination among all ministries and agencies, the government starts looking who to blame for the economic failures by the year-end.

The situation affects coherence of managerial decision making. To unload warehouses, enterprises require greater independence to adjust their industrial production to meet the demand in different markets. The government ignores enterprises’ needs and requests them to reduce production stocks while increasing production. The National Bank is under pressure to lower loans’ interest rates, but that will increase the risks for the foreign exchange market and will reduce the growth rate for individual and business deposits. As a result, inflation will increase and gold reserves will drop. Simultaneously, everyone understands the importance of maintaining the international reserves at a certain level and is bound by the need to curb inflation.

The best option would be to abandon the GDP growth plan in favour of the balanced economic development. However, the president demands the forecast’s fulfillment, which may increase the negative trends in the economy.

Thus, the government is not focusing on mitigating the negative trends in the economy following downward trends in the foreign markets, but seeks who to blame and punish for the inevitable economic failures. Such attitudes strengthen crisis trends that may result in devaluation, as in 2009 and 2011.

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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.