Inflation and prices
On 28 May the retail price of vodka increased by 10%, sugar by 40%. As of 1st June the price of tobacco and alcohol will be increased by 30%.
On 24 May the Belneftekhim Concern increased the retail prices of petroleum products by an average of 20%. The cost of petrol A-95 was set to approx. USD 0.9. It is anticipated that in the near future petroleum prices will rise again.
On 25 May international railway fares were raised. On 26 May the margins of selling prices of beef and pork were increased.
The Ministry of Economy has acknowledged that during the past 5 months the inflation could exceed 15%. Following the devaluation, the Ministry of Economy recalculated the annual inflation at 55-75% however following discussions in the government the forecast was lowered to 33%.
The official devaluation resulted in even higher prices. The increase of pensions from 1 June (on average by 13.7%), and of salaries of public sector workers, drags the country deeper into a spiral of “wages – prices”.
The next step is raising fares on public transport, gas, electricity and heat, followed by a slight increase in wages in the public sector. All this will heat up the flywheel of inflation and become an additional factor of growing USD rates. At the same time, the country still lacks the political will to tighten the monetary and fiscal policy (freezing salaries, suspension of activities and bankruptcy of enterprises, etc.).
The government’s unwillingness to acknowledge the unpleasant data and the economic consequences speak of their “coward” attitude.
The government experts consider the possibility of a moratorium on the actual accession of Belarus to the single economic space on 1 July 2011 as one of the solutions to curb inflation. They explain that in the case of lifting of the restrictions on mutual trade with the Customs Union member countries locally produced goods, particularly goods of social significance with regulated prices, will be “washed out” from the Belarusian market by “dealers” and immigrants from the neighboring countries because of the sheer disparity of prices (also increased by the devaluation). Belarus will face a problem of shortages of essential products with all the potential social consequences. Another negative effect of lifting the restrictions on mutual trade with the CU countries is that it will expose Belarus to the flow of imports, which could have painful consequences for some Belarusian industries (light industry, food industry).
Therefore it is likely that Belarus introduces such moratorium however at the moment Russia has leverage to prevent it.
The Belarusian authorities are attempting to strengthen some elements of the ‘Soviet’ education to ensure the ideological loyalty of new generations to the state. Most likely, one of the major tasks of the educational reform is to prevent growing discontent with the existing education system among the population. The educational reform aims to strengthen centralisation and adjust the system to the needs of the public sector.
In Belarus, the Ministry of Labour and Social Protection and the Ministry of Economy would determine the university enrolment figures.
The Belarusian authorities do not seem to have a long-term vision of the educational reform. The education system changes depending on who leads the Education Ministry and has access to President Lukashenka. For instance, former head of pro-government communist party and Education Minister Igor Karpenko reintroduced some "Soviet" elements to the school and strengthened ideological components along with the de-politicisation of the curricula. Current generation of students and youth have not spoken against the authorities, unlike previous generations raised during the Gorbachev thaw and socio-political transformations of the 1990s.
In addition, the Belarusian authorities are attempting to adopt measures aiming to prevent discontent among the population with the Belarusian education system. The authorities are mobilizing those nostalgic for the USSR and propose to return to 5-marks grading system, school uniforms and reduced curriculum. The Belarusian leadership also aims to blur the growing social stratification in society and to relax social tension due to the growing income gap between the richest and poorest.
Should the authorities adopt plans to reduce university enrolment, they would re-certify universities in order to close some of them and would reduce competition from private educational institutions. The Belarusian leadership is attempting to adjust the education system to the needs of the real economy, to reduce pressure on the labour market and to cut government spending on higher education for specialists low in demand by replacing them with graduates of secondary vocational schools requiring less time to train.