Powers of State Bodies Extended in the Order of State-owned Property, but Privatization of Main State Assets held by Lukashenko

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April 22, 2016 18:13

On June 4, President of Belarus Alexander Lukashenko signed Decree No 294 \"On the Order of Disposal of State-Owned Property\". The decree extends the powers of state bodies on order of disposal of state-owned property. Now the government will have right to alienate state property worth more than 10 thousand basic units and personal property worth more than 30 thousand basic units. Nevertheless, Lukashenko has left himself the right to take decisions on the alienation of shares of the main state assets.

The new decree extends the government’s authority, which will help motivate state bodies in carrying out the privatization of state movable and real property. It will also speed up corresponding privatization procedures. 

However, the President’s decree should not be overestimated. Firstly, the demand for state-owned property among foreign and local investors is still low. According to the State Property Committee of Belarus, in January-May 2012 no transactions for the sale of state-owned property to non-residents of Belarus had been made. In 2011, the sale of real state-owned property to foreign investors amounted to only USD 0.4 million.

Secondly, under the decree, Lukashenko has a right to decide on the privatization of shares of companies and state enterprises as property complexes. As of May 25 2012, on the list of joint stock companies with a stake of the Republic of Belarus in the authorized share capital are 787 open joint-stock companies (JSC). Please see Table 1 for the top ten enterprises with a state share.

Table 1

Rating of major Belarusian JSCs with government’s stake in the authorized share capital (excluding banks) 



Revenue in 2011,
USD, millions.

Average number of employees, people

Government’s stake, %







Mozyr oil processing plant




















Belarusian Autoworks















Gomeltransneft Druzhba





Minsk Motor Plant




1 –The calculation is based on the average weighted rate of the Belarusian ruble in 2011 - BYR 6075.94 per USD 1. (Our own estimation in view of the shadow segment of the foreign exchange market)


Thus, the main issues related to the privatization of state assets in Belarus will continue to be in the competence of the incumbent president. 

However, under the agreements with the EurAsEC Anti-Crisis Fund, during 2012 Belarus has to privatize state-owned assets worth at least USD 2.5 billion; in January-September 2012, the sum is to amount to not less than USD1.2 billion.

In order to increase privatization revenues, Belarus State Property Committee will hold first auctions in the current year to sell shares of 14 companies which investors find attractive. The actions are due in August. President will take a final decision on privatization of each plant which will be sold by auction or tender.

It should be pointed out that in the current year Belarus rejected its privatization plan for 2011-2013. At present, any company can be privatized on condition that there is a particular investor and a company’s market value has been estimated.

It can be assumed that in 2012 Belarus will fulfill the plan for privatization of state assets, mainly due to sale of shares of mobile operator MTS and the transfer of 75% minus 1 share of MAZ to a newly established Belarusian-Russian holding “Rosbelavto”. 

However, there is a negative point as well. Work on creating the IPO of the Belarusian Automobile Plant has been suspended due to political disagreements with the EU. Previously a German bank Deutsche Bank had been viewed as possible organiser of the IPO. In 2011 it refused to cooperate with the Belarusian authorities.

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

The rapid increase in wages has led to a decline in the ratio between labour productivity and real wages to one. Previously, the rule was that enterprises, in which the state owned more than 50% of shares in the founding capital, were not allowed increasing salaries if this ratio was equal to or less than one. The authorities are unlikely to be able to meet the wage growth requirement without long-term consequences for the economy. Hence, the government is likely to contain wage growth for the sake of economic growth.

According to Belstat, In January – August 2017, GDP growth was 1.6%. The economic revival has led to an increase in wages. In August, the average monthly wage was BYN 844.4 or USD 435, i.e. grew by 6.6% since early 2017, adjusted for inflation. This has reduced the ratio between labour productivity and real wages from 1.03 in January 2017 to 1 in the first seven months of 2017. This parameter should not be less than 1, otherwise, the economy starts accumulating imbalances.

The need for faster growth in labour productivity over wage growth was stated in Decree No 744 of July 31st, 2014. The decree enabled wages growth at state organizations and organizations with more than 50% of state-owned shares only if the ratio between growth in labour productivity and wages was higher than 1. Taking into account the state's share in the economy, this rule has had impact on most of the country's key enterprises. In 2013 -2014 wages grew rapidly, which resulted in devaluation in 2014-2015.

Faster wage growth as compared with growth in labour productivity carries a number of risks. Enterprises increase cost of wages, which subsequently leads to a decrease in the competitiveness of products on the domestic and foreign markets. In construction, wholesale, retail trade, and some other industries the growth rate of prime cost in 2017 outpaces the dynamics of revenue growth. This is likely to lead to a decrease in profits and a decrease in investments for further development. Amid wage growth, the population is likely to increase import consumption and reduce currency sales, which would reduce the National Bank's ability to repay foreign and domestic liabilities.

The Belarusian government is facing a dilemma – either to comply with the president’s requirement of a BYN 1000 monthly wage, which could lead to new economic imbalances and could further affect the national currency value, or to suspend the wage growth in order to retain the achieved economic results. That said, the first option bears a greater number of negative consequences for the nomenclature.

Overall, the rapid growth in wages no longer corresponds the pace of economic development. The government is likely to retain the economic growth and retrain further growth in wages. Staff reshuffles are unlikely to follow the failure to meet the wage growth requirement.

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