State aid unlikely to resolve problems with Belarusian economy

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September 18, 2017 10:58
Фото: Палата представителей Национального собрания Республики

Despite the overall economic recovery, some Belarusian industries continue to generate losses. Over the past ten years Belarus spent more than USD 2.5 billion on industrial modernisation, which boosted growth in production, but had no impact on its efficiency. High costs would prevent such industries from reporting profits by the year-end.

According to Belstat, as of August 1st, 2017, three industries reported losses. Namely, 34 woodworking enterprises of 121 with a total loss at BYN 118 million, which outpaced profits of other woodworking enterprises. Profitability of sales in the woodworking made some 0.8% and losses were attributed to due payments on modernisation loans. In addition, metallurgy and glass and cement plants were loss-making, too. Unprofitable enterprises took the lead in laying off workers across the country.

In previous years, the state invested more than EUR 1 billion in modernising the wood processing; more than USD 500 million in the key metallurgy enterprise, BMZ; some USD 1.2 billion in the cement industry, however they still require the state support. In 2016, BMZ reported over USD140 million in losses, all three cement plants were unprofitable, as well as most wood processing enterprises. That said, in 2017, exports in wood processing grew by 39%, in metallurgy by 30%, and at cement plants by 64% as compared with 2016. However, the growth in exports led to an increase in losses. High production costs are unlikely to enable these enterprises to report break-even production by the year-end, while reduced discount rate would be to no avail in repaying loans, since they were issued in foreign currency.

Overall, the growth in exports did not help metallurgy, woodworking and cement plants to report profits. The state would continue to provide state support for these industries, however it is unlikely to help overcoming losses in 2017.

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President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

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