Trying to achieve the impossible economic performance, the government might have the economic situation deteriorating
On April 23rd, the Council of Ministers Presidium summed up the socio-economic development performance in Q1 2013.
The original GDP growth plan has been overestimated and is not implemented. The economic situation, despite the GDP growth by 3.5%, is qualitatively worse. Administrative measures used to stimulate the GDP growth had only short-term impact, deteriorating the situation in the medium term.
In Q1 2013 GDP growth was 3.5%. The original GDP growth plan for 2013 at 8.5% was overestimated, as the economic performance shows. In Q2 2013 the economic growth will continue declining due to high baseline of 2012, when Belarus was carrying out innovative schemes.
The desire to fulfill the GDP growth forecast without taking into account the international economic situation has resulted in deterioration of quality indicators. In Q1 2013 the stocks were piling up and increased by more than BYR 10 trillion, already exceeding the growth for entire 2012. In addition, the actual volume of stocks is clearly understated, because part of the goods are shipped to dealer warehouses in Russia and do not show up in the statistics.
Accounts payable in March 2012 to February 2013 have increased by 33%, receivables - up to 40%. The share of overdue payments in the total amount of existing debt has increased. During the year foreign receivables increased by USD 1.5 billion, which implies there are problems with export sales. Net economic output in January-February 2013 decreased by 34.3%compared with the same period in 2012.
Methodological amendments to the economic indicators’ calculation made in 2013 enabled to show economic improvements, but their impact will be limited in time. Effects from increases in net taxes on products on GDP growth in January 2013 were 3.8 percentage points, but in Q1 2013 the GDP growth slowed down to 1.7 percentage points with a clear further downward trend. The growth of investment in fixed assets was due to the changes in the accounting methodology for construction and installation works and has local impact. The distortion of statistical data results in loss of understanding about the real state of affairs in the economy and prevents the ability to implement urgent measures to remedy the situation.
Thus, the desire to achieve the impossible economic performance by any means results in economic imbalances and deteriorates the quality indicators for both, individual companies and large industries. Nevertheless, the government will continue stimulating the economic growth, provoking economic crisis in the medium term.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.