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.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.