Kazakhstan is interested in the privatization of Belarusian assets
The Sovereign Wealth Fund “Samruk-Kazyna” JSC is interested in taking part in the privatization of Belarusian enterprises. The issues of bilateral trade, economic and investment cooperation are due to be discussed within the frameworks of an official visit of Nursultan Nazarbayev, President of the Republic of Kazakhstan, to Minsk on May, 12-14.
At the meeting with Deputy Prime Minister of Belarus Sergei Rumas May 10, the Chairman of the Board of the Sovereign Wealth Fund “Samruk-Kazyna” JSC, Umirzak Shukeyev announced that Kazakhstan is interested to take part in privatization of Belarusian enterprises.
Sergei Rumas invited to consider the possibilities of bilateral cooperation in several areas, including rail and road transport, logistics, industrial cooperation, etc. In particular, Kazakhstan shows deep interest in building a modern terminal in Belarus for the handling and storage of grain before its transportation to Europe. For its part, Belarus is ready to allocate land for the construction of this terminal.
The prospects of mutual economic cooperation will be discussed during the official visit of President of the Republic of Kazakhstan Nursultan Nazarbayev to Minsk on May, 12-14.
According to the National Statistics Committee, the volume of foreign trade between Belarus and Kazakhstan in the first quarter of 2012 increased as compared to the same period the previous year by 45.7% to USD 215 million. In the first quarter of 2012, the net outflow of foreign direct investment of Kazakhstan residents from Belarus amounted to USD 8,000, as compared to a net inflow of USD 206,900 in the first quarter of 2011.
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.