Belarusian Government to preserve balance between reformists and managers

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April 22, 2016 19:38

The Government’s main strategy in the near future would be to seek loans in order to preserve the existing socio-economic model in somewhat curtailed form until the economic situation in Russia changes. Meanwhile, Belarusian society and government officials still hope for reforms, but there is no political will to carry them out. President Lukashenka is only likely to respond to the public demand for economic policy reforms, if there is an obvious demonstration of public discontent with the falling living standards amid a protracted crisis.

At a meeting on topical issues of socio-economic development, President Lukashenka has reappointed the Prime Minister and Deputy Prime Ministers.

After returning from Moscow, President Lukashenka has approved the new Government headed by Prime Minister Kobyakov and only minor changes in the composition. It took the President one month and a half after his inauguration to approve the new government.

The president does not seem to recognise the fact that the existing socio-economic model is in a crisis. In his inauguration speech, he blamed external factors for existing negative trends in the economy. That said, Prime Minister Kobyakov after his approval as the head of the Government, confirmed that the economic policy would not change and said that external factors were the main obstacles to economic growth. "So far, unfortunately, the environment at our major trading partners is not improving. There is no question, therefore, of any fundamental changes in the economic policy”, he said.

Accordingly, to improve the economic situation, the Belarusian Prime Minister proposed traditional Belarusian recipes - ‘bolstering the search for new markets, while not forgetting the traditional ones’ and ‘reducing production costs’. One of the main tasks for the new government is to find external funding sources, so as the external nature of ‘temporary difficulties’, according to the Belarusian government, requires external assistance to overcome them.

Some analysts believe, that Minsk and Brussels have already reached the limits of mutual concessions in their relations. Neither party is willing to make radical changes, which significantly reduces Belarus’ chances to receive a loan from the IMF. However, the Belarusian authorities are quite optimistic about the likelihood of getting a USD 2 billion loan through the Eurasia Foundation for Stabilization and Development if not this year, but early next year.

In addition, the fact that the composition of the Kobyakov-led Government has not changed, could imply that the president has not come up with a final decision regarding the country’s future socio-economic development. The president has preserved the balance between ‘good managers’ and supporters of market reforms. The president keeps ‘reformists’ in the government regardless of their critical attitude both, because of the need to attract external loans, and because most of his ‘soviet’ accomplices have already retired.

Meanwhile, according to a BISS research, the demand for changes in the economic policy remains high among all population groups, including public officials. However, different population groups have different views on reforms. For instance, a significant part of the population simply wants to return to the socio-economic model, which exited in the mid-2000s. A large part of society hopes to increase the state’s role in economic and social policies.

Overall, the government is focusing on carrying out the traditional conservative economic policy, i.e. wait for better times without structural reform. If needed, the government will refer the major role of market reforms supporters in the government and the National Bank in order to demonstrate readiness for reforms.

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