Former Prime Minister Myasnikovich to ensure economic policy continuity by new government
A monitoring group led by former Prime Minister Vladimir Myasnikovich was set up in order to ensure continuity of social and economic policy by the Kobyakov’s government. The group is also a mechanism for coordinating interests of different nomenclature groups aiming to prevent misbalances in the management in the election year. Its task is to adjust the Government’s policy within the framework of the current socio-economic model in order to prevent economic destabilisation.
On February 26th, the president signed a decree establishing a monitoring group headed by Council of the Republic Chairman Mikhail Myasnikovich. The group was tasked to develop concrete proposals to address socio-economic issues in Belarus. The group’s decisions would become recommendations for the government.
Chairman of the Council of the Republic Myasnikovich outlined the monitoring group’s main objectives: to inform the population and workers about decisions made by the president and the government and to receive their feedback. In particular, Myasnikovich explained his vision of relations between people and the government: “We have a common cause. This work aims at the overall result – economic stabilisation and development”.
Recently, President Lukashenko criticised the new government and referred to the economic deterioration: “The industry is slowing down, stocks at warehouses are building up so as mutual non-payments. So far, measures undertaken to support exports have not worked out. And it all starts to affect people. Real incomes are not growing”. In January 2015, the average salary in Belarus decreased by 35% - from USD 620 to USD 400, as compared with January 2014.
The president also criticised the 2015 Government’s Action Plan. When Prime Minister Kobyakov presented the Plan in the Parliament, he tried to pre-empt accusations of the Plan envisaging "manual control" of the economy. Nevertheless, the Plan contains numerous opportunities for rapid intervention by the authorities aiming to prevent economic destabilisation. In fact, the government in 2015 has received a carte blanche to sustain current socio-economic development by short-term actions depending on the situation.
Interestingly, the Plan also contains some elements, which resemble preparatory steps to structural economic reforms. Most likely, these elements were added to the Plan in order to receive positive reviews from international creditors, such as the IMF, World Bank and other financial organisations. Despite everything, the authorities have not yet demonstrated the explicit desire to implement structural economic reforms, inter alia, reducing the state’s presence in the economy.
The authorities are willing to maintain financial and economic stability at people’s costs – by introducing new ‘taxation’ forms and by weakening social protection. If necessary, the government is ready to introduce measures aiming to raise additional budget revenues, reduce costs and prevent macroeconomic imbalances from accumulation. For instance, subsidised housing construction, which has always been one of the strongest pillars of Lukashenko’s socio-economic model, will be reduced by 30% in the election year. The authorities lack funds to increase people’s incomes in 2015, however, they will implement price control in order to support the current level of well-being.
In the year of presidential elections, the government will attempt to keep the balance between financial, economic and social stability. If external funding is not secured, the authorities might review their social policy and partially take away people’s proceeds to prevent economic destabilisation.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.