Lukashenko’s toughens rhetoric regarding government to deflect citizen’s criticism
By toughening up rhetoric in relation to top officials and managers, President Lukashenko anticipates mobilising public officials and redirecting criticism from citizens. Meanwhile, President Lukashenko is not questioning the efficiency of Belarus’ economic model. The Government is unlikely to be dissolved as a result of the mid-year socio-economic review.
While visiting ‘Belaruskali’, President Lukashenko talked about potential personnel reshuffles in Belarus - from the government to top-managers at large enterprises.
After visiting ‘Belaruskali’, one of the largest exporters in Belarus which provides up to 30% of foreign exchange revenues, President Lukashenko announced plans to hold a reshuffle in the government and large state-owned enterprises: “if proper results are not achieved in the near future, we will reshuffle staff in the government and managers at large enterprises...”
After last year’s conflict between Ukralkali and Belaruskali, the latter managed to restore its production and exports. In Q1 2014, the company showed some growth, for instance, exports grew by 4.8% in value terms. The growth in foreign exchange proceeds was achieved due to a significant increase in physical exports – by almost 50%.
Other industrial giants, however, are not demonstrating a similar growth in exports. In January - May 2014, industrial production and agriculture continued to decline: by 1.3% and 4.3% respectively compared with 2013. Nevertheless, according to official reports, the government managed to ensure GDP growth by 1.5%.
The president underscored the need to ensure high-quality economic growth. And Economy Minister Snopkov said at the Council of Ministers’ meeting that decreasing inflation and devaluation expectations should be the key objective in 2015: "We believe it would be right not to stake on economic growth in 2015, since it is impossible to ensure performance of the two conflicting economic policy indicators - inflation and economic growth. In 2015, in order to balance out the economic situation, in our opinion, it is necessary to set inflation as a priority”. In addition, the president supported the Economy Ministry’s proposal to reduce funding of social programmes in favour of production.
It is worth noting that President Lukashenko voiced threats to dissolve the government back in Q1 2014. However, despite the government’s failure to meet GDP, production and export growth indicators, all senior government officials remained in their offices. So far, the government has managed to maintain macro-economic stability in the country and ensure some economic development, including keeping inflation-devaluation expectations of the population at bay.
It is unlikely that President Lukashenko will make major changes in the government before the presidential campaign starts in 2015. Radical changes in the government could have a negative impact on macro-economic stability and the stability of the national currency.
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.