Natalia Petkevich returns to presidential team

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April 22, 2016 17:47

The main reason behind the return of Petkevich back to a position in the President Lukashenko’s team is her awareness of the shadow rules of operation of the state agencies. Moreover, Petkevich might be useful as a consultant during a possible new round of a dialogue between Minsk and the West and international institutions.

On 1 September Lukashenko appointed former First Deputy Head of the Presidential Administration Natalia Petkevich as Aide to the President of Belarus.

Comment

The main reason behind the return of Petkevich back to a position in the President Lukashenko’s team is her awareness of the shadow rules of operation of the state agencies. Moreover, Petkevich might be useful as a consultant during a possible new round of a dialogue between Minsk and the West and international institutions.

Recently Petkevich spoke at a meeting of the Executive Committee of the Belarusian National Olympic Committee, where she had made emotional, frank and very critical comments about the unpublished rules of redistribution of funds received from donors by the NOC through its regional offices in Belarus. Being a leader of the Belarusian Federation of skiing and snowboarding, Petkevich is responsible for working with sponsors and knows the subject well.

Current appointment of ambitious Petkevich is a downgrade, compared with her previous position in the Presidential Administration however she is close enough to fall under better control and to mitigate the negative effect of the December resignation as Deputy Head of the PA. Moreover, Petkevich has experience in working with international agencies (particularly the UN) and could be useful while Minsk is looking for new partners in the West. In particular, on 1 September Reuters disseminated information about a meeting between Prime Minister of Bulgaria Nikolai Mladenov and President Lukashenko, during which they discussed the possibility of the release of some political prisoners.

This information has been confirmed by the press service of the Bulgarian Foreign Ministry however denied by the Bulgarian Embassy in Minsk. Also on 1 September 4 additional political prisoners were pardoned and released. Earlier nine political prisoners have been pardoned. All this proves the willingness of the authorities to approach closer to the EU and Washington. If this dialogue process fails, negotiations skills of Petkevich will be useful for the Belarusian authorities.

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

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.