New government plans tough austerity measures

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April 22, 2016 19:04

The National Bank of Belarus has adopted a number of measures as a part of its monetary policy in order to stabilize Belarus’ financial situation. In the first days of January, the new government and the new team of the National Bank have managed to address the problems on the currency exchange market without social discontent growing. However, the measures adopted by the government and the National Bank have led to personal income freezing, or even falling, which goes against the traditional state policy of pumping up household income in the year of the presidential elections, which will have an adverse effect on the authorities’ popularity. In the future, this could lead to a contradiction between the actions and statements of the Executive Office of the President, government, and the National Bank, as well as to officials being increasingly criticised by the president.

President Lukashenko is trying to bring on board professionals who have proven to be relatively successful in managing crises on the currency exchange market within the current socio-economic model. Key staff changes within the government and the National Bank were made over the Christmas holiday period in order to soften the public’s reaction at a time when the population is concerned with the limitations on the currency exchange market. The head of state has not blamed the previous teams of the government and the National Bank for failures in the country’s socio-economic development. However, president Lukashenko has underlined his readiness to use “another reserve of personnel” after the election. 

Meanwhile, in early January the National Bank’s new management has managed to address the problems on the currency exchange market by carrying out another devaluation of the national currency by 26%, although originally there had been plans for a single currency exchange rate by February 1st. It is worth mentioning that the new head of the National Bank, Pavel Kalaur, has some experience in dealing with currency exchange crises, having worked at the National Bank for 17 years. It was precisely when Kalaur was a deputy head of the National Bank that a one-time devaluation of the national currency was held, and earlier, in 2000, he led a team which had a single currency exchange rate as its goal.

At the same time, the year of the presidential elections is usually a year when Belarusians see a significant growth in their personal income. But this time, the Belarusian state cannot guarantee such a growth (which was usually artificially created using domestic resources) without risking yet another currency devaluation. Despite the president’s statements on the need to increase personal income, the current government and the new team at the National Bank are picking up where the previous authorities left off, namely limiting the growth of the wages and sustaining the stability of the exchange rate. Introducing the new head of the National Bank, the president defined his duties: “The most important thing today is the stability of the national currency. We face a strategic task – to strengthen the trust of the population in the national currency – the Belarusian ruble.”

It is worth mentioning that since summer 2014, wage growth in Belarus has been de-facto frozen, and living standards even fell after the national currency was devalued by 30% at the start of this year. 

President Lukashenko continues to view the staffing policy as a basis for sharpening the current socio-economic model’s efficiency. The new head of the President’s Executive Office, Kosinets, underlines growth in performance discipline as the most important of his primary goals in his new office: “Discipline is the mother of victory. If there isn’t discipline, there won’t be a victory. That’s why there should be discipline everywhere. The heart of the problem lies in another thing. There are terms “strictness” and “humaneness”. Alongside strictness, there should also be humaneness.”

Most likely, during the year of the presidential elections, the government’s main objective will be to keep the population’s standards of living at an acceptable level by curbing inflation and price rises. The Belarusian authorities will continue to prop up the currency exchange market without changing the socio-economic model or carrying out structural reforms of the economy. In addition, official Minsk will step up the search for foreign borrowing which might provide a certain growth of personal income – but minus the risk of yet another devaluation.

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Image: BRSM.BY

President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.