Ability to avoid ‘shock therapy’ deserves respect
By Vladimir Vasiliev
Those present at the meeting compared it with an examination at which PM Mikhail Myasnikovich and his team actually defended their proposals to the President. Of course, the main test lies ahead, when the Government’s ‘balanced development of the economy’ will be judged. As Alexander Lukashenko insists, the economy ‘should be balanced with people’s interests’.
Beforehand, the President had made some general comments. “I’m seriously worried by the fact that the Government is so addicted to market reform, trying — as I think due miscomprehension — to change policy and programme aims adopted at the 4th All-Belarus People’s Assembly,” he stressed. “The ‘shock therapy’, which we experienced back in the 1990s and which burnt our fingers, and those of our neighbours, is inappropriate today.”
The Government and the National Bank took the President’s critique into consideration in redrafting their proposals for the meeting. Initially, the Council of Ministers forecast GDP growth of 101-101.5 percent for 2012 but this has now been revised to 105-105.5 — as Mr. Lukashenko believes economic growth to have reached this pace. The Government aims to ensure the required GDP while paying attention to other important indicators: primarily inflation.
This year, the growth of prices surpassed 100 percent but is set to fall to 19-22 percent next year. Real incomes (taking into account inflation) are to rise by 3-3.5 percent. Speaking on this topic, which is of major public concern, the President noted, “Putting aside the established practice of price regulation and other economic processes, we’ve seen negative results and serious problems. We need to spend additional energy and money on solving this.”
Mr. Lukashenko expects that the Council of Ministers will apply a step-by-step strategy to fight inflation — to be ready by no later than mid-December, when the final major macroeconomic parameters will have been approved.
The President’s meeting with the Government continued behind closed doors but the Presidential Press Service shared some of the details. Mr. Lukashenko highlighted several important issues — especially the import-substitution process, which he believes should be strengthened, to improve the country’s balance of payments.
Much attention was also paid to monetary-credit policy, with the National Bank’s Chair — Nadezhda Yermakova — stating that there is no need to ‘pump’ the economy with ‘empty’ monetary emissions. Nobody argued, as conclusions can be drawn from past experience. Ms. Yermakova insists on strict control over how banking loans are spent (as some have been diverted from their intended purpose in the past).
The President believes that financial discipline must be enhanced, while greater control over credit spending. He also calls for strict staff management, with greater control over unsuccessful senior managers who may merely change their executive positions. He asserts that mistakes relating to management could generate huge losses now.
Mr. Lukashenko has recommended that the Administration’s economic staff refrain from taking on the obligations of the Government. If Mr. Myasnikovich and his ministers have defined proposals, they must know what they are doing. The Government is responsible for future results while the Administration should control whether these comply with plans.