Once again, we ponder form and content

[b]Belarus remains the only country in Eastern Europe where the state sector dominates the national economy, accounting for around 75 percent of GDP. Several years ago, this state ‘concentration’ aroused criticism from international experts. However, the crisis has made them re-evaluate. Unexpectedly, it has been beneficial for the state to be playing such a huge role in the economy, since it guarantees paying capacity[/b]Belarusian enterprises have seen foreign sales falling since autumn 2008. The country’s balance of payments has worsened as a result. To preserve macroeconomic stability and maintain the Belarusian rouble’s exchange rate, the Government and the National Bank have addressed foreign lenders. The republic’s gold and currency reserves have been expanded at the expense of funds from the International Monetary Fund. The IMF approved $3.52bn of financial assistance to Belarus in 2009 and experts are unanimous in their opinion that this sum could have been bigger.
Belarus remains the only country in Eastern Europe where the state sector dominates the national economy, accounting for around 75 percent of GDP. Several years ago, this state ‘concentration’ aroused criticism from international experts. However, the crisis has made them re-evaluate. Unexpectedly, it has been beneficial for the state to be playing such a huge role in the economy, since it guarantees paying capacity

Belarusian enterprises have seen foreign sales falling since autumn 2008. The country’s balance of payments has worsened as a result. To preserve macroeconomic stability and maintain the Belarusian rouble’s exchange rate, the Government and the National Bank have addressed foreign lenders. The republic’s gold and currency reserves have been expanded at the expense of funds from the International Monetary Fund. The IMF approved $3.52bn of financial assistance to Belarus in 2009 and experts are unanimous in their opinion that this sum could have been bigger. International organisations are confident in Minsk’s ability to repay it debts, so are more than willing to offer loans.
“Fifteen years have passed since Belarus first began negotiating with the IMF regarding stand-by credit. Since then, our country and its economy have seriously improved,” notes the Chairman of the Federation of Trade Unions of Belarus, Leonid Kozik. He headed the parliamentary commission on economic reform in the early 1990s and notes, “Today, we have money to pick up the tab, as the IMF can see.”
The Head of the Strategy Analytical Centre, economist Leonid Zaiko, shares
a similar opinion. “By giving money to Belarus and generating profit, international organisations are aware that the risk is negligible. The state owns almost the entire industrial complex, so it can always repay its debts. It could sell 70 percent of its enterprises if it needed to. Which other country can say such a thing? Not Russia, nor Ukraine. Only Belarus.”
Major privatisation is a trump card, held consciously by the Belarusian state. Selling enterprises under crisis conditions, even when prices are low, can generate dozens of billions of US dollars.
Should the Government part with highly profitable businesses — the ‘blue chips’ of the national economy, like oil processing plants, Belaruskali and the Belarusian Steel Works? They’ll remain under state control for the time being, being absent from the list of companies being prepared for privatisation. There’s no hurry to sell them. “Belarus has the lowest level of foreign debt, calculated in terms of population or GDP,” comments Mikhail Kovalev, the Dean of the Belarusian State University’s Economic Department. “Even taking into account the loans granted to us this year.”
The notion of ‘selling the family silver’ was much spoken of in early 2009 by politicians and economists but isn’t likely to happen. Belarus’ foreign debt is far from critical. According to IMF assessments, the country has emerged favourably from the recession. “Belarus has managed to survive the crisis quite painlessly,” asserts Natalia Kolyadina, an IMF Permanent Representative in Belarus. ‘A range of positive economic trends has been noted in November by the National Bank.
Of course, privatisation isn’t just a way for the state to meet its obligations. It also inspires further development of firms, driving innovation and modernisation — crucial for the future. New technologies, contemporary managerial instruments and financial investments are needed. The term ‘privatisation’ is often voiced by the Government and the National Bank, although accompanied by the word ‘pinpoint’.
“Speaking of whether it’s necessary to sell some enterprises, the simple answer is ‘yes’. However, the question is for how much?” noted President Lukashenko in October, during a meeting to discuss the opportunity to sell Belpromstroibank. The Belarusian President notes that major organisations from the West and East are keen to purchase large Belarusian state banks and other businesses.
Auditors differ in their estimates of the value of assets. Naturally, the state orients towards the highest while potential buyers prefer to use minimal figures. Reaching a compromise is no easy task.
Russian investors’ attempt to buy shares in Gomel Chemical Plant — Belarus’ only phosphorous fertiliser manufacturer — provide a good example. The initial offer of $110m was refused, noted Mr. Lukashenko — speaking to the editors of the Russian printed media in June in Minsk.
Meanwhile, 80 percent of shares in BeST- the state mobile operator —
have been sold to Turkish Turkcell telecommunications company for a price deemed beneficial to the Belarusian budget ($600m).
Besides agreeing a good price, investors are obliged to fulfil other terms — keeping jobs, modernising technology and maintaining the country’s major profile of work. The Belarusian Government is currently negotiating the sale of controlling shares in Minsk Watch Plant JSC with Swiss Franck Muller. Addressing the factory’s administration, the Belarusian President stressed that his main aim is to keep the plant operational, saving jobs and the ‘Luch’ brand. “We won’t agree to crippling terms,” warned Mr. Lukashenko, explaining that the sale is no goal in itself and that there are alternative measures being considered by the state, which plans to revive manufacturing. High-class managers from private companies could be attracted. “The state has the ability to pay good money to them,”
the President asserted.
Visiting Integral, President Lukashenko made it clear that decisions to privatise large enterprises will be considered individually, taking into account the advantages and disadvantages. “I’m not ready to sell this plant or to turn it into a joint stock company,” he noted, with good grounds. Around Br300bn of state investments (injected into submicron production at Integral) are yet to see a return. Mr. Lukashenko has warned Integral’s management that they shouldn’t expect any further state support. “We won’t support any company at the expense of the state budget,” he announced. State enterprises will need to tighten their belts, working under the same conditions as private firms (without support from the budget or privileged loan terms).
The Chairman of the National Bank Board, Piotr Prokopovich, emphasises, “Both private and state enterprises are going bankrupt worldwide The quality of management, rather than the form of ownership, is the most important factor.”

By Vitaly Volyanyuk
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