Economist: Russian Loan Won’t Help Lukashenka Already

The current “development” model and the people in power have exhausted all their possibilities.

It has been said in an interview to Salidarnasts by an economist, the leader of the project The Cost Of the Government Uladzimir Kavalkin, who answered the question for how long officials would be using their preferred draconian measures, in order to patch the holes in the budget.

– It is to be continued until they balance the budget, – the expert explained the situation. – In connection with the extreme decline in exports, especially exports to Russia (it is about 30%), the state should bring in balance state budget revenues and expenditures.

This is precisely why state officials are talking about reduction of spending on subsidizing the housing and utilities sector and construction sector, the expert says.

– There is no money, no inflow of foreign currency, as our flagship enterprises pay less taxes then before, – he notes. – Salaries do not increase either, that means that income tax collection rate is dropping. All these gaps must be filed somehow.

As said by the expert, the problem could have been solved by more effective actions, by structural reforms of the Belarusian economy, but Belarusian officials are doing things their own way.

– Sometimes their steps are very strange, like the tax on social parasitism, for example Uladzimir Kavalkin continues – As for the most recent changes concerning parcels, it is clear that in this way officials want to limit imports of goods, allegedly goods of poor quality, that are hindering development of the home industry. However it is obvious that the problem could not be solved this way, as people won’t start buying Belarusian goods, but are going to start bringing in these goods through Vilnius, Warsaw and Moscow, where there are no limitations.

According to the expert, all these measures won’t fill the gaps in the budget, which had been created due to decline in exports and the economic recession in Belarus:

– It is just going to enrage people, who will join the grey sector and the shadow economy, but the state won’t receive additional revenues to the budget out of that, on the contrary, it is going to lose.

As a result, the authorities would have to make further steps – to increase excise duties on oil products and alcoholic drinks, which would allow to replenish the budget at least a little, Uladzimir Kavalkin believes.

– It is unlikely to end even in case of receiving the Russian credit, as the reason is that the current economic development model and the people in power have exhausted all their possibilities.