President holds session to discuss current economic situation in Belarus

President of the Republic of Belarus Aleksandr Lukashenko is convinced that people's incomes will be as big as before the crisis. He made such a statement at the government session to discuss current economic situation in the country on 9 February.

Before the session the President met with Prime Minister Mikhail Myasnikovich who reported on the main results and activities. "They correspond to what we planned last year. The results are even better than we hoped," the President said.

Aleksandr Lukashenko noted that the coming months will show if the Government’s analysis of the situation and the measures undertaken were right.

However, according to the President, special attention is to be drawn to the problem of price growth, the situation with salaries, allowances, pensions, scholarships.

"The Prime Minister told me about the price growth and the increase in salaries at major enterprises. “I have emphasized the need to reach the pre-crisis level; there is no doubt that household incomes will be as big as before the crisis,” the head of state stressed.

Aleksandr Lukashenko, however, expressed concern about a significant difference in salaries at big enterprises. “I am concerned about the salary gap at major exporting companies: from $800 on the average at Belarusian Steel Works, oil refineries to $480 at Keramin, and so on, almost two times at the leading companies,” the head of state said.

“It is ok if this money has been earned. If companies fulfil their growth targets, not only consumption targets, I am fine with that, I do not mind them paying one thousand dollars or two thousand. However, if companies are not efficient enough, if they survive only through loans, salaries are not earned,” the President said. “Of course, salaries should be raised. Population income is not so big here on the average, especially in the public sector. We should learn from the recent financial crisis,” Aleksandr Lukashenko warned.

The President emphasized that the price rise needs to be carefully studied. “Although one of the priorities of the government is the fight against inflation, the inflation rate made about 2% in January 2012. A 0.9% growth in prices for alcohol and tobacco is no big deal. If people still want to smoke, they will find the money. Actually, tobacco and alcohol are cheaper in Belarus compared with other CIS member states. If not the price rise for these products, the inflation rate would stand at 1%. It is not bad,” the head of state believes.

“However, we cannot ignore the fact that food became 2-2.2% more expensive as against December,” the President said. He pointed to an appreciable price difference across various regions. In Brest Oblast, for example, milk became 0.3% cheaper, while in Gomel Oblast 5% more expensive. The price for potatoes grew by 3.5% on the average, while in Mogilev Oblast by almost 6%. “The same pertains to other products. Why so?” the President asked the attendees.

“If prices continue to rise at this pace, I am afraid we may go beyond the price growth band of 19%. We have projected inflation at 19-20%, but 13-15% will be better. Therefore, let us not lose sight of the issue,” said the head of state. He recalled that last year food prices increased almost 2.5 times, while wages fell by almost a quarter.

Another theme of the meeting, according to Aleksandr Lukashenko, is current problems caused by cold weather. “These are purely routine issues. But, as you can imagine, they are very important for ordinary people,” the head of state said.

In this respect the President made reference to the explosion in Logoisk District. Aleksandr Lukashenko said there are many examples of bungling incompetence in the country. “The recent explosion of a residential building in Logoisk District that destroyed an entire section of the house is an example. According to the Investigation Committee, it had nothing to do with the weather. Most likely it was caused by bungling incompetence of the people, who should be responsible for it. Gas is a serious business. Regardless of whether the apartment was locked or not, whether there was gas smell or not, they should have acted upon the report.”

The President stressed that the guilty ones will face the full rigor of the law.

He expressed interest in the operation of industrial enterprises, particularly in small towns, livestock farms, forage supplies, export of products. He also inquired about the progress in the implementation of his instruction to upgrade dairy farms. He recalled that this year 1,200 farms should come on stream after upgrade that was carried out using their own resources, which, in the opinion of the President, will be a breakthrough in the dairy industry.

The Prime Minister said that Belarus' budget and financial system posts surplus, the inflow of foreign currency exceeds its outflow. The foreign currency and deposit markets are stable; all targets and sources of financing have been approved.

The agricultural industry is developing. The issue of buying necessary amounts of fertilizers, fuels and lubricants has been solved. There are plans to build 105 new dairy farms; construction materials became 10% cheaper to facilitate the modernization of 1,200 existing farms.

According to the Prime Minister, the industrial growth rate made 106,3% in January 2012, while the target was 104-105%.

In 2011 revenues of the companies of the Belarusian Industry Ministry were equivalent to $1.3 billion as against $460 million in 2010. Oil refineries are stable. At big export oriented companies the purchase capacity of salaries almost reached the level of 2010. This level is justified. It was mostly reached due to higher labor productivity," Mikhail Myasnikovich noted.

As for the construction industry, the Government approved the list of the residential houses currently under construction and financed with preferential loans. For this purpose, the Government allocates Br7.5 trillion. In January Br488 billion was injected in home construction and infrastructure. “Lending is on schedule. By 20 February the regional authorities and Minsk City Hall will specify the lists of citizens who can qualify for the support of the state using the criteria established in Decree No. 13. All the loan contracts signed before the decree was adopted will be executed on previous terms and conditions,” Mikhail Myasnikovich informed.

The situation in the consumer market is stable. No fall in retail sale is expected in January, which attests that purchasing power is getting back on track. “The draft decree on anti-monopoly measures has been developed to counter profiteering in the domestic market. The document has been submitted to the head of state. It suggests tough measures for collusion and unjustified increase in prices,” Mikhail Myasnikovich said.

In general, the national economy started 2012 on a dynamic note. Revenues of the national budget in January 2012 made up Br6.4 trillion, or 7% of the target, which corresponds to the level of January 2011. All obligations were met in January in full, and the surplus of the national budget made up Br0.4 trillion in January.

Presidential aide Sergei Tkachev spoke about the interest policy in the banking sector and expensive credit resources. In his words, it is necessary to solve a number of issues in the construction industry. There are big differences in the size of salaries from region to region.

"As far as the interest rate and the refinancing rate are concerned, we are working in close contact with the National Bank. It is necessary to take into account all components in order to avoid the outflow of accounts. Within the recent two months the inflow of accounts in the foreign and national currencies was reported Thus, the deposit policy is attractive," the Prime Minister said.

Deputy Head of the Presidential Administration Andrei Tur drew attention to the need to elaborate a mechanism that would restrain producers from including excessive risks into the final price of a product. According to him, many of them overdo it, which is reflected in the final price of the product.

“I do not think that the Government does not see it. This is the most serious thing. We do not need to be afraid. We sometimes get too much focused on the theory or the requirements of some international funds. We need to think about our people. We see which companies produce such “overcharges”, and we are in a position to hold them responsible for that. Let us examine, see what happens at these enterprises. We need to pay attention to this, and to proceed from this,” the head of state said.

President of Belarus Aleksandr Lukashenko ordered the Government to develop a clear concept of the home construction lending within one month. “In a month the Government needs to have all issues resolved: home construction, large families, military. We need to have a clear intelligible concept as to who is eligible to preferential loans, who can qualify for social housing. After 8 March I want a report from you. We need to give the public a clear answer as to how we are going to act this and subsequent years,” the President said.

According to the President, the priority needs to be given to large families and military.