Government meeting to discuss economic matters
Belarusian President Aleksandr Lukashenko held a government meeting to discuss economic matters on 6 October.
The situation with prices was the key item of the meeting of the head of state with the government and the National Bank. At the macroeconomic level, this is called inflation, and at the microeconomic level, people feel it when they see prices rise in stores. In January-August of this year, the rate of inflation was 13.8%. The government expects the inflation in the country at 19%.
"The Council of Ministers and the National Bank should have responded to such high inflation with tough measures to restrain prices. I mean, 13-14% is no good at all. Those who should deal with inflation should have reacted,” the Belarusian leader stressed. "Rising prices negate all our efforts to raise wages and pensions." According to him, real incomes of the population fell below the level of last year, by about 3%.
"Real incomes of households, care for the people… Whose concern is it, except for the President? Yours, Natalya Ivanovna [chairwoman of the Council of the Republic Natalya Kochanova] and the House of Representatives," the President said. In his opinion, MPs have been underperforming in this regard so far.
"Today we need to thoroughly understand the causes of the current situation, both objective and subjective, and make a final decision. I expect effective proposals from the government and the National Bank to restrain price growth. The task number one is to ensure single-digit inflation next year (some 7-8%),” Aleksandr Lukashenko said.
There are objective factors that influence the price growth. Due to the thoughtless sanctions imposed by Western countries, the usual pattern of world trade has been disrupted, the President said. As a result, inflation rates are hitting records all over the world. “That means that rising prices and high inflation are not an invention of Belarus. The whole world is going crazy with this inflation,” said Aleksandr Lukashenko and named a number of examples. The growth of food prices in the United States has become the biggest one since 1979. The European Union set a record for the entire period of the single European currency (1 January 1999). In Estonia, annual inflation exceeds 25%; and it is above 20% in Latvia and Lithuania. “More is on the way,” the Belarusian leader added.
The head of state pointed to unjustified increase in prices by producers.
“It is fairly understandable why imported products became more expensive. However, what is the reason for the continuous growth in prices for domestic products made from domestic raw materials?” the President asked. “Prices for raw materials did not rise, prices for fuel (oil, gas, etc.) and other things that would always be a great concern for us did not rise either,” the President noted.
The President went on saying that food prices had risen by almost 13% since the beginning of the year. Prices are rising even for consumer staples, although MPs, trade unions and the State Control Committee were supposed to take care of price growth. “I have to intervene in the situation. It is already obvious that the government, trade unions, regional executive committees and the Minsk City Council, MPs, and the State Control Committee cannot cope with the overwhelming price growth,” Aleksandr Lukashenko said.
According to the President, the National Bank has an important role to play when it comes to pricing. “For some reason, importing companies continue hedging exchange rate risks by inflating prices, although the exchange rate of the Belarusian ruble is stable,” Aleksandr Lukashenko said.
The head of state believes that the National Bank is not doing enough to maintain the exchange rate of the Belarusian ruble. “The exchange rate factor has an impact on the price of goods that we have to import. So come to grips with this issue!” the Belarusian leader said.
“Unreasonable rise in prices for imported products should be punishable; a system [of control] should be established,” Aleksandr Lukashenko emphasized.
According to him, particular attention should be paid to critical imports. “Who imports these products and at what prices? What is the final price for these products when they reach store shelves? You need to have a close study of importers and eliminate speculations with imported goods,” the Belarusian leader said.
The President mentioned the problem of so-called unscrupulous mediation. “What is unscrupulous mediation at all? It should be clearly spelled out: there should be no mediation. No mediation at all,” said the Belarusian leader.
Talking about mediators in the sale of domestic products in foreign markets, producers should play the main role there. “If we sell a tractor outside the country, then if mediators sell it, MTZ should play the main role there, and not just give that tractor away to the mediator and take no care of what price this mediator sets in Russia or in China,” said the Belarusian leader. According to him, mediators and traders jack up prices throughout the entire sale chain.
“The government spends a lot of money from the budget, for example, to support agricultural producers in the form of cheap loans for processing enterprises, to create favorable conditions for retail facilities. Given all these measures, milk, bread, meat, cereals and other socially important products still continue to rise in price every month," the Belarusian leader said.
The head of state demanded that officials stop using the wording "socially important goods". "It should not be divided into important and unimportant," Aleksandr Lukashenko said, meaning that all products matter to people.
According to him, the situation is even worse with non-food items, the prices of which have risen by 18% since the beginning of the year. “If it is Adidas, Nike or Zara, then let it be so. If someone wants to buy this imported stuff at crazy prices, let them buy it. However, the prices for domestic footwear and clothing have risen, too,” the President said.
The head of state also mentioned some businessmen: “First, they raised the prices because of the increased exchange rate, and when our currency strengthened, they ‘forgot’ for some reason to lower the prices.”
“Did the governors with their offices of 300 employees, the government and the National Bank not see that? Did you not notice that? Why didn’t you take a look and do your best to restore justice?” Aleksandr Lukashenko asked.
“Speculators easily profit from disruptions in the supply chain. The State Control Committee has been reporting facts when apples, onions, beets and cabbage, grown by our agricultural enterprises, are bought from mediators with a 300% markup!” the President said. Aleksandr Lukashenko demanded the officials to solve the issue.
The head of state said that he knows about the practice of bypassing the anti-inflationary legislation by raising prices of goods under the guise of new products. This is when, for example, a well-known product appears on the shelves, but with some minor additions and at a higher price. Often such “metamorphoses” happen to bread, milk, meat and poultry. “You see, there was bread and chicken, and all of a sudden there is a new product! Chicken parts are packaged and here it is – a new product,” Aleksandr Lukashenko remarked ironically. “And people are forced to buy the same products at a higher price. This is nonsense! A whole chicken costs Br2 for instance and a chicken in parts – Br5. Why is a two or threefold increase in the price? Is it because you have cut it?” he added.
“Don’t the agriculture and food minister, the deputy prime minister, and trade see that?” the President asked. Aleksandr Lukashenko demanded effective measures from all responsible officials: ministries of trade, agriculture and food, regional authorities, State Control Committee, trade unions, and MPs.
"The shelves should offer goods of high quality, in a wide range and at fair prices. The so-called new products, if any, should differ from the old ones in their consumer qualities,” the Belarusian leader stressed.
“We do not have and will not have a shortage of goods. I promise this to people. You and other people in charge of prices will face tough punishment if you fail,” the head of state said addressing the officials.
The President urged to maintain a reasonable balance in society, including when it comes to household income. For many years, Aleksandr Lukashenko’s main requirement was a fair attitude towards people.
In this regard, the head of state mentioned his recent meeting with the military where he discussed in detail the country’s security and the role of the military in this. The military must stand ready to fulfill their military duty anytime. However, if you look at their living standards, you will see that they are not as well-off as, for example, people working in trade.
“And what do the military have? Do they get an apartment in time? Do they earn an insane amount of money? Do their children have a lavish lifestyle?” Aleksandr Lukashenko asked rhetorically. “Now look at sellers. They take the money they make here out of the country. They have palaces, mansions abroad. Are these traders, intermediaries and others a special class now?” the President asked.
The President is convinced that in such a manageable compact country as Belarus, the power vertical is absolutely capable of restoring order and ensuring a fair treatment of people by the state and supporting and helping those who need it.
Aleksandr Lukashenko asked officials in charge to report on the state of things in retail and the situation with consumer prices: “What are the causes of high inflation? What needs to be done to curb price growth and protect people and their incomes? The government and the National Bank should present specific reports listing measures to stabilize prices, especially for Belarusian goods where it is possible to trace the entire price formation chain from raw materials to price tag on the store shelf. How are you going to control prices for imported goods and operation of the retail sector?”
Chairwoman of the Belarusian National Statistical Committee Inna Medvedeva proposed to introduce price controls along the entire chain.
"Prices for food contributed a third to the inflation since the beginning of the year. Prices for domestic food products rose the most," she said.
The rise in food prices in retail chains, she said, was due to higher prices along the entire chain, starting from agricultural producers and ending with retail.
"The main reason for the increase in prices, according to manufacturers, was the rise in prices for raw materials and fuels. A significant dependence of some manufactures on imports, for example, confectionery, leads to a significant impact of the currency exchange rates on the cost of products and a direct dependence on the prices for raw materials set by suppliers. In addition, prices in the domestic market are influenced by the cost of food on the world market and neighboring markets," Inna Medvedeva stated.
Commodity producers have found a loophole that allows them to raise prices and circumvent the anti-inflationary legislation. They supply traditional products to stores under the guise of new ones, setting higher prices for them.
“We believe it is advisable to establish state regulation of prices for business entities, from producers to retail chains, to prohibit the registration of new products with little change in their consumer properties, to develop a clear system for price setting for seasonal products, especially for greenhouses, in order to prevent the growth of prices in annual terms and to smooth out seasonal fluctuations, to develop a mechanism for recalculation of the cost of imported products for all importers,” the head of the Belarusian Statistics Committee said.
Chairman of the House of Representatives of the National Assembly Vladimir Andreichenko informed the President about the results of the monitoring of food prices conducted by MPs. He told the head of state how prices for fruits and vegetables are sometimes formed. According to Vladimir Andreichenko, apples are sold in retail chains at Br2-3.5 per kilogram. Private farmsteads sell apples at Br0.8 per kilogram. Apples to be processed are bought at Br0.2 kopecks.
“It is not just about apples. This pertains to cucumbers, tomatoes, and so on. Our people should be able to earn money from what they grow on their land and sell products to Belkoopsoyuz without leaving their yard. Today we are mulling over plans to launch a new enterprise in each district. This is absolutely right. However, there was a time when almost every district capital had its own processing facilities that used local raw materials. I think that time has come, primarily for Belkoopsoyuz, to revive these good traditions, which will also help resolve the employment issue in the countryside,” Vladimir Andreichenko suggested.
“Starting from tomorrow you personally and MPs will take the work of consumer cooperatives under special control. And you will help Leonid Zayats [deputy prime minister] with this work,” Aleksandr Lukashenko said.
First Deputy Prime Minister Nikolai Snopkov expressed an ambiguous point of view that inflation always accompanies economic growth. According to him, over the past 10 years (from 2012 to 2021), the average inflation rate was 11%. At the same time, the average annual economic growth was only 0.7%. Earlier, in the period from 2002 to 2011, the inflation was above 20%, real GDP growth was 7.5%, real wage growth - 10.3%. "The main task is economic growth. This is even more important than inflation spikes," Nikolai Snopkov said. According to him, the increase in prices for 75% of goods, which are goods of daily consumer demand, is less than 10%. "We really did try to restrain the inflation," the first deputy prime minister added. However, he acknowledged that not all reserves were used.
The President believes that inflation should not necessarily accompany economic growth: why do we need economic growth that leads to the impoverishment of people? Especially in a situation when there is no growth of salaries and income. Aleksandr Lukashenko stressed that the current growth of prices in the country was unreasonable in many cases and there were reserves to prevent it.
“We have stopped the decline in household incomes. Keeping in mind the tasks we have set for all government agencies, we can see that in December we will reach the real wage growth. There are reserves for that,” said Nikolai Snopkov.
According to the first deputy prime minister, one of the factors affecting the increase in the cost of goods is the openness of the Belarusian economy and the disparity of prices: many producers want to export goods to Russia where prices are higher.
The head of state reasonably remarked that the government should act in the interests of its own people. “You are the first deputy prime minister in Belarus, not in Russia. You need to feed the Belarusian people first. We have everything for that if we speak about our agriculture and farmers,” he said.
Following the meeting, the President announced his decision: "From 6 October any increase in prices is prohibited. Forbidden! From today. Not from tomorrow, but from today. So that they do not inflate prices over the day. Therefore, from today, price increases are prohibited. God forbid someone decides to raise prices or do some indexation retroactively."
However, Aleksandr Lukashenko noted that there may be exceptions for certain commodity positions and named the people who will be authorized to make such decisions. "Such decisions can be made by the Minister of Antimonopoly Regulation and Trade, governors and Minsk mayor. Without their permission, no price may be risen over today’s level," the head of state ordered.
He explained why he opted for such a strong-willed decision: "Because prices surged excessively at one point, about which the prime minister reported to us. But they still continued to grow. They rose by the same amount. Prices are exorbitant today. They hit the ceiling. Prices cannot be raised anywhere. There is no need for that. Yet there may be exceptions. These exceptions are under the control of the minister and the governors. That's it."
Aleksandr Lukashenko also warned against any closures and attempts to leave the market. “You will be held responsible for any store or facility closing or leaving the market,” the Belarusian leader said.
He instructed the prosecutor general and the chairman of the State Control Committee to monitor the fulfillment of these instructions and to take tough decisions regarding violators. “Immediate detention and criminal proceedings,” he said. “The prosecutor and the State Control Committee will determine what to do with anyone who violates my instructions, who contributes to any violations, or who just takes no notice of them,” the head of state said.
Aleksandr Lukashenko noted that Chairwoman of the Council of the Republic Natalya Kochanova was instructed to prepare the current meeting together with a group of other officials. They will have to promptly submit proposals to the government on measures to regulate prices in Belarus. “This group, headed by Kochanova, includes Gerasimov, Andreichenko, Orda, Medvedeva [heads of the State Control Committee, House of Representatives, Federation of Trade Unions, Belarusian Statistics Committee]. Invite any experts and work out a plan [of measures to regulate prices]. Submit it to the government. The government shall make a decision by 20 October 2022,” the President said.
He asked to report to him immediately if there are any doubts regarding a possible deficit.
Addressing First Deputy Prime Minister Nikolai Snopkov, Aleksandr Lukashenko advised to find ways to lower prices. “You better find ways to lower the prices,” he said.
At the end of the meeting the head of state stressed that agricultural works should be completed in time.
“The fall ploughing of the last hectare of land will mean the end of the agricultural year. Fall ploughing should be done in the same fashion as last year,” the head of state demanded.
He noted that even today experts say that last year’s good harvest was achieved, among other things, due to increased attention to this issue.
Yet, there are other areas where additional efforts are required. “The most dangerous thing today is to fail to complete the sowing of winter crops that will make the next year’s harvest,” the Belarusian leader said. “Get things going. We need to finish sowing. This is the main thing. The second thing is to harvest corn that will be used for grain. This is the second issue that requires immediate action. Naturally, someone has not finished harvesting potatoes or flax, or sugar beets,” the Belarusian leader said.
Speaking about potato harvesting, the President expressed confidence that there will be no problems here, as the work is already on the home stretch. Yet, flax harvesting remains a matter of concern. “If it overstays, it will be rotten,” he warned. He noted that linen products are in great demand.
“And you don’t have to take it far. Russia is nearby. They need everything. You can earn this money just across the border. But we need to mobilize, to get united in order to meet consumer needs in Belarus and to earn,” the head of state said.