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TELL ME, WISE MAN…

Similar to other research centers in Belarus and abroad, IISEPS is very interested in the country’s economic indicators which are reported to be improving. Employees of IISEPS have recently polled economic analysts. They are relatively few in Belarus and mostly based in ministries, research institutes, bigger newspapers and banks. All over the country, their number is slightly more than one hundred but, which is most important, the authorities listen to their opinions.

1. Failed again

Not all Belarusian economic analysts agreed to answer our questions although they did not concern politics. The pollsters were asked to evaluate various aspects of the economic situation in Belarus using a five-grade scale. Then the average grade was calculated. The average grade of Belarusian economic reforms was “2” although two experts believe that the situation is good and seven more respondents said it is satisfactory.

To understand why reforms have failed in Belarus so far, let’s consider the objects and subjects of the reform process. Obviously, the subject of reforms is the state which is closely associated with the government. The questioned experts, however, gave the government the average grade of 1.88.

The openness of them was evaluated by the respondents as 1.69 while three fourth of the respondents believe that bribing senior officials is wide-spread. However, governmental officials are trusted by the President. Thanks to his trust, they interfere with all matters and, according to more than one half of the experts polled, play the most important part in the country’s economic development.

2. Investment is a problem

The role of senior officials in the reform process seems to be contradictory. The pollsters believe that prices for goods and services are set by the state and the freedom of price formation in Belarus received the grade of 1.96. The government seems to have found a mysterious correlation between inflation and devaluation, so it spent a lot of energy on the regulation of the exchange rate of the Belarusian rouble. According to 85% of the respondents, trade and investment was seriously hit by the administrative regulation of the exchange rate. The financial policy of the government received 1.51.

The pollsters explained lack of investment in Belarus by hindrances to external trade and restrictions on imports. Interestingly, they evaluated the investment climate as bad while the government is at pains to attract investment to the country. The respondents gave the government’s efforts aimed at attracting investment the average grade of 1.39 and the restrictions for potential foreign investors received 1.63.

The grade for the state control in the field of investment was 2.29, governmental plans in the same field were evaluated at 1.35. The experts also noted that lack of capital significantly hampers Belarus’ economic development. The grades given to the privatization process of bigger and small enterprises were 1.27 and 2.33, respectively. Another conclusion inferred from the experts’ responses is that the number of competitors is not increasing while it is extremely difficult to open a new company, therefore the current policy on privatization is not conducive to the creation of a competitive environment.

3. We are not savages

According to the experts, most citizens of Belarus don’t have a feeling of security. They are also persuaded that the population’s attitude towards private business is rather negative and the number of those who would like to become private businessmen is decreasing. The understanding of market economy by the population was marked as 1.4, by state officials 1.67, by businessmen 2.5.

The experts believe that the population is more enthusiastic about the principles of market economy than its values (3.27) and the process of defining property rights is going through the earliest stage of its development (1.47). The pollsters say that the conditions for sustainable economic growth have not been created in Belarus and the general economic situation received only 1.4.

They gave the current fiscal system the grade of 1.61. The grade of the current fiscal policy was 1.49. The activities of the financial, banking and insurance companies were evaluated as 1.98 and the legal base for their functioning as 1.71. According to the experts, the current educational system is not good enough to satisfy the requirements of the economic development (2.49) and the gray economy may either hamper or help economic development as its grade was neutral – 3.0.

The economic situation, according to the pollsters, has worsened during the last year (1.88), the population’s living standards rather shrank (1.71) and no effective steps in the field of environmental protection were taken by the government during that period (1.94). The grade of the investment climate in Belarus was as low as 1.25. In this respect, Belarusian experts’ opinion is the same as that of their foreign colleagues.

Thanks to the opinion poll, we were able to find out the opinion of Belarusian economic experts 75% or more of whom gave clear answers to our questionnaire. Obviously, investment in Belarus is risky, therefore privatization is slow. Regulations on investment are constantly changed and private ownership of land has not yet been introduced. Taxes are high and the amount of money issued is too large.

The poll’s results also show that it’s the government who is responsible for current economic problems while the population has already understood that market relations are based on profits.

While the government is concerned about the state-run economy, the gray economy is developing expanding to other countries as Belarusian exports are not properly restricted. It would be too far, to call Belarusians savages of the XXI century, but one thing is obvious: in the nearest future, Belarusians will have to count only on their own strengths.

M. Zalessky, Ph. D.