THE BELARUS ECONOMY: ARE THE CHICKENS COMING HOME TO ROOST?

Reports from Minsk suggest that economic conditions in Belarus are considerable less favorable than the official portrait of a booming recovery would suggest. Alyaksandr Bukhvostaw, a leader of the Independent Automobile and Agricultural Machine-Building Trade Union, was recently quoted in Belapan as saying that many Belarusan enterprises are in fact now at a standstill. (Belapan, May 3) According to Bukhvostaw, output at the Minsk Automobile Works fell by 17.5 percent in 1996, and work stoppages have become so common over the past three years that they are now negotiated in advance by labor and management. Bukhvostaw’s remarks were followed by news that meat shortages had prompted the Belarusan Agriculture Ministry to ban cattle and beef exports until October 1. (Belapan, May 5) The ministry also banned margarine and butter imports, apparently because Belarus’s newly-recreated central planning system has unexpectedly coughed up unplanned surpluses. Moreover, Russian press reports suggest that inflation in Belarus is beginning to spin out of control, largely because the government’s budget deficit is being financed almost completely by Belarusan National Bank credits.

Such accounts of economic disarray are difficult to reconcile with official reports that Belarus’s GDP at the end of the first quarter was 9 percent above the level recorded at the end of the first quarter of 1996 — said to be due, among other things, to a 9.8 percent increase in industrial production and a 13 percent increase in fixed investment (Interfax, April 18. This would be on top of the 3 percent growth in GDP and industrial production reported for 1996.) Instead, they suggest that the economic news provided for external consumption by the Lukashenka regime may be little more than disinformation.

Countries that are conducting IMF-approved stabilization programs are generally unable to get away with such chicanery, but the Fund’s decision to freeze a $300 million standby credit in 1996 removed this source of potential leverage over the Lukashenka regime’s economic policies. The unannounced and almost completely unreported visit of an IMF mission to Minsk on April 23-30 thus comes as something of a surprise. (Belapan, May 3) While no agreement was reached during the visit, the mission did discuss possible future cooperation with Prime Minister Syarhey Linh. The mission is apparently slated to return to Minsk in June.

The tight secrecy (maintained by both sides) surrounding the meeting suggests that the Lukashenka regime may be increasingly worried about Belarus’s economic problems, but is unwilling to permit any serious discussion of these problems before ratification of the union treaty with Russia later this month. The Fund, for its part, has kept its distance from the political controversies in Minsk, and may be waiting for more propitious conditions to renew a serious dialogue over economic policy. The timing of the June meeting suggests that the Belarusan government may be steeling itself for some unpleasant economic developments after the treaty’s ratification.

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