OREANDA-NEWS. February 03, 2011. The standards of living in Belarus should reach Europe’s average performance, Prime Minister of Belarus Mikhail Myasnikovich said at the Council of Ministers’ session on the draft social and economic development program for 2011-2015 and the government’s action plan for 2011-2015.

“All the programs and relative efforts should be aimed at securing the European average standards of living in Belarus as it has been done in Poland and the Czech Republic. The implementation of these programs will produce the desired result,” Mikhail Myasnikovich said. So far Belarus is lagging behind other states twice as much in the key areas, the Prime Minister stressed.

As regards the draft social and economic development program for 2011-2015 and the government’s draft action plan for 2011-2015, Mikhail Myasnikovich stressed that the tasks they contain are “very difficult to fulfill”. According to him, concrete algorithms of reaching the goals set out at the All-Belarus People’s Congress should have been suggested as part of the work of finalization of the social and economic development program. “They should have been laid down in the government’s draft action plan. The Council of Ministers has made it clear to the plan drafters that the action plan should focus, first of all, on how, with the help of whom and by what means we will meet the goals set out at the All-Belarus People’s Congress and envisaged in the country’s social and economic development program,” the Premier stated.

The Government is set to reduce the trade deficit in goods and services to a zero by 2014, and secure a surplus in 2015, the Prime Minister said.

“Unfortunately, the positions we are starting from are not the best ones. In 2010 we had the biggest ever foreign trade deficit. We need to redress the situation,” Mikhail Myasnikovich said.
The Prime Minister drew particular attention to the tasks that the Head of state announced when speaking in the House of Representatives on 27 January. “As it was stated, gross figures are good. But what is needed is the economic efficiency of business entities, industries, and the entire economy in general,” Mikhail Myasnikovich said. Mikhail Myasnikovich believes that a drastic rise in labor productivity and competitive ability of products will help rectify the situation. Utmost attention should be focused on realizing the country’s export potential as the best indicator of the country’s economic competitiveness.

By 2015 Belarus needs to increase the export of goods at least 2.2 times, that of services 3 times, Prime Minister said.

“Reaching these targets is essential for us to secure a surplus of foreign trade in goods and services. I urge to focus on the growth of export-oriented manufactures, primarily, those based on local raw materials,” said the Prime Minister. As an example Mikhail Myasnikovich cited the forest industry. “Indeed, we have many new large businesses in this industry. But they are built at the expense of domestic investment and are granted substantial government preferences. Where are foreign investors, where is private business?” the head of Government said.

According to the Prime Minister, no big results have been achieved in this industry. As an example he cited the case of red tape with investment projects in forestry. For example, for two years one of the world-famous companies has been trying to get started in Mogilev. There is still no certainty regarding the project in Smorgon that has been in the pipeline for six months already. Negotiations with one of the foreign companies on construction of enterprises in Borisov have last for more than two years. “These are the world’s leading companies. They communicate with each other and see how their colleagues are doing in Belarus and whether it is worthy to do business in this country,” the Prime Minister said. In this regard, the Prime Minister urged to remove the barriers in the work of investors and to consider investment projects in shortest time possible.

The foreign direct investment (FDI) inflow into Belarus is expected to reach USD 7.5 billion, or USD 798 per capita, by 2015, Economy Minister Nikolai Snopkov said at the Council of Ministers’ session on the draft social and economic development program for 2011-2015.

In his words, the country needs a regular update of its major production assets. Capital investment will make up 37.5% of GDP. Foreign resources will account for at least 21% of the total.

Increasing the efficiency of investment will help boost the labor productivity (in terms of added value) from USD 33,300 in 2010 to USD 58,000-60,000 in 2015 per one employed in the economy (per purchasing power parity). This will help make domestic products more competitive in foreign markets, Nikolai Snopkov added.

In the sectors that make the basis of GDP, the government support will focus on high-tech and innovative industries with high added value.

The Government of Belarus is determined to offer entrepreneurs and investors the most favorable terms of doing business, Deputy Prime Minister of Belarus Sergei Rumas said at a session of the Council of Ministers to discuss the draft program of the government’s action plan for 2011-2015.

The major goal facing the Government is to fulfill the social and economic development program of the Republic of Belarus set to run in 2011-2015. The major points of the program were approved at the Fourth All-Belarus People’s Congress.

Sergei Rumas voiced the major tasks set by the Government in the current five-year period. They include sustained economic growth, greater labor efficiency, an increase in capital investments and household incomes and reaching a surplus in foreign trade.

The participants of the session discussed ways to improve the legislation in order to create most favorable conditions for entrepreneurship and investments. In 2011 alone, about 75 bills are to be elaborated. A major focus will be placed on the transition from administrative economy to market economy based on indirect regulation. The Vice-Premier underlined the need to delimit the functions of state and economic administration, restrict the state interference with activity of economic entities. The structure and size of the state property will be optimized, including by means of selling shares of loss-making state-run enterprises.

The tax burden on entrepreneurs will be further eased (to 26% of GDP) and the tax administration will be simplified. Sergei Rumas deems it necessary to consider the redistribution of mandatory insurance contributions to the Social Security Fund between employers and employees. This will enable the introduction of a defined contribution pension system.

The reduction of taxes and the time spent on tax calculation and payment more than three times will help advance the Belarusian tax system in the World Bank’s Doing Business ranking from the 183rd to 70th position.

Belarus has plans to develop a competitive financial market capable of meeting the needs of the domestic economy in investment resources, Deputy Prime Minister said.

“In this regard we need to develop a legal framework regulating the activity of the exchange and depositary systems, insurance companies, debt recovery, leasing, investment and managing companies,” the Vice Premier said.

He also stressed the necessity to create a competitive environment on the insurance market by means of ensuring equal rights for companies of all forms of ownership.

The country is expected to shift to the market price formation in the agro-industrial sector within the next five years.

Another challenge facing the Government is bringing Belarus into the higher group of Country Risk Classification of the Organization for Economic Cooperation and Development (OECD), Sergei Rumas said.

“Working to improve the positions in the internationally recognized ratings, we thereby create the necessary conditions for increasing the share of small and medium-sized business in GDP by no less than 30% by the end of 2015 and for attracting a substantial inflow of foreign direct investment in the economy without direct interference of the government, i.e. solely through investments,” Sergei Rumas believes. He added that there are plans to allow business entities to self-select the forms and systems of remuneration of labor taking into account the contribution of each employee and the financial capacity of enterprises. New elements of the social package including option incentive schemes will be introduced for managers and skilled workers.

Streamlining the legislation will become the basis for sustained economic growth and boosting GDP 1.6-1.7 times by 2015 as against 2010. To this end, annual GDP growth in the current five-year period should reach 10-11%, which is a quarter higher than its average annual growth rate in the first decade of the 21st century. The target is reachable if we manage to ensure a rapid transition of the national economy onto an innovative path of development, the Deputy Prime Minister said.