BELARUS’ GDP 18.9% UP IN 2006-2007

Over the past two years, Belarus’ GDP has increased by 18.9%, Belarusian Prime Minister Sergei Sidorskiy told the session of the Council of Ministers which summed up the work of the national economy in 2007 and in January 2008. This index has beaten the projected parameters of the GDP growth. In line with the targets for 2006-2007, the GDP was prognosticated to increase by not less than 118.3%. The head of government also noted the growth of investments in Belarusian economy. For the recent two years, this index has upped by 51.2%. In 2007, the national economy attracted more than $5.4 billion of foreign investments including $1.3 billion of direct foreign investments. On the whole, in 2007, the investments reached Br25.3 trillion.

The wages in the manufacturing industries of Belarus made up more than Br900 thousand in December 2007, Prime Minister of Belarus Sergei Sidorsky said at a session of the Council of Ministers on February 12.

The wages in Belarus averaged Br795 thousand in December. Over the past two years real incomes have grown 34.5% for the population.

The Prime Minister also noted the positive tendencies in the construction industry where wages averaged Br1 million. The average wages of doctors are more than Br1.1 million, university professors – Br1.2 million, research personnel - Br1.3 million. The average pensions were 17% up to Br305 thousand.

Sergei Sidorsky said that the increase in wages was due to the GDP growth.

In February-March Belarus will reach the projected inflation parameters, Prime Minister of Belarus Sergei Sidorsky said at a session of the Council of Ministers on February 12.

According to him, in 2007 inflation in Belarus was over 12%. “This is the limit we should not cross,” the Prime Minister said.

Sergei Sidorsky said that a 2.5% inflation in January was high. The increase in the tariffs for utilities services triggered a 1.7% increase in inflation. Some 0.8% of inflation came through the increased prices in the real production sector, consumer services.

At the same time in February-March there is an opportunity to keep the inflation within the projections (6-8%), the Prime Minister believes.

The Belarusian agricultural branch falls behind the production growth targets. The rural revival and development programme for 2005-2010 is not implemented to the full, Belarusian Prime Minister Sergei Sidorskiy told a session of the Council of Ministers on February 12.

According to him, within the five year term the agricultural production is projected to increase by 45% including by 8.5% - in 2008. “Unfortunately, these targets are not being met,” the head of government said.

Sergei Sidorskiy reminded that in 2005, the agrarian sector increased production by 2%, in 2006 – by 6%, in 2007 – by 4.1%.

The Prime Minister also highlighted that in 2008, in line with the socio-economic development forecast of Belarus, the GDP is projected to increase by 8-9%. The Council of Ministers’ Resolution No 8 has established a more ambitious target of 11%. These parameters should be met including by means of increasing the agricultural output. However, this sector of the economy failed to achieve the January 2008 targets.

According to the Prime Minister, the fall in production of agricultural products was due to the reduction of milk production though the stocks of feedstuffs are sufficient.

Investment growth has slowed in Belarus, Prime Minister of Belarus Sergei Sidorsky said at a session of the Council of Ministers on February 12.

He said that the Government is set to increase investments by 25% in 2008 over 2007 “Yet, manufacturing companies have failed so far to post high capital growth results.” This pertains, first thing, to the Belneftekhim concern and Industry Ministry who performed the investment growth plan at 89% and 67% respectively in January. This activity has not come into focus in several other ministries and agencies including the Ministry of Architecture and Construction, Bellesbumprom and Bellegprom concerns.

“Without active innovation and investment policies we will not reach the results,” Sergei Sidorsky said. He acknowledged that in 2007 the results were high (47% more investments in January 2007 over January 2006). It is difficult to outperform the result but we need to, the Prime Minister said.

This year housing construction target is 5.2 million square meters of housing, 500 thousand square meters up over 2007. “The country needs to boost housing construction rate, the Premier said.

Analyzing the January results, Sergei Sidorsky criticized the work of the governors. “The oblast executive committees have failed to devise a step-by-step scheme on increasing industrial output. January was a failure in the manufacturing industries in the regions, he said. Meanwhile, the Government has passed many resolutions to ensure stable performance of the economy in the regions. But not every region managed in January.”

The economic issues should be on radar of all miniseries and agencies including those who are not engaged in manufacturing. According to the Prime Minister, the Information Ministry needs to make more special programmes, information materials telling about the development of the business sector of the country, on attracting investment.

The Prime Minister criticized the Foreign Ministry for the inefficient work with investors in the regions. According to him, no effective system has been elaborated to implement Decree No1 on attracting investors into small towns.

In 2008, the Government of Belarus will keep inflation at the level of 8%, Economy Minister Nikolai Zaichenko told a session of the Council of Ministers on February 12.

According to the minister, in 2008, the Government is set to reduce the inflation rate. In January 2008, the consumer price index increased by 2.5% due to the increase in tariffs for public utilities (1.66% up), fruits and vegetables (0.27% up), meats, beer, cheeses and some other foodstuffs. More than 77% of the increase in the consolidated index accounted for administered prices, 23% for free-of-control prices and tariffs.

To keep inflation in check, the Government has approved a range of the anti-inflationary measures. In Q1 2008, the consumer price index is projected to increase by 3.7%, in Q2 –1.4%, in Q3 –0.8% and in Q4 2008 – by 1.9%.

According to Nikolai Zaichenko, in 2007, the increase in the consumer prices was due to the increase in prices for the imported power resources. In 2008, the price growth is expected to be slower, the minister noted.

The Government of Belarus passed a resolution to approve the 2008 investment activity targets for all ministries, agencies and government bodies, Economy Minister Nikolai Zaichenko said at a session of the Council of Ministers son February 12.

“The targets are very ambitious and important for implementing all other plans and programmes,” the minister said.

Capital investments are projected to make up Br34.5 trillion. The target on attracting foreign credits and direct investments is $2.7 billion. The list of most important investment projects in 2008 includes 78 projects at the sum of Br2.1 trillion. The volume of investment credits, including foreign credit resources, in the real production sectors, is estimate to amount to Br5.5 trillion.

The plans to increase profitability of Belarus’ industry by 2-3% in 2008 are feasible, Economy Minister Nikolai Zaichenko told a session of the Council of Ministers of Belarus.

According to him, in 2007 the country failed to achieve the target for profitability of sold products. However, many of the ministries fulfilled the task. Thus, the profitability in the Industry Ministry was up to 15.9% while the target was 13%.

According to the minister, the target was not fulfilled due to the new working conditions of Belneftekhim Concern, the oil refineries in particular. Earlier, the profitability of these companies hit 30%. In 2007, their profitability was 3-4%.

Taking into consideration that in 2008 the growth of the energy prices will be much less, the target on industrial product profitability at 12-13% is achievable, Nikolai Zaichenko noted.

Without considering energy price hike, Belarus had a foreign trade surplus in 2007 at the amount of $1.58 billion, Economy Minister Nikolai Zaichenko told a session of the Council of Ministers.

Last year’s foreign economic results are ambiguous. Comparing with 2006, the deficit came to $2 billion 685.3 million, or $1 billion 140 million more. “Yet, if we do not take into account the oil and gas price spike, then we have a trade surplus of $1 billion 584 million,” the minister said. The surplus was due to the increase in trade in services ($448.6 million up) and in the trade in main groups of goods ($1 billion 134.4 million up).

Nikolai Zaichenko said that the trade balance targets were not met by the Ministry of Architecture and Construction Belneftekhim, Bellegprom and Belgospischeprom concerns. In terms of oblasts it was only the Minsk oblast who met the target.

“Therefore the goal to reduce the deficit of foreign trade in services and goods becomes the most important priority of the government bodies in 2008,” the minister stressed. With a view to meeting the foreign economic targets and reducing foreign trade deficit to $1.4 billion, the Government has developed a set of organisational and economic measures and plan of action in 2008 to implement the national export development programme 2006-2010.

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