OREANDA-NEWS  On 26 February was announced, that efforts will be taken in Belarus to keep the annual inflation within the designated range. The statement was made by Prime Minister of Belarus Sergei Sidorsky at a session of the Council of Ministers Presidium on February 24. The session discussed Belarus’ economy performance in January and expected performance in Q1 2009. “I would like this year’s inflation to stay under 9-11%. So far the January results are not impressive,” remarked the Premier. He reminded that inflation totalled 4.2% in Belarus in January.

“We have not had such drastic curves for a long time,” he said. The head of Government attributed the high inflation to objective and subjective factors. In particular, the prices went up due to the national currency devaluation, an increase in tariffs on utilities and imported energy resources. At the same time certain companies deliberately raised prices for their products. Audits done by the Economy Ministry and auditing agencies have managed to gradually bring down the overrated prices to the previous level.

Sergei Sidorsky remarked, at present certain Belarusian companies suggest keeping pre-crisis prices on the domestic market and drastically reducing prices for foreign markets. “It will never happen. Prices in Belarus will be as high as prices for your exports. They will be falling and will correspond to the prices on foreign markets,” stressed the Prime Minister.

“We have abandoned the practice of regulating prices for certain commodities lately but we will use antimonopoly laws in Belarus very carefully,” added Sergei Sidorsky.

According to Economy Minister of Belarus Nikolai Zaichenko, the ministry has come up with a plan of measures to combat inflation. Monetary and pricing policy instruments will be used to secure the targeted inflation in 2009. The plan also provides for reducing production costs, increasing the output of consumer prices and services and saturating the consumer market.

In Q1 2009 Belarus’ GDP is expected to increase by 2%, Economy Minister Nikolai Zaichenko said during a session of the Presidium of the Council of Ministers.

“The past two-month GDP growth is approaching 2.5%. In Q1 it will stand at 2%, with the manufacturing industry generating 1%,” Nikolai Zaichenko said. According to him, in Q1 the main social and economic development trends will remain unchanged amid the global financial crisis, which will affect a little the economic growth.

According to the Economy Ministry, the growth of capital investment will reduce from 24.9% in January to 5% in January-February and 3% in Q1.

Foreign trade in goods and services is estimated at 62-65%. The foreign trade deficit will make around USD 30 million in January, USD 130 million in January-February. The Economy Ministry has designed a set of measures to restrict import and use of foreign currency, to increase foreign currency revenues. The Economy Ministry believes it is necessary to increase import customs duties on consumer goods (but for the Russian Federation).

Profitability of sold products, works and services in the manufacturing industry in Q1 is estimated at 4.4-4.5% while in previous years it was 13-18%. In the beginning of the year the GDP energy intensity will reduce by 1.5% instead of the projected 8%.

The Economy Ministry is not going to revise the forecast of Belarus’ social and economic development in 2009, said Economy Minister of Belarus Nikolai Zaichenko.

The Economy Minister said: “Many suggest changing the adopted forecast in favour of more real economic growth targets. The Economy Ministry also put forward proposals for decreasing the load in Q1 and Q2 2009. However, at present nobody has precise knowledge about the deepness and duration of the financial crisis. This is why we believe it is inadvisable to suggest revising the forecast to the Head of state. The adopted forecast does not impede specific efforts aimed at developing the economy,” said Nikolai Zaichenko.

He noted, the economy performance is determined by flagship companies to a large extent. At present the effectiveness of these companies is somewhat lower than the industry’s. In particular, out of 164 monitored flagship companies 60 ones have reduced their output.

The government has adopted a system of measures to ensure the steady operation of Belarusian companies during the global financial crisis and stabilise the economy. Decisions have been made concerning the sale of products at prices lower than the prime cost, giving preferential interest rates for loans, a zero customs duty on imported equipment, a tax respite and other measures. However, efforts of some government agencies are insufficiently effective in taking some of these measures.

Nikolai Zaichenko also believes Belarus needs additional measures to stimulate the domestic demand. He suggested the expansion of sales by instalment as one of the instruments able to increase the capacity of the home market for Belarusian manufacturers of consumer goods. It should be done primarily via proprietary shops.