A. Lukashenko has instructed that the final drafts of the most important socio-economic development documents for 2012 be submitted by mid-December.

According to Alexander Lukashenko, currently "even in the West, they are looking for ways to curb market forces, not shying away from nationalisation, widespread strengthening of state control and management of socio-economic processes." "Our economic capabilities and modern conditions do not allow for ill-considered experiments that would have the most negative impact on the well-being of the people. We must not forget that the economy is not solely about business and does not protect the interests of merchants alone. We must remember and care for the welfare of those who sow and plough, stand at the machine tool and build houses, operate transport, treat the sick and teach children. They also have families to feed, clothe and shoe," the President emphasised, noting that "reasonable economic management means maintaining a balance of interests for all segments of the population." "This is precisely why thoughtfulness is needed in decision-making at the state level, taking into account all consequences both for the economy as a whole and for each individual. Everyone must see that the policy of our state has served and will continue to serve the people. No one is allowed to deviate from this principle," the head of state stated. According to him, following a recent discussion at a meeting on the disposal of state property, documents on economic development forecasts for 2012 were thoroughly revised. "I hope everyone understands that they must be a real guide to action, a realistic mobilising programme that is mandatory for implementation," the President noted. Alexander Lukashenko also drew the attention of the meeting participants to a number of negative phenomena and shortcomings that need to be overcome. According to him, a deep analysis of the current situation is required today in order to "build plans not on sand, but on solid ground." "Unfortunately, even a cursory look at the statistics shows that this year's forecast will not be met. There are numerous problems in industry, agriculture, housing construction, and modernisation. And most alarmingly, the well-being of the people has deteriorated, hit hard by inflation. By abandoning the established practice of regulating prices and other economic processes, we have obtained negative results and serious problems, the resolution of which now requires additional effort and resources," the head of state said.The current year's forecast is also hindered by the situation in the banking sector. This particularly concerns the cost of credit resources, the President added. "Instead of energetic government measures for effective mobilization of resources and forces to overcome negative phenomena, I see only discussions and lengthy reasoning about the merits of the liberal development model, reliance on radical reforms," Alexander Lukashenko noted with regret. "And the inconsistency in actions and the leaks of various scare stories to the press, which they themselves use to frighten themselves, are quite unpleasant surprises. But it would be only half the trouble if it did not negatively affect the state of society," the Belarusian leader emphasized. "I warn everyone - think before you say anything. Do not forget about the political aspects of economic actions and statements. We are not old women gossiping on the porch, but civil servants, people responsible for their words." Alexander Lukashenko stressed that he expects a clear answer from the meeting participants on what specific measures the government and the National Bank are taking to solve the existing problems, and what reserves need to be involved for this. "And most importantly - what do you see as the sources of resources for the development of the economy next year," said the President. As reported by Prime Minister Mikhail Myasnikovich, the forecasts for the socio-economic development of the country, the budget, and the main directions of monetary and credit policy were developed with the main goal of ensuring the consistent and balanced development of the country's economy and its sectors, taking into account the stabilization of the currency market. The GDP growth rate is projected at 105-105.5%. The documents propose to somewhat reduce expenditures on final consumption and gross accumulation, thereby ensuring an increase in net exports instead of the current export situation, which has created a negative balance and negatively affected the national currency exchange rate. It is also planned to move away from emission-based lending to the economy. The government proposes to introduce a "dictate" of universal savings. For example, it is planned to reduce material intensity by 3%. At the same time, it is planned to significantly reduce costs in gross production in order to ensure GDP growth and increase the competitiveness of domestic products. Over 9 months of the current year, the economy has received $33.5 billion in foreign currency earnings, which has allowed the country to ensure imports and pay off debts. At the same time, according to Mikhail Myasnikovich, it is necessary to ensure even greater export growth.Therefore, the targets for export growth of 10.6% in 2012 are extremely challenging and will be achieved amidst a growing real exchange rate of the ruble, primarily driven by industry, increasing its share in GDP to 34%, i.e., a 2.1% increase. It is planned that export earnings from industrial products in 2012 will amount to $7.5 billion. Significant hopes are placed on woodworking, the development of production using local resources, and agriculture. As the Prime Minister noted, the economy is improving at the micro-level. It is expected that the net profit of enterprises will increase 2.5-fold in nominal terms this year. In the government's opinion, enterprise funds should be used more effectively for innovative and investment development. In 2012, it is proposed to direct the main investments into technology, machinery, and equipment. The draft documents also include proposals for changes in taxation, which will additionally provide enterprises with another Br2 trillion, which can be directed towards their own development. Regarding agriculture, the plans for the agrarian sector in 2012 are not very challenging overall, the Prime Minister noted. The projected growth rate of gross and added value is 104.2%, with a 0.5% reduction in material intensity. Next year, it is planned to build 5.7 million square meters of housing, with over 2 million square meters receiving state support. In 2012, maximum support for families with children will be maintained. As for housing loans, the government proposes to maintain the 2011 conditions for already formed housing construction cooperatives (ЖСК) for which financing has been opened in banks. This concerns approximately 36,000 contracts. Furthermore, the government has submitted a proposal for enterprises and trade unions to participate in assisting people building housing, especially without state support. In the government's view, trade unions accumulate considerable funds that should be directed towards housing construction, subsidizing meals in factory canteens, and other social purposes. The draft documents, as in previous years, maintain a social focus. Food security will be ensured next year. Work on stocking stabilization funds with products has been practically completed, exceeding the previous years' figures. Inflation containment within the range of 19-22% per year is planned to be addressed through a tight monetary policy and maintaining a stable currency exchange rate. The government, at the same time, promises that real incomes of citizens will also grow in 2012.Mikhail Myasnikovich stressed that monetary methods and internal pricing control will be priorities in the manual management of the country's economy in 2012. Furthermore, cost savings across the board remain one of the key tasks. As the Prime Minister summarised, the main goal of the plans for 2012 is balanced development, not adjusting plans to circumstances. "This means that enterprises and the economy as a whole must maintain export markets, re-equip technically, attract investments and loans, and if selling property, then for the creation of new, more competitive assets. The main thing is to save, at every technical stage, in construction, in every budgetary organisation. Processing such huge volumes of metal, oil, gas, and timber, we must not only save but, and this is the second main requirement, increase labour productivity," said Mikhail Myasnikovich. Minister of Finance Andrei Kharkovets reported on the tax policy measures included in the draft documents. In conditions where the structure of the tax system, in terms of composition and number of taxes, has been brought into line with the standards of developed countries, it is proposed to improve its qualitative characteristics. To this end, the profit tax rate will be radically reduced from 24% to 18%. This will be the lowest tax rate in the Customs Union and one of the lowest in Eastern Europe. According to the Minister of Finance, modelling the situation indicates that significantly greater efficiency of this decision can be achieved if existing profit tax incentives are simultaneously replaced by generally accepted and understandable investment stimulation mechanisms for foreign investors. The draft documents also present a package of tax measures designed to improve tax administration, adapt rates to new price conditions, increase budget revenue collection, reduce the tax burden on small and medium-sized businesses, and stimulate the production of high-tech goods. In the opinion of the Ministry of Finance, the documents provide sufficient resources for the fulfilment of external and internal financial obligations, which contributes to the stabilisation of the financial system. The Minister reported that the budget for 2012 will maintain its social focus, with increased support for healthcare and education in particular. Overall, the budget is planned to be deficit-free.The Chairperson of the Board of the National Bank, Nadezhda Ermakova, noted that the most important priority for socio-economic development in 2012 is to achieve balanced economic development based on price stability through all economic policy measures. Inflation is planned to slow down to the level of 19-22%. The exchange rate of the Belarusian ruble is currently formed based on the supply and demand of foreign currency in the domestic foreign exchange market. The National Bank conducts currency interventions exclusively to curb sharp fluctuations in the exchange rate and in a limited volume. Since the introduction of a unified exchange rate in October, the National Bank has purchased the equivalent of $418 million and sold $390 million. As Nadezhda Ermakova noted, this exchange rate policy will be continued next year. Given the minimal intervention of the National Bank in the exchange rate formation process, the main directions of monetary policy do not include exchange rate targets. Its value is used only in forecast calculations. The most important condition for achieving price stability will be that the National Bank will not carry out emission lending to banks for financing investment projects. Refinancing of banks will be carried out exclusively on market terms and for short periods using standard liquidity management tools. The Chairperson of the Board of the National Bank also drew attention to the need to eliminate mismanagement in all spheres of life. In her opinion, it is only in this case that a positive result can be expected from all measures. In this regard, she announced that control over the spending of borrowed funds will be tightened. The Assistant to the President, Sergey Tkachev, also expressed his point of view on the draft documents and the parameters laid down in them. He pointed out the need to clearly justify all the figures stated in the documents. In his opinion, it is also necessary to establish strict control over prices. The Vice-Premier, Sergey Rumas, opposed this approach. He believes that the GDP forecast should be reduced, considering the complex economic situation, and that there should be less intervention in the pricing process, leaving it to the market. In his opinion, the failure to adopt these and some other measures may negatively affect the economic development next year.The President, summing up the discussion, stressed that the projects presented by the Prime Minister with a GDP of 105-105.5% would be taken as a basis. "And refine these documents. Polish them, make them as they should be," said the Head of State. "And proceed from a 5-5.5% GDP growth. The Prime Minister knows my requirements – calculate. Whoever disagrees and cannot – please, we will find other work. But after I put my signature on this document, everyone will run around the country and say: this is real, this is a blessing, forward, mobilization. Not just chatter in the media. God forbid, I only get reports to the contrary." "We cannot work at half a percent tomorrow. We cannot! The economy will produce a different result. Are we supposed to slow down the economy?" the President added. Alexander Lukashenko drew attention to import substitution issues, emphasizing that the domestic component in products should be significantly increased. "If we are to achieve such GDP with such sloppiness and looseness in import substitution, of course, we will have problems with currency," the President noted. The Head of State also stated that next year "everyone must work hard." "Everyone must work hard, not create good conditions for themselves. It's okay if profits or profitability have to be adjusted somewhere. And there should be no losses. But we cannot live at the expense of the people, straining them to the limit. Otherwise, it turns out that a milkmaid milks milk, sells it, and then goes to the store to buy it, and she doesn't even have enough for a liter of milk to feed her family. Where are these prices, what are they? Some import, others process, third ones deliver to trade through wholesalers, fifth ones supply to their own structures – and it arrives at the store five times more expensive! Where is this going?!" the President exclaimed. "We are not pressuring business. But we must bear in mind that if it's difficult, it's difficult for everyone; if it's good, it's good for everyone," he noted. Alexander Lukashenko instructed to present him with the final documents for signature in mid-December. "We must think about the people first and foremost," the President advised the officials. -0-

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