The Financial Times: Behemoths in Belarus betoken state of economy

• 16.11.2009, 14:18

The influential British newspaper writes the economic slowdown may “shake the regime of Alyaksandr Lukashenka”.

Amid the crisis, the Belarusian government has returned to the Soviet-era tradition of steering the economy by administrative fiat.

The parking lots of Belarusian heavy truckmaker Belaz offer a hard-to-miss clue to how the ex-Soviet republic is tackling the downturn. They are packed with unsold bright yellow behemoths, the Financial Times notes. “The government - through the four largest state-controlled banks - has pumped cash into the state-owned enterprises that make up three-quarters of the economy,” correspondent Jan Cienski writes.

The International Monetary Fund foresees no contraction in Belarus this year. According to official data unemployment is only 1 per cent. Andrei Kabyakou says that the banking system's non-performing loans are only 4 per cent. But Standard & Poor's, the rating agency, says problem assets in the financial system could rise to as high as 35-50 per cent that would have the potential to shake the regime of Alyaksandr Lukashenka.

Amid the global financial crisis the Belarusian government has returned to the Soviet-era tradition of steering the economy by administrative fiat, the newspaper runs. Lukashenka decreed that businesses should produce at least 80 per cent of last year's production. But exports have fallen 50 per cent so state-owned companies such as Belaz have run up enormous inventories, which they are now frantically trying to sell off.

But a 20 per cent devaluation against the dollar earlier this year, and the prospects of slow growth next year, are challenging the generous welfare state built by Lukashenka, the daily supposes.