Profits of Belarus' industrial flagships collapse. What awaits the workers?
MTZ's uncovered loss by April 1 was 22.8 million rubles / glavpahar.ru
The strategy of the authorities for troubled enterprises covers short term only.
The state will support state-owned enterprises to the bitter end, despite losses and falling profits. For example, MTZ's net profit dropped 101 times in the first quarter. MAPID made a loss, although it was in the black in the first quarter of 2021. However, the authorities need good formal employment figures.
Euroradio asked experts how long it will last and what the Belarusians should prepare for.
"There will be no hunger riots"
Some state enterprises have always been on the verge of loss, says Leu Lvouski, senior researcher at BEROC (Kyiv). At the same time, in the first months after the war, they still had the financial capacity and components stocks, and some sanctions against Belarus came into force only on June 4.
"So far, all the problems are of a pinpoint nature, but it's sure to grow. And we see growth in lending to companies [by 13.5% in ruble loans in January-April - Euroradio]. Starting from April, money has been issued to support companies".
At the same time loans will not be much help for enterprises under sanctions, if there are simply no components.
"It is possible to finance excessive employment, to give state-guaranteed loans, and then write them off. But if MTZ can't buy components for any money, production will stop. However, Chinese suppliers of components are likely to help," says Aleg Mazol.
Most likely, Chinese companies will raise prices taking into account the sanctions risks. This means that the same tractors from MTZ will become more expensive.
"They will be more expensive and of worse quality. Where such goods will be sold is an open question. Russia has its own manufacturers, let alone China," continues Aleg Mazol.
"The trouble of the Belarusians lies not with individual enterprises," emphasizes Leu Lvouski. The fact is that the problems are on all fronts, he adds.
"People may easily start having problems with their savings because their bank will suffer from sanctions directly or indirectly. Either they will get a pay cut or they will buy less from private businesses. Private business will run into some sanctions and so on".
While there used to be a way out for some people -- like go into IT, that prospect is gone, too. Our only successful industry is partly leaving the country, partly freezing hiring. And the main problem is that it is unclear when all this will end because no one is trying to deal with the root of the problem.
The authorities are not easing the pressure inside the country and are still supporting Russia. So there is no reason to believe that things will change for the better.