Recently many countries, including global players, have faced economic challenges, for subjective reasons and objective ones. Reckless sanctions disrupted world trade and triggered inflationary processes across the world. Belarus was no exception. In 2022, by the end of summer, inflation in the country jumped twice and reached almost 14%, and by the end of the year the government was preparing to see even more dismal figures. It would seem that this state of affairs bothered no one. But in October, the Belarusian president convened a meeting with the economic team of the government and unexpectedly announced: from now on, price rises were forbidden. “What about the market and free pricing?” economists and experts shook their heads in disbelief. But Aleksandr Lukashenko had an unambiguous answer to this question.
In the new episode of BelTA’s YouTube project “After the Fact: Lukashenko’s Decisions” we'll tell you how the head of state forced the government “to skim off the fat” from retail chains and tame the appetites of their owners. Why Belarus introduced pricing controls and how this seemingly non-market approach worked.
In the new episode of BelTA’s YouTube project “After the Fact: Lukashenko’s Decisions” we'll tell you how the head of state forced the government “to skim off the fat” from retail chains and tame the appetites of their owners. Why Belarus introduced pricing controls and how this seemingly non-market approach worked.
Why did Lukashenko decide to regulate prices?
The increased attention to prices by the Belarusian president did not arise out of nowhere. Aleksandr Lukashenko emphasized 20 years ago that the financial status of people was the most important factor of social stability in society. He criticized the government for its inability to adequately respond to market changes. In 2022, when the situation in the Belarusian economy worsened and price growth began to offset all the efforts by the authorities to raise wages and pensions, the president had to intervene again to stop havoc on the market.
What happened? On the one hand - sanctions and so-called imported inflation. That is, the price rise was partly due to the rise in the prices for imported goods. There was another problem - domestic producers were put in unequal conditions with importers, which meant that it was much more profitable to sell foreign products. Well, then, why did prices for Belarusian goods rise? First, profiteers easily profited from buyers. Some drove up their prices following the fluctuations in currency exchange rate but when the ruble strengthened they forgot to drive them down. Others did not hesitate to sell goods at a 300% mark-up or to supply stores with items that were misrepresented as new launches.
Aleksandr Lukashenko also instructed to take a closer look at the owners of retail chains, who had salaries 40 or even 60 times higher than those of their salespeople. In such cases, they usually say: you get what you deserve. But, perhaps, we should not forget that such businessmen bought their villas on the Cote d'Azur by inflating prices for customers and underpaying their employees.
After the meeting in 2022, Aleksandr Lukashenko signed a directive. It banned price rises and obliged market participants to provide a full range of goods and services. The government was tasked with implementing a price regulation system and overseeing its implementation. A large-scale monitoring of the consumer market was performed. And soon the Council of Ministers of Belarus approved the resolution "On price regulations".
"In the current difficult situation in the world and around Belarus, some try to point fingers at sanctions, external pressure, etc. Indeed, this is one of the reasons for what is happening in our country. But you should not lump everything together and say: we have nothing to do with it. We do. The four months have shown that we do. When we took the situation under control, prices dropped by almost 3% on average," the head of state said as he was taking stock of the measures several months later.
According to Deputy Chairperson of the National Statistical Committee Natalya Tarasyuk, price regulation can significantly curb inflation. Thus, in September 2022, inflation in Belarus was 17.4%. At the end of the year, after the introduction of the new pricing system, this figure dropped by almost 5%.
"In 2023, the inflation rate was 5.8%, in 2024 it stood at 5.2%. As we can see, the situation was reversed. In addition, the measures taken allowed us to contain the depreciation of household income, had a positive impact on livelihoods and reduced poverty to the lowest level on record, which is 3.5%," said Natalya Tarasyuk.
The Belarusian president got a lot of flak for these "non-market" methods. But these critiques missed an important point. Aleksandr Lukashenko did not demand price caps, but rather an effective system of price control. But before this system was developed, prices, of course, had to be curbed.
Although alarmists and skeptics shouted from the rooftops that stores would become empty, go bankrupt and shut down, the Belarusian authorities were able to find a way to avoid such a scenario. The product assortment on the shelves was not only preserved, but also expanded over time. Moreover, as the government admitted, the CIS partners were also curious about Belarus' price regulation system and asked about it behind the scenes at international events. However, no one dared to follow this path. Over time, the government had to repeatedly fine-tune the system, taking into account mistakes and new circumstances.
"We were aware of all the risks and we were fast on our feet. We made adjustments to the government resolution several times based on the reality on the ground. Thus, all negative trends in trade and in manufacturing were nipped in the bud. Price regulation did not cause any imbalances. There is a sufficient amount of goods on the shelves at reasonable prices," said Ivan Vezhnovets, First Deputy Minister of Antimonopoly Regulation and Trade.
Aleksandr Lukashenko warned against any deviation from the price regulation policy, because its core principle is fairness. And this issue is not so much about economy, but rather about justice, politics and strategy.
"People create wealth for this country, and therefore they are entitled to a portion of profits. No way someone will take all the profits. This is my understanding of justice. If there is no justice, there will be war. Let’s take Ukraine. The Maidan happened because of injustice, because of a formidable clan of oligarchs who were strangling Ukraine. Thus, little by little, this oligarchy pushed the country to war. Or take Zelensky, for example - he is not a poor man, either. Therefore, those who got their hands on huge money, that was unearned, no longer think about the state, they think only about their assets. All the presidents there were like that. Therefore, everything starts with injustice,” Aleksandr Lukashenko said at the beginning of the year.
What pricing system is being developed in Belarus?
The story did not end with the directive of the head of state and the government. Aleksandr Lukashenko looked at the problem deeper and demanded a “fair formula” of pricing, which would remove all the issues.
The increased attention to prices by the Belarusian president did not arise out of nowhere. Aleksandr Lukashenko emphasized 20 years ago that the financial status of people was the most important factor of social stability in society. He criticized the government for its inability to adequately respond to market changes. In 2022, when the situation in the Belarusian economy worsened and price growth began to offset all the efforts by the authorities to raise wages and pensions, the president had to intervene again to stop havoc on the market.
What happened? On the one hand - sanctions and so-called imported inflation. That is, the price rise was partly due to the rise in the prices for imported goods. There was another problem - domestic producers were put in unequal conditions with importers, which meant that it was much more profitable to sell foreign products. Well, then, why did prices for Belarusian goods rise? First, profiteers easily profited from buyers. Some drove up their prices following the fluctuations in currency exchange rate but when the ruble strengthened they forgot to drive them down. Others did not hesitate to sell goods at a 300% mark-up or to supply stores with items that were misrepresented as new launches.
Aleksandr Lukashenko also instructed to take a closer look at the owners of retail chains, who had salaries 40 or even 60 times higher than those of their salespeople. In such cases, they usually say: you get what you deserve. But, perhaps, we should not forget that such businessmen bought their villas on the Cote d'Azur by inflating prices for customers and underpaying their employees.
“When we see unreasonable price increases, when we see the nouveau riche, yesterday’s nobodies, fatten their pockets on price hikes in their retail chains, when their employees make $500 a month while they make 46 or 60 times more… Is it a normal situation? t a normal situation? Pricing is an instrument to maintain justice in Belarus. It is the key element of social contract. This is why we should weather the storm, stand firm. Everyone should strive to preserve our country. We have everything for that. We can preserve it and even be much better off after the ongoing re-division of the world is over,” Aleksandr Lukashenko said in February 2023.
Is it possible to regular prices?
Okay. But is it possible to regulate prices without causing product shortages and panic buying? The Belarusian experience has shown that it is. So market-based pricing is all a myth? Hmm... After a long period of regulation of prices and all other aspects of life in the Soviet Union, the post-Soviet countries rushed to embrace the market economy that was so actively touted by the West. But in fact, the postulate "the market will regulate everything" in reality means: I do whatever I please. The market itself is soulless, and market participants are only interested in getting the maximum profit. By any means. But Belarus decided to challenge this state of affairs.
"I have this idea that this was imposed on us on purpose. Because there is no free market (supply and demand) and never was. This concept was imposed on us by the United States of America. Everything is simple for them: their economy is based on papers. Unfortunately, since we have all swallowed this paper bait, they are doing ok. I mean the dollar. They regulate relations in the world, strangle some countries and support others. They do whatever they want," Belarusian President Aleksandr Lukashenko said at the Belarus Media Forum in Mogilev. "In this situation, it was very easy for them to impose a market (I call it simply ‘chaos’). We did not go this way. It was my position: do what’s best for the country.”
How were prices regulated in Belarus and what did it lead to?
After the meeting in 2022, Aleksandr Lukashenko signed a directive. It banned price rises and obliged market participants to provide a full range of goods and services. The government was tasked with implementing a price regulation system and overseeing its implementation. A large-scale monitoring of the consumer market was performed. And soon the Council of Ministers of Belarus approved the resolution "On price regulations".
"In the current difficult situation in the world and around Belarus, some try to point fingers at sanctions, external pressure, etc. Indeed, this is one of the reasons for what is happening in our country. But you should not lump everything together and say: we have nothing to do with it. We do. The four months have shown that we do. When we took the situation under control, prices dropped by almost 3% on average," the head of state said as he was taking stock of the measures several months later.
According to Deputy Chairperson of the National Statistical Committee Natalya Tarasyuk, price regulation can significantly curb inflation. Thus, in September 2022, inflation in Belarus was 17.4%. At the end of the year, after the introduction of the new pricing system, this figure dropped by almost 5%.
"In 2023, the inflation rate was 5.8%, in 2024 it stood at 5.2%. As we can see, the situation was reversed. In addition, the measures taken allowed us to contain the depreciation of household income, had a positive impact on livelihoods and reduced poverty to the lowest level on record, which is 3.5%," said Natalya Tarasyuk.
The Belarusian president got a lot of flak for these "non-market" methods. But these critiques missed an important point. Aleksandr Lukashenko did not demand price caps, but rather an effective system of price control. But before this system was developed, prices, of course, had to be curbed.
Although alarmists and skeptics shouted from the rooftops that stores would become empty, go bankrupt and shut down, the Belarusian authorities were able to find a way to avoid such a scenario. The product assortment on the shelves was not only preserved, but also expanded over time. Moreover, as the government admitted, the CIS partners were also curious about Belarus' price regulation system and asked about it behind the scenes at international events. However, no one dared to follow this path. Over time, the government had to repeatedly fine-tune the system, taking into account mistakes and new circumstances.
"We were aware of all the risks and we were fast on our feet. We made adjustments to the government resolution several times based on the reality on the ground. Thus, all negative trends in trade and in manufacturing were nipped in the bud. Price regulation did not cause any imbalances. There is a sufficient amount of goods on the shelves at reasonable prices," said Ivan Vezhnovets, First Deputy Minister of Antimonopoly Regulation and Trade.
Aleksandr Lukashenko warned against any deviation from the price regulation policy, because its core principle is fairness. And this issue is not so much about economy, but rather about justice, politics and strategy.
"People create wealth for this country, and therefore they are entitled to a portion of profits. No way someone will take all the profits. This is my understanding of justice. If there is no justice, there will be war. Let’s take Ukraine. The Maidan happened because of injustice, because of a formidable clan of oligarchs who were strangling Ukraine. Thus, little by little, this oligarchy pushed the country to war. Or take Zelensky, for example - he is not a poor man, either. Therefore, those who got their hands on huge money, that was unearned, no longer think about the state, they think only about their assets. All the presidents there were like that. Therefore, everything starts with injustice,” Aleksandr Lukashenko said at the beginning of the year.
What pricing system is being developed in Belarus?
The story did not end with the directive of the head of state and the government. Aleksandr Lukashenko looked at the problem deeper and demanded a “fair formula” of pricing, which would remove all the issues.
Now, according to him, the role of the state should be not in supervising, but in ensuring there is a transparent pricing policy and common rules for all market participants. No one should keep coming to the government with requests to regulate prices. Business people and manufacturers should set their prices themselves, but they should follow a certain principle - a principle of fairness, the president said.
“Poor, destitute people… They live in mansions, have 7 foreign-made cars, 12 mistresses. I don't mind if they have 20, but please they must do it on their own dime. But no... They afford these things by incorporating these expenses into prime costs. Whatever extra is pulled out abroad and hidden until the time is right. You didn't know about that. That's where it starts. I asked them to streamline things. Things should be fair. A tomato or a cucumber should sell at a price they cost. What should be done for producers? The producer is the priority. Not retail,” Aleksandr Lukashenko said at the recent government meeting.
The head of state agrees that the work requires a lot of effort and the issue is a complicated one. Of course, the easiest thing would be to act according to the simple formula of supply and demand. As they say, the market will regulate everything. The question is who benefits here in the first place?
“In the economic situation that is developing in foreign markets and with high inflation in our neighbors, it is necessary to ensure that goods with an adequate and understandable price are available for everyone. Therefore, it is necessary to have manageable pricing,” said the deputy chairwoman of the National Statistical Committee.
According to her, all the measures taken in Belarus are aimed at preventing abusive activities in retail pricing. “There were unreasonably high trade markups, excessive margin for certain goods. Such things should be prevented. Fair pricing should be ensured,” Natalya Tarasyuk added.
“Every day I asked Snopkov rigorously about this. Golovchenko said that this was your main exam. People are watching us, they support us. We were all excited about the support we received in the last election. People have faith in us,” the president said. “Meanwhile, everyone in the government is inventing their own formulas and has their own ideas. The president has set a task and set a framework for you and you should stick to it. After all we have a dictatorship. And this dictatorship is supported by the people. Get down to work!” the head of state demanded.
What does fair pricing mean?
A new fair pricing policy. Let’s unpack this concept. For the consumer, the ordinary person, fairness lies in the absence of speculation and in a reasonable price for the final product. For enterprises, for those who produce, fairness means adequate profit. Manufacturers should get enough profit to pay decent wages for workers and invest in production. It by no means should settle in the pockets of managers.
Fairness also means the maximum promotion of domestic goods. It should not be the case when it is more profitable to sell imported goods than domestic ones. In other words, the new fair pricing system should maintain the balance of all interests, Aleksandr Lukashenko said.
The government has proposed two options: the first is short-term and the second one is medium-term. The short-term one is about adjusting the existing system of price regulation, working on the mistakes, leveling the existing distortions and imbalances based on the existing practices. The midterm plan envisages a national system of the circulation of goods, works and services. Its main purpose is to track the added value in the chain of goods movement.
“It is quite difficult to respect the interests of all market players in price regulation, because everyone has their own interest. In principle, this interest is to maximize profit. This is true for retail, manufacturers and importers alike. Of course, we will prioritize the manufacturer. We will be transforming the pricing system keeping this in mind, and without affecting the customer. The customer comes first. All regulation has been done to benefit the customer,” Ivan Vezhnovets said.
No matter what decisions the government were eventually to make, Aleksandr Lukashenko said that he would never abandon this issue, as it directly affects people's lives. Fairness always comes first.
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