Housing construction plans’ fulfillment is an important factor in Lukashenko’s election programme

On March 22^nd, Belarus’ Deputy Prime Minister Prokopovich said that the country’s housing construction programme was balanced, and the odds were high that it would be fulfilled.

Along with a growth in wages, increased housing construction is yet another important factor in improving president Lukashenko’s popularity. With the election campaign drawing nearer and Lukashenko’s low current rating have forced him to launch a very ambitious and risky housing construction programme.

The proximity of the forthcoming presidential elections in 2015, have forced President Lukashenko to stir up his efforts in winning voters’ support. Since 2011, the president’s electoral rating has dropped to 30%, which is 10 percentage points lower than the average in 2006-2010. In addition, in 2012 the president’s popularity stopped responding to increases in real incomes.

There are reasons to believe that the president’s decreased popularity was caused by the reduced housing construction volumes. In 2010 (the election year) 84,700 apartments were built in the country – the record-high volumes for contemporary Belarus. But later there was a sharp decline: 69,800 in 2011 and 55, 500 in 2012.

Another reason why Lukashenko’s ratings are falling is the revised soft loans policy for housing construction in 2011. In 2010 about 80% of 866,000 of those who ‘needed’ to improve their housing conditions received soft loans from the state for the housing construction needs. But after the adoption of decree No 13 in January 2011, the number of soft loans recipients decreased by 2-2.5 times.

In political terms, soft loans for housing construction have an important multiplier effect: for example, if a young family receives a soft loan for the apartment, the authorities get at least two votes. In turn, young families may have 4 adult close relatives, not to mention the extended family, friends and colleagues. Thus, the halved number of soft loans recipients left some 350,000 without state support, which, with the multiplier effect, could affect views of some 700,000 voters (about 10% of all voters in Belarus).

Therefore, in view of the painful housing reform of 2011 it is essential for the government to secure high volumes of commissioning housing by 2015. The plan is to commission 6.5 million square meters in 2013, and 9.5 million square meters in 2015. For reference, in 2010, 6.6 million square meters were commissioned and in 2012 – 4.5 million square meters. In the meantime, the main problem is whether the ambitious plan could be implemented with reduced state soft loans (i.e. Belarusians would have to rely primarily on their own means).

Potentially, the National Bank’s motive behind the discount rate reduction to 10-15% pa is largely explained by this problem. Housing construction policy in the country is supervised by Deputy Prime Minister Prokopovich – Honored Builder of the Republic of Belarus. In February the government also proposed to resume issuing foreign currency loans for housing construction to the population, but this proposal was not supported by the National Bank.