Construction industry reform: Lukashenko’s pre-election project

On July 26^th, President Lukashenko spoke about country’s construction industry development.

The ruling group tightens control over economy’s priority areas, the construction industry in particular. In authorities’ view, stronger monopoly in this field will reduce political and economic risks before the next presidential election.

Lukashenko spoke about construction industry reform. He said that the government will put more restrictions on private developers and will focus on large state-owned construction companies. The statement was made against the background of mass-scale inspections in the construction industry, carried out by the Presidential Administration.

The construction industry reform envisages strengthening the state’s positions in this field. In particular, discussions are ongoing about merging into a single holding all district construction contractors in Minsk. If implemented, all nine district administration offices for capital construction in Minsk will merge into one organization with a consolidated budget. For example, in 2013 the overall budget of all nine construction administrations in Minsk is BYR 970 billion rubles, or circa USD 110 million.

Also, gradually denying contracts to private construction companies and contracting state-owned will result in state contractors’ consolidation under the state’s supervision. Such monopolization of the industry will enable the ruling group not only to tighten control over greater budgets, but also to reduce the risks for politically important housing construction projects in the view of the upcoming presidential elections in 2015.

In Q1 and Q2 2013 housing construction plan was fulfilled only by 40.3%. All in all, 2.62 million housing square meters were commissioned out of projected 6.5 million. It seems that the ruling group aims at fulfilling the ‘plan’ by scarifying private construction companies’ interests in order to accelerate the residential construction pace.

In addition, the President’s Administration bears in mind the 2015 presidential election, which is why they make very ambitious housing construction plans – in 2014 it is planned to commission 8.5 million square metres and in 2015 – 9.5 million. This could become an important part of the future election campaign for candidate Aleksandr Lukashenko.

Finally, construction industry in Belarus has conventionally been regarded as a driver for the economy and the key to managing the economy. This stereotype is also supported by the endeavors of former National Bank Head and former adviser to the President on economic matters and acting Deputy Prime Minister Petr Prokopovich, who enjoys President’s loyalty in economic policy matters.