The public sector is counting on import substitution, while Lukashenka focuses on the IT sector
The ruling class increases surcharges and taxes on businesses and landlords, gradually expanding to include broad population groups. Public sector industrialists are counting on a significant increase in government support, despite the failures of previous import substitution and modernisation campaigns. The IT sector continues to lose substantial investors, partially due to political interference and attempts to enforce ideological loyalty.
The government plans to raise income tax rates for those who rent out housing, garages, and parking spaces, introduce new fines for price control violations by companies and entrepreneurs, and incrementally increase the overall tax burden on the population while monitoring for significant adverse reactions.
Real incomes continue to decline, and taxes payable on a first apartment purchase will increase by 10%; however, this is not expected to cause an abrupt surge in dissatisfaction with the government or provoke owners to open protests.
Lukashenka’s price control policies are causing a shortage of certain goods on store shelves. However, this is likely to be of minor concern to the leadership. The unavailability of imported goods does not significantly impact traditional Lukashenka supporters or those on low incomes.
The Ministry of Antimonopoly Regulation and Trade emphasises the advantages of price controls and reports positive results in the form of deflation. Chairman of the Council of the Republic Natalia Kachanova emphasises the need to ensure “fair” prices.
The leadership is unconcerned by the departure of foreign companies from the Belarusian market and intends to maintain a tough line towards foreign investors and continue to restrict their rights. The sale of the “Synevo” laboratory network has been banned.
Lukashenka personally oversees developments in the IT sector, which he considers one of the economy’s most disloyal sectors. Another major Kazakh investor has withdrawn from the High Technology Park, and an American billionaire from the Forbes list is liquidating his IT business in Belarus.
The government will continue using private business funds to maintain public-sector employment.
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Situation in Belarus