Now that it is increasingly hard to trust official statistics, analyzing absolute indicators is a thankless job. Nonetheless, we should take note of four economic indicators of the first six months of the year. They reveal not only the poor quality of short-term planning but also the government's economic priorities.
The first indicator is an unprecedented increase in fixed capital expenditure, which reportedly rose by 36.9 percent in adjusted prices compared with the level of the first half of 2005, whereas the government's annual growth target was 13 to 14 percent. It turns out that the authorities had not expected such a large amount of budgetary funds and such a high increase in enterprises' earnings. Instead of fulfilling its promises and reduce the size of the state (its revenues and expenditures), the Council of Ministers decided that it should spend as much as possible. A number of investments may prove beneficial in the distant future, but the finance ministry seems not to think about the efficiency of most investment projects.
Another impressive figure is the size of consolidated budget revenues in the first five months in proportion to GDP - 51.5 percent. With tax and duty arrears taken into account, this proportion increases to 53.7 percent. Last year's consolidated budget revenues accounted for 48.4 percent of GDP. For the year 2006, the government projected the revenues at 46.1 percent. This means that the authorities failed to fulfill their promise to alleviate the tax burden on the economy. Hard-currency proceeds from the export of petroleum products have been on the rise for the third consecutive year. The sale of metals and metal products remains steadily large and the finance and tax ministries continue to insist on preserving the current rates and procedure of payment of major taxes.
The third extraordinary figure of the former half of 2006 is an unexpected rise in imports, which increased in the January-May period by 42.4 percent, although an annual rise of eight or nine percent had been projected. The government also had not expected such a high rise in exports: 22.4 percent against a target of 8.5 to 9.5 percent.
Imports largely rose because of a sharp increase in the price of oil. Crude oil increased in price by 46.7 percent and petroleum products by 111.6 percent. The import of oil rose by 70 percent in terms of value, or more than $1 billion. The value amount of imported cars increased by 50 percent, or $91.3 million, and that of imported ferrous metals by 19.9 percent, or $81.4 percent.
And finally, the fourth indicator important for comprehending trends in the Belarusian economy is the preservation of an extremely high growth rate of wages with a dangerously low level of savings. In the first five months of 2006, the population spent 14.1 trillion rubels on purchases of goods and services compared with 11.4 trillion in the same period of the previous year. The population's expenses rose by 23.7 percent over the year, whereas savings accounted for 5.6 percent of all money incomes, or some 1 trillion rubels. But even this low level proved enough for individuals' rubel and hard currency deposits in Belarusian banks to continue rising. They amounted to 6.4 trillion rubels, with almost 56 percent of the amount kept in Belarusbank. The population's deposits rose by 42.2 percent compared with the level on June 1, 2005. The growth rate was lower than a year ago but sufficient to maintain the lending boom.
The government strictly abides by Alyaksandr Lukashenka's directive that people's wages and salaries should be steadily raised. Average before-tax monthly pay rose by 20.5 percent from 449,933 rubels in May 2005 to 579,312 in May 2006. This policy can be described as capital decumulation. Since the growth potential of demand for Belarusian goods is limited to a few chief exports such as petroleum products, fertilizers, metals and chemical products, the government takes a soft option by strictly recommending that enterprises should raise pay, and that banks should lower the interest rates of loans and simplify the borrowing procedure. As a result, Belarus is experiencing a true consumption boom.
Against the background of highly favorable official data about the macroeconomic situation the country - 10.1-percent GDP growth, 3.1-percent inflation and a 3.1-percent budget proficit, we can note some negative indicators. The most important one is the crisis experienced by Belaruskaly, the state-owned potash fertilizer giant in Salhgorsk, Minsk region. The output of potash fertilizers in the first five months of 2006 totaled 1,665,500 tons, a 25.4-percent year-on-year decrease. May's output was 211,000 tons, 49.1 percent less than in May 2005. The export of potash fertilizers fell by 35.3 percent year-on-year.
The decrease largely occurred because China, the world's second largest importer of potash fertilizers, has bought nothing from Belarus this year, as Minsk wanted the price to increase from $165 to $205 for a ton.
In June, Belaruskaly had to stop the operation of all the four mines for a week because of having filled its storage facilities to full capacity. The crisis affected the budgetary revenues of the Minsk region and the entire country. Other flagships of the national economy, such as BelAZ and Horizont also did not show a good performance in the first half of the year. Another negative factor is an upward trend in finished product inventories. They were up 13.1 percent on the level of July 1, 2005 to total 2,616 billion rubels. This constitutes a huge amount of blocked money. The government urgently demands every year that enterprises should reduce their unsold stock but to no avail. This partly occurs because the government itself sets enterprises output growth targets.
What also causes concern is a sharp increase in the import surplus in foreign trade. It amounted to $767.5 million in the first five months. In the same period of the previous year, there was an export surplus of $318.5 million. The import surplus in trade with Russia rose by 95.4 percent from $1,351.5 million to $2,641.4. This is an alarming sign of a possible crisis that may occur in the event of a rise in oil and gas prices for Belarus. If the current trend persists, it will be very difficult to preserve the stability of the Belarusian rubel. The currency's depreciation would easily discourage people from making rubel deposits at banks. The loss of this important financial source would increase pressure on the last-hope money lender, the National Bank. If the National Bank attempts to restore the liquidity of banks by giving them inflationary money, an economic disaster will be inevitable.

Table 1. Quantitative indicators of the Belarusian economy
in the first halves of 2002 through 2006

Source: Ministry of Statistics and Analysis

Table 2. Qualitative indicators of the Belarusian economy in the first halves of 2002 through 2006

Source: Ministry of Statistics and Analysis