Unsurprisingly, not a single opposition candidate managed to land a seat in last month’s parliamentary elections, which were considered neither free nor fair by international observers. Two of the largest opposition parties withdrew from the poll a week before election day and the electorate is supposed to have done largely the same with real turnout assumed to be significantly lower than the official 74%, suggesting widespread voter apathy.

Impact on country risk

The results mean that long-serving president Alexander Lukashenko will maintain his tight grip over the country, the more as dispersed opposition forces have been heavily repressed over the past years to avoid any challenge to his rule. While politically unthreatened, the soviet-style command economy may cause the regime more headaches. In the run-up to the elections, the  authorities took recourse  to  the  same tactics they deployed in  2010, namely increasing pensions and public wages in order to bolster support for their rule. However, this populist spending resulted in a heavy financial crisis last year as foreign exchange reserves were depleted, the rouble exchange rate was heavily devalued and inflation spiked. While down from last year’s levels of over 100%, inflation still reached 55% in the twelve months to August. Given the worse starting point, the latest hike in wages and pensions could trigger an even more intense crisis this time around.

Analyst: The Risk Management Team, p.dellafaille@credendogroup.com