Forecasting in the system of state regulation of the economy

An increasing place in the system of state regulation is occupied by forecasting, which can act as an independent form of regulation and as a scientific and analytical stage of planning.

Forecasting is the process of developing a forecast built on a probabilistic, scientifically based judgment about the prospects for the development of an object in the future, its possible state, as well as alternative ways to achieve it.

Socio-economic forecasting is a way of anticipating, obtaining an idea of the future, due to the laws of social development and the action of diverse and multidirectional factors in the forecast period. In accordance with the Law
“On State Forecasting and Programs of Socio-Economic Development of the Republic of Belarus” forecast is a system of scientifically based ideas about the directions, criteria, principles, goals and priorities of the socio-economic development of the Republic of Belarus for the relevant period, indicating the main projected indicators, targets and measures to ensure them.

The probabilistic nature of the forecasts allows us to judge the possible state of economic and social development of the object in the future, alternative ways of its development, to justify the choice of the most acceptable option. In this sense, forecasting should be considered as an indispensable attribute of long-term planning, as its scientific and analytical stage. Thanks to forecasts, it becomes possible at various levels of management to draw up scientifically based long-term plans for economic and social development, to determine the needs of domestic and foreign markets.

The role of forecasts is especially great in the development of the socio-economic concept and the main directions of development of the national economy for the long term, as well as for analyzing the dynamics and structure of social needs and market reserves, the impact of scientific and technological progress and its consequences on national economic proportions, on resource saving and increasing production efficiency.

In the conditions of market relations, forecasts make it possible not only to determine the prospect of changes in social needs, but also to foresee the conditions and factors for the development of the national economy, the consequences of the implementation of various options for structural, financial, credit, tax and pricing policies. They reveal the picture of the future, positive and negative trends, alternatives, contradictions and measures to resolve them.

However, forecasting can also act as an independent form of state regulation. An example of this is the plans-forecasts, which in the Republic of Belarus on the way to the formation of market relations act as a form of state regulation of the socio-economic development of the country. In addition, many processes and phenomena are not always amenable to planning, but can be objects of forecasting. For example, demographic processes, the level of development of personal subsidiary farming, etc.

The whole variety of forecasts used can be represented through the following types: economic forecasts, natural resource forecasts, scientific and technical forecasts, demographic forecasts and social development forecasts.

Economic forecasts study the long-term development of productive forces and production relations: labor productivity, the use and reproduction of labor resources, fixed assets, the volume and composition of capital investments, their efficiency, economic growth rates, the development of industries and national economic complexes, the dynamics, composition and quality of products, etc.

Forecasts of social development and improvement of the standard of living of the population include: consumption of food and non-food products by the population, retail turnover, development of social sectors, housing and communal services, consumer services, public education, culture, art, healthcare, recreation, tourism, etc.

Forecasts of social development are a very complex set of studies that concern the most diverse aspects of the life of our people.

Forecasts of natural resources and their involvement in economic turnover cover all types of resources that make up the natural base of social production and the natural environment: fuel and mineral resources, resources of the oceans, some types of energy, flora and fauna, as well as environmental protection.

The value of these predictions is determined by the following: First, the availability of raw materials affects the development of production, its specialization, size, structure, and the amount of transport costs. The conditions of occurrence, volume, composition of natural resources ultimately affect the efficiency of production. Secondly, due to the increased scale of extraction and use of natural resources and their non-renewableity, the reserves of coal, oil, gas, peat and other resources are rapidly decreasing. Therefore, now the task is to move to the use of resources of lower quality, with a smaller content of a useful component, to the development of deposits in hard-to-reach areas, the use of secondary and associated resources.

All this should be reflected in forecasts, which should provide both quantitative and qualitative assessment of resources.

Scientific and technical forecasts consider the achievements of scientific and technological progress, which have a significant impact on the location of production, natural factors. For example, the production and use of nuclear energy, the construction of nuclear power plants, the emergence of opportunities for the transmission of energy over ultra-long distances makes it possible to change the location of energy-intensive industries, which indicates a close connection between the forecasts of natural resources and scientific and technological progress, and that they cannot be considered outside this connection.

Scientific and technical forecasts reveal the possibility of increasing the efficiency of production, the degree and methods of meeting the personal and social needs of the population, the possibility of improving the methods and means of managing production, improving the use of natural resources, ensuring the country’s defense capability.

Three types of scientific and technical forecasts can be distinguished:

forecasts of the development of science as one of the spheres of human activity, the main fundamental and applied research; forecasts of development and implementation of achievements of scientific and technological progress in the national economy; determination of the consequences of scientific and technological progress.

Demographic forecasts cover the movement of population and the reproduction of labor resources, the level of employment of the able-bodied population, its qualification and professional composition. Demographic forecasts consider the dynamics of population on the basis of the sex-age structure, data on fertility and mortality, on the territorial distribution of the population. They make it possible to obtain forecast information on the possible number of families, their average size, the direction and intensity of migration flows of the population, the duration of active labor activity, the average ages of the beginning and end of labor activity, retirement, and the average life expectancy.

On the basis of demographic forecasts, the volume and structure of public needs of the population, the production of personal consumption items, the development of public education, health care, etc. are planned.

All of these forecasts are interrelated and should be developed on the basis of theoretical research and observations, natural processes in nature and society, allowing to foresee what will happen in a particular area under appropriate conditions and prerequisites.

Forecasting the development of the national economy covers all aspects and levels of its development and is based on the totality of all the forecasts listed above, i.e. it is complex.

The structure of the national economic forecast includes both different levels of aggregation of the national economy and various aspects of its development.                              According to the level of aggregation in the national economic forecast, there are: macroeconomic, structural, forecasts for the development of national economic complexes (fuel and energy, agro-industrial, investment, structural materials, production infrastructure, public service sectors).

The macroeconomic level includes the forecast:

GDP, GNP and its distributions; labor resources, their distribution between the production and non-production  spheres, and within the production sphere – between industries; labor productivity on the scale of material production; production fixed and circulating assets and capital investments; capital return and unit capital expenditures throughout the sphere of material production; current consumption of the population, non-productive fixed assets and capital investments; the main financial flows (primary income of the state, the population and their use).

The structural (intersectoral and interregional) forecast includes forecasts:

sectoral structure of the social product; intersectoral relations and products of branches of material production in value and physical terms; distribution of labor resources between the branches of material production and sectoral labor productivity; cross-sectoral distribution and efficiency of use of fixed assets and capital investments.

The forecast for the development of national economic complexes includes forecasts:

needs for products of this complex; volume and structure of the complex’s products, production resources and efficiency of their use.

Having their own content (acting as independent objects of forecasting), all sections of the national economic forecast presented in Scheme 3.1 are consistent and act as a single whole in the national economic forecast.

According to the period of pre-emption, short-term forecasts (up to 2 – 3 years), medium-term (2 – 5 years), long-term (over 5 years) are distinguished. It should be noted that the assignment of the forecast to one or another type for the period of anticipation depends on the object of forecasting.

In the system of state regulation of the economy of the Republic of Belarus, forecasting is used both as a form of state regulation of the economy, and as a scientific basis for making specific decisions in the field of socio-economic development of the republic by legislative and executive authorities.

In accordance with the Law “On State Forecasting and Programs of Socio-Economic Development of the Republic of Belarus”, state forecasts are developed for long-term (10, 15 years), medium-term
(5 years) and short term prospects.

The development of state forecasts is provided by the Council of Ministers of the Republic of Belarus.

The basis for the development of forecasts is a comprehensive analysis of the current socio-economic, demographic and environmental situation, scientific, technical and production potentials of the Republic of Belarus, external conditions, the state of natural resources and the prospects for changing these factors.

Forecasts of socio-economic development are developed in several versions and reflect the quantitative indicators and qualitative characteristics of the macroeconomic situation, economic structure, scientific and technical development, foreign economic activity, dynamics of production and consumption, level and quality of life, environmental situation, social structure.

Forecasts are developed in the republic as a whole, for republican bodies of state administration and for administrative-territorial entities.

The procedure for developing local forecasts is the same as for local programs.

System of program and forecast documents used in state regulation of the economy of the Republic of Belarus

State forecasting and programming of socio-economic development of the Republic of Belarus is implemented through the system of state forecasts and programs (Fig. 2), which includes:

National Strategy for Sustainable Development  of the Republic (15 years); forecast of socio-economic development for the long term (10 years); program of socio-economic development of the Republic of Belarus for the medium term
(5 years); forecast of socio-economic development in the short term (1 year).

The starting point in the system of forecast and program documents is the National Strategy for Sustainable Development of the Republic of Belarus, which is developed for a fifteen-year period once every five years two and a half years before the beginning of the forecast period.

The main goal of the National Strategy for Sustainable Development is to ensure stable socio-economic development of Belarus while maintaining a favorable environment and rationally using the natural resource potential to meet the needs of not only present, but also future generations, taking into account the interests of other states.

The National Strategy for Sustainable Development of the Republic of Belarus is a system of scientifically based ideas about the criteria and principles of sustainable development of the economy and society, on the basis of which the directions for the effective use of the demographic, social, natural, production and innovative potentials of the country are determined.

The strategy provides for a phased movement towards a post-industrial society, taking into account national characteristics, in order to achieve a high level and quality of life of the population, improve the living environment on the basis of the formation of a new technological mode of production and  a multi-structured economy with a significant role of the state in its transformation and reform.

Taking into account the long period of time required to achieve the ultimate goals of reforming the economy, the following stages of socio-economic development of the republic are distinguished:

the first is restorative. This phase covered  the years 1998-2000;

The second stage (2001-2005) is the stage of creating conditions for the  resumption of sustainable economic growth;

the third stage (2006-2010) should become a stage of active structural restructuring of the economy. The priority areas of this stage should be the technological re-equipment of production based on the introduction of the latest technologies, stimulating internal and external innovations and fundamental developments in the field of resource saving, ensuring the dynamic development of the investment process;

The fourth stage (2011-2015) should be the initial period of sustainable economic development and approximation to European standards of the level and quality of life, the environment.

For the fourth and fifth stages, two options for scenarios for the socio-economic development of the republic are envisaged:

the first option is inertial, based on the trends and directions of socio-economic development formed in 1996-2000, moderate growth rates, some improvement in the use of production capacities and relatively slow rates of renewal of fixed capital, the use of a fairly tight fiscal and monetary policy;

the second option is targeted. It provides for the fullest use of internal and external factors of economic growth, the achievement of rational consumption norms, ensuring by the end of the period of normal processes of reproduction of fixed assets, stimulating the production of goods and services fiscal and monetary policy, a higher level of state support for entrepreneurship, small and medium-sized businesses.

On the basis of the National Strategy for Sustainable Development of the Republic of Belarus, a forecast of socio-economic development for a ten-year period is being prepared, which is developed every five years two years before the beginning of the forecast period. The first five years are broken down by year.

The forecast of socio-economic development for a ten-year period specifies the goals and alternative options for ways and means of achieving them.

The data of the forecast of socio-economic development for the ten-year perspective are subject to publication.

The procedure for developing the National Strategy for Sustainable Development and the forecast for ten years shall be determined by the Council of Ministers of the Republic of Belarus.

The medium-term perspective of the socio-economic development of the Republic of Belarus is reflected in the Programme for the Socio-Economic Development of the Republic of Belarus, which is being developed for a five-year period one year before its start.

The basis for the development of the program is the forecast of socio-economic development of the Republic of Belarus on
10 years.

The procedure for developing the program shall be determined by the Council of Ministers of the Republic of Belarus.

The program should reflect:

assessment of the results of socio-economic development for the previous period and the characteristics of the state of the economy of the Republic of Belarus; the concept of the program of socio-economic development of the Republic of Belarus for the medium term; macroeconomic policies, including fiscal, monetary and exchange rate policies; institutional transformation; foreign economic activity; development of the real sector of the economy; social issues.

The concept of the socio-economic development program of the Republic of Belarus is a system of target parameters of the state of the economy, the main decisions and measures in the field of financial, economic and innovation policy.

In accordance with the Main Provisions of the Program of Socio-Economic Development of the Republic of Belarus for 2001-2005, the first five-year period of the XXI century should become the most important stage in achieving the strategic goal of the socio-economic development of the country – improving the well-being of the people and bringing it closer to the level of economically developed European states.

The main objectives of this quinquennium  are:

to create the necessary conditions for improving the health of the population, raising the level of its education and culture on the basis of the priority development of healthcare, education, culture, sports and tourism; to improve the demographic situation in the country and strengthen the institution of the family; create conditions for sustainable socio-economic development and growth of efficiency of the real sector of the economy; reduce the tax burden on commodity producers and the population; carry out technical re-equipment and restructuring of enterprises on the basis of introduction of new and high technologies; to bring by the end of the five-year period the average monthly wage of workers in the national economy to a level equivalent to 250 US dollars; increase the level of pensions to 48%, scholarships – to
25-30% of the average wage in the national economy; improve the environmental situation, implement effective measures to overcome the consequences of the Chernobyl disaster; to ensure the comprehensiveness of the socio-economic development of regions, districts and cities, the stabilization of the situation in problem regions.

The main priorities for 2001-2005 are:

formation of an effective health care system; intensification of innovation and investment policies; increasing exports of goods and services; further development of housing construction on an emission-free basis, making maximum use of extrabudgetary sources of funding; development of the agro-industrial complex and related industries.

The program of socio-economic development of the Republic of Belarus for five years serves as the basis for the development of an annual forecast of socio-economic development, which is developed annually, and the main indicators are specified quarterly.

The annual forecast of socio-economic development is developed in several versions, taking into account the probabilistic impact of internal and external factors.

The annual forecast reflects the issues included in the program of socio-economic development for five years, and also includes:

list and characteristics of target programs of the Republic of Belarus and interstate programs planned for financing from the republican budget; the composition of republican state needs, a list of state customers for the supply (procurement) of goods, works and services for republican state needs; state investment program; a set of measures necessary to implement the forecast of socio-economic development for the projected year; target indicators of socio-economic development, which are guidelines for the development of forecasts and programs for administrative-territorial entities and government bodies.

It is important to note that the procedure and timing of the development of the annual forecast of socio-economic development are consistent with the procedure and timing of the development of the state budget, and the annual forecast itself serves as the initial basis for drafting the republican and local budgets.

In the month following the end of each quarter, the Council of Ministers of the Republic of Belarus shall consider the implementation of the annual forecast of socio-economic development.

Draft state forecasts of socio-economic development for the next year and five-year programs of socio-economic development are submitted by the Council of Ministers of the Republic of Belarus to the National Assembly and the President of the Republic of Belarus.

When discussing the draft state budget for the next fiscal year, the National Assembly of the Republic of Belarus determines the procedure for considering the submitted draft forecasts and programs.

Annual forecasts and five-year programs of socio-economic development are approved by decrees of the President of the Republic of Belarus.

The presented system of forecast and program documents of socio-economic development of the Republic of Belarus ensures continuity of forecasting and programming, continuity in the development of long-term, medium-term and short-term documents.

The system of forecast and program documents, their goals and objectives, the content, the procedure for developing and interfacing, submission and approval are regulated by the Law “On State Forecasting and Programs of Socio-Economic Development of the Republic of Belarus”, adopted by the House of Representatives and approved by the Council of the Republic in 1998 and other normative acts.

State forecasts and programs of socio-economic development of the Republic of Belarus are based on a system of private forecasts and programs of demographic, environmental, scientific, technical, social, economic and foreign economic development, as well as sectoral, regional and other forecasts.