Swedish experts: «Belarus can’t avoid financial crisis»

Specialists from Stockholm Institute of Transition Economics and economies of Eastern Europe countries (SITE) at the Stockholm School of Economics researched the Belarusian reality and came to a conclusion that if Belarus with its ill balance of payment maintains today’s rates of foreign loans, it won’t be able to avoid financial crisis.

The SITE’s report urges the Belarusian government to take steps on restraining of growth of deficit of current operations and keeping it on the level that can allow its financing without serious borrowings. The Swedish economists have founded on data of the IMF, the World Bank Group, the European Bank for Reconstruction and Development in their research, “Belorusskie Novosti” writes.

The facts are evident: if the first quarter of the last year showed account balance of current operation of USD 114.6 mln, it comprised USD -641 mln for the period January-March 2007. Cash inflow can balance the situation, but only for some time –long-term stability can’t be achieved by loans. On the contrary, depending on loans in great degree, economy settles itself on the top of debt financial pyramid.

According to the National Bank, the total foreign debt of Belarus has increased by 37.5 per cent – up to USD 9.27 bln for the first half of the year. More than 90 per cent of risks in total assets of banking system are credit risks.

So, the anxiety of Stanislau Bagdankevich, former head of the National Bank, who agree with the Swedish researches, is fully understandable. He has been warning for a long time about a high probability of financial turmoil.