Bahdankevich: Banking system’s collapse risks increase

The recent measures of the balance of trade show that. Only loans are keeping the economy afloat.

The National Statistics Committee has published the figures on foreign trade volume in January-June. The adverse balance was 3 billion 949 million dollars. This final sum has appeared mostly because of the adverse balance in Belarusian-Russian trade which was 4 billion 605 million dollars.

As a result, the adverse balance has exceeded gold and foreign currency reserves, which according to the information of the National bank, were equal to 3 billion 887 million dollars as of July 10.

The former head of the National bank Stanislau Bahdankevich in an interview to “My” said that it is a highly critical figure.

“It is a result of not implementing needed anti-crisis measures. I cannot say that nothing is done. Many things are done, but there is no system to that, so there is no effect. They have limited currency credits for physical persons. I think I would have done the same, I would even act more radically in this direction. But it is a little step. Crediting of loss-making enterprises continues, which increases risks for the banking system. The authorities take loans hoping that everything would turn out right, but in reality this just postpones problems and radical reforms, which the government would have to make sooner or later. And by the way, the crisis is quite a convenient time for that. Moreover, the people understand the situation. But the government procrastinates, ordering to hard-sell our unsalable products worldwide and taking more and more loans. And loans are used for consumption, for covering the merchandise deficit and suporting the currency exchange rate,” the economist said.

The adverse balance exceeding the gold and foreign currency reserves could result in devaluation, as many economists view it as an instrument of regulating the foreign trade. “It is really an effective method,” Bahdankevich said. “But it’s one out of dozens of measures that should be taken. It’s true, the budget should be changed. Now it has been cut down in different directions by little parts. But the situation is, that investment expenditures should be decreased. For instance, non-essential projects for building sports and cultural buildings should be stopped. The structure of the state government should be made cheaper, that means job cuts for bureaucrats. So far de-bureaucratization is mere words. A number of programs on business development, increase of competitiveness and so on, should be adopted”.