Stanislau Bahdankevich: There's high risk of ruble slump

The ruble money supply is increasing, but there's no production.

There's a “high risk of the Belarusian ruble slump”, though the opportunity to avoid it still remains, former chief of the National Bank Stanislau Bahdankevich said on August 18 in Brest during a meeting with journalists, BelaPAN news agency reports. “We have a recession. The industrial output in Belarus fell almost 4.5%, agricultural production fell by more than 3% and freight turnover – by 8%,” the expert notes.

The gross product grew 1.1% due to the service sector. “But taking into account that the volume of unsold finished goods increased by 10 trillion we can understand that there's no real growth of the gross product,” Bahdankevich added.

The former bank chief notes other problems that increase the probability of the collapse of the Belarusian ruble, among them a slump in foreign trade within the Customs Union and a decline in gold and foreign currency reserves.

“If we take the entire banking system, the forex reserves fell to zero. The reserves of commercial banks were used to buy bonds of the Ministry of Finance, the National Bank bought free money: it gave rubles and took dollars,” Bahdankevich underlined. “It seems we have about 7$ billion of gold and foreign currency reserves, but we don't actually have them if we mean the whole banking system. We already saw it in 2011 before the collapse of the Belarusian ruble.”

Bahdankevich said the the fall of the national currency could be avoided.

“We are waiting for 440 million dollars of a loan of the EurAsEC Anti-Crisis Fund. The Ministry of Finance issues a debt of $500 million. There's a possibility of selling the state's assets. Besides, the National Bank has unspent reserves,” Bahdankevich said.

The National Bank conducts the right monetary policy in current conditions, according to him.

“Loans are expensive to make the real sector of economy produce the products that can be sold instead of freezing the working capital in excess inventory. Sell it and don't go to a bank,” Bahdankevich summed up.

He thinks a more balanced credit policy in interests rates is needed, in particular, for the small and medium-sized business.

“We need structural changes. The development of the small and medium-sized business is more important than privatisation, I think. But active businessmen don't have funds today. So they need to take cheap money,” Bahdankevich said.