Stanislau Bahdankevich: Devaluation is inevitable

Belarusians lost confidence in the national currency.

Former chief of the Belarusian National Bank Stanislau Bahdankevich spoke to charter97.org about the outflow of time deposits in Belarusian rubles.

“In my opinion, the situation develops as expected. To some extent, it can be explained by the holiday season – people buy more foreign currency for foreign trips and withdraw their deposits. The decrease in deposits shows that bank clients have doubts in the stability of the national currency. The lack of confidence is caused by the current economic situation: Belarusian products cannot compete in the international market, first of all in Russia; problems with selling finished goods; accounts receivable. This was caused by the lack of reforms in the Belarusian authoritarian economy,” the expert says.

The economist stressed that ungrounded plans of the Belarusian government to boost the economy can only surprise.

“The old tendencies will continue: the price growth, a decline in standards of living, etc. I am convinced that devaluation is necessary and inevitable in the current conditions. Not a sharp devaluation, but the dollar must cost 9,500—10,000 rubles. I think the government will be able to keep afloat for some time, but it will have to take measures, especially if the golden and foreign currency reserves decrease. The reserves now are 8 billion dollars, but commercial banks have minus 5.6 billion. The matter is that the National Bank took foreign currency from banks and replaced it with Belarusian rubles that are used to give loans. You can examine the official data and find the negative value of net foreign assets. The country has only 3 billion of net assets. This is very little. The dollar will cost 9,000 rubles by the end of the year if the exchange rate is controlled, and 10,000 rubles if it is not controlled,” the expert thinks.

The outflow of time deposits in Belarusian rubles opened by individuals and companied was recorded in June 2013 for the first time since October 2012.