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Stanislau Bahdankevich: It would be difficult to avoid landslide of devaluation in Belarus

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Stanislau Bahdankevich: It would be difficult to avoid landslide of devaluation in Belarus

If the authorities are not going to do anything, devaluation will be the same as in Russia.

Such an opinion has been expressed by the former Chairman of the Board of the National Bank Stanislau Bahdankevich concerning the measures which should be adopted in connection with the collapse of the Russian ruble. Since the beginning of the year the exchange rate of the Russian ruble to Belarusian ruble has dropped by more than 35% - from 290 to 177 rubles.

According to Bahdankevich, devaluation of the Belarusian ruble should be done quicker. “At the same time, I do not think that we should devaluate our currency by 60%, as it has been done by Russia,” the expert stressed. “Yes, it’s true, we should liberalize Belarusian ruble, but mostly being guided by the deficit on current account. Not only by the equilibrium of foreign trade, but taking into account the payments which are done by us to pay off external debts.”

“That is, we should not be pegged to the Russian ruble, but a quicker devaluation. We should see at which extent it should be done proceeding from the account deficit,” Bahdankevich added.

As said by him, in order to prevent devaluation of the national currency in the same way as the Russian one, in the first place it is necessary to solve the problem of high inflation, to limit the growth in money supply, stop crediting ineffective projects and cut indebtedness of the real economy to commercial banks. “The GDP has grown by less than 1.5%, and debts of the real sector to banks have grown by 24%. It’s totally inappropriate. And it is another reason why we need speedy devaluation, and not only because the Russian ruble is dropping,” the former head of the National Bank stressed.

According to him, it is still possible to prevent repetition of the currency crisis which took place in Belarus in 2011. “Today the exchange rate of currency in the country is controlled. It is still possible to avoid a landslide devaluation, which took place in our country before. However a number of economic measures should be taken for that,” Bahdankevich underlined.

“If our government is going to do nothing as before, there will be a landslide of devaluation, in the same way as in Russia,” the expert added. There is not much time left for the authorities, within one quarter.

“It’s not right to put one’s stake on devaluation only, as any devaluation results in impoverishment of the population, depreciation of ruble deposits, additional price growth in the home market. Devaluation is a huge problem for the country and its population,” Bahdankevich stressed.

It should be noted that international financial organisations, including the World Bank, suggest that there is a necessity to devaluate the Belarusian ruble faster.

Meanwhile the National Bank does not comment on its possible changes in the exchange rate policy so far. In October the chairperson of the Board of the National Bank Nadzeja Yarmakova stated that it is not planned to devaluate the Belarusian ruble in the wake of the Russian ruble, emphasizing that there are lots of speculations on the issue of the Russian ruble devaluation. “Tomorrow it will jump up, so what, are we going to run after it?” Yarmakova noted.

On December 12 the deputy chairperson of the Board of the National Bank Syarhei Dubko stated that Belarus is able to find new sources of growth for the economy in the unfavorable external conditions. Answering the question of influence of the unstable situation in the Russian economy on Belarus, Dubkou noted that it is an important factor, though it should not be overstated. “Crisis is a bad thing, and it is a good thing. It allows to open the new niches, which could be won by is,” the deputy chairperson of the Board of the National Bank stressed.

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