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Stanislau Bahdankevich: Authorities cannot prevent ruble fall

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Stanislau Bahdankevich: Authorities cannot prevent ruble fall

A devaluation of the national currency is inevitable.

The authorities will have to cut down expenses next year. The draft budget for 2015 takes into account a “sharp decline in the world's economic growth and the lack of GDP growth in the Russian Federation due to a significant fall in oil prices”.

It doesn't give many opportunities for populism. Even the recently advertised maternity capital scheme looks more like vague prospects. The state proposes to use a $10,000 allowance for the third child only in 18 years.

Having no hopes for the financial aid from Russia, Aliaksandr Lukashenka has opted to focus on his reliable supporters – the law-enforcement bodies and the power vertical – ahead of the “presidential elections”. Eurobelarus.info talks to former head of the National Bank Stanislau Bahdankevich about the draft budget for 2015.

– What can you say about the budget for the next year? Is it more about development, austerity or social support?

– What concerns the social sector, the budget contains rational ideas, but budgets of the last fews years don't have many differences. These budgets were primarily aimed at supporting the law-enforcement bodies. The next year's budget is a standard stable document that provides for increasing expenses on the police and other law-enforcement agencies.

The draft budget for 2015 cannot be called a budget of development, because it and the main strategies for the country's social and economic development lack measures to cut taxes, cheapen loans and so on.

A potential investor with serious money won't come to the country, because he sees that the interest rate for loans are 30-50%. These conditions are unacceptable for a normal development.

The budget for 2015 seems to be a document to keep the current status quo.

– The next year's draft budget has a surplus of 15 billion rubles. What does it mean: the government is confident it will have enough revenues or, on the contrary, expenses will be cut?

– It means that the inflation rate and sales taxes will give nominal budget revenues when the real revenues will be devalued. It's like the inflation rate ensuring the nominal value of goods. We see this scheme working in the country now.

The country should recover the economy. The primary target is the stable national currency, so that it can be used for evaluating the growth of production, incomes and prosperity. When the inflation rate is a two-digit number, it is impossible to have the real statistics and real budget.

The surplus means not only increased revenues but also reduced expenses. The national currency is being devalued.

Belarus has had balanced budgets in the past few years, but it is not the main thing. If the budget is balanced, why do we take external loans? They are given if the country does not have enough resources to cover its expenses. Belarus has balanced budgets, but debts are growing year by year.

– How will the Belarusian budget hit by a decline in oil prices?

– A decline in energy prices is supposed to be an advantage for the country, because it reduces expenses in the real sector of economy. Yes, oil refineries suffer losses, but the real sector and population are supposed to live not worse than before.

Unfortunately, we don't see it. The decline will negatively hit the country in the real Belarusian conditions due to the absence of the economic sovereignty, the excessive financial and economic dependence on Russia, a fall in oil prices and a recession in Russia.

– The treaty on the establishment of the Eurasian Economic Union takes force at the beginning of 2015. The Russian ruble is falling. Belarus's budget for 2015 was formed taking into account that the Belarusian ruble will cost 11,000 a dollar. In you opinion, will the authorities be able to keep the ruble on the expected level if the Russian ruble may continue its fall?

– I think they cannot do it. If Belarus could settle transactions in dollars instead of Russian rubles, the country wouldn't need to devalue its currency to adjust it to the Russian ruble rate.

But we settle transactions mainly in the national currencies, including the Russian ruble. We also see it from the statements proposing to use the national currencies for transactions in the Eurasian Economic Union.

We can expect nothing good. Belarus will have to devalue its currency.

If we settle transactions in dollars, we can keep a certain stability in relation to the Russian ruble, the euro and other currencies. But if most transactions are in Russian rubles, we need to speed up the devaluation, otherwise our economy will collapse.

– When you look at the draft budget for 2015, do you have a feeling that it is the budget for the year of the presidential elections? Does it contain anything to “buy” voters?

– I would say that I have a feeling that the authorities decided to rest on the law-enforcement bodies. The budget provides for increased expenses on the law-enforcement agencies and the state administration.

The budget shows that Lukashenka doesn't plan to focus on voters. He wants to rely on officials, the police, courts, prosecution agencies and the army.

– The country doesn't have money for all, do it?

– It seems so. Lukashenka would probably like to help other people too, but he has no money. He only has money for the bodies on which the election results depend. We don't have democracy to have fair elections.

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