Leu Marholin: Belarusian economy doesn't allow paying wages of more than $400

Economist Leu Marholin explains why Belarusians in April sold foreign currency more than they bought.

The amount of foreign currency sold by Belarusians has been exceeding the amount of purchased foreign currency for the third month. According to the National Bank, Belarusians sold by 269.9 million dollars of foreign cash more than they bought in April. The same value in March was 243,8 million. Belarusians exchanged 2.337 billion of foreign currency for rubles for four months of the year. It means that every Belarusian, including children, sold $240. Individuals bought 1.806 billion of foreign cash from January to May.

“It is because people became poorer. Wages declined. Some people cannot find a job. People have to take their 'rainy day fund' and sell foreign currency. It is a question what they will do when they run out of foreign cash,” economist Leu Marholin said in an interview with Radio Racyja.

– Can we say that the panic buying of foreign currency is over?

– Yes, but panic buying is not possible in normal conditions. Those wanting to buy foreign currency can easily do it, those wanting to sell can sell it. Panic buying happens in an abnormal situation or if restrictions are imposed. It is like in a shop. Either it has products on sale or not.

– The Belarusian ruble looks stable now, but do people still have devaluation expectations?

– They always have them. Perhaps, they are not very strong today. But people always have the word 'devaluation' in the back of their mind. They know from their own bitter experience that the government can devalue their savings in rubles at any moment. But we see today that the government don't throw money into the economy, so a devaluation is unlikely to happen now.

– There were plans to reach an average salary of $1000, but the plans remained dreams. Why did it fail?

– Clever people knew that it wouldn't be achieved, because the Belarusian economy cannot afford it. People must receive the wages that the economy can afford. If the government pays more, you can expect a high inflation rate and later a devaluation. The Belarusian economy does not allow paying wages of more than $300-400. We can discuss other plans only when real systemic reforms are launched. But we don't see them now.

– Is it possible that wages will be raised due to the upcoming elections?

– It is impossible. Wages of public sector employees can be increased a bit, but they are only a small part of all employees in the country, so the authorities may drop this idea in order not to offend other people.