Leanid Zaika: Government’s measures for “taming” ruble are wild dances around fire

In order to overcome the crisis of Belarusian products’ sales, the exchange rate of the ruble should be about 18,000 per dollar.

Such an opinion was given in an interview to charter97.org website by a well-known Belarusian economist, the head of Strategia analytical centre Leanid Zaika.

- For two days in a row the US dollar demonstrates its historical maximum against the Belarusian ruble. What is the reason for that to your mind, and what is the forecast of the exchange rate by the end of this year?

- We have plunged into an unpleasant situation when Russia made its ruble rather weak. Now many things in Russia have become very cheap in dollar terms. A small flat (20-27 square metres) could be bought for about 13,000 dollars.

In Russia devaluation has its own sense. It leads to the situation when Russian exported products become cheaper, and imports to Russia are getting cheaper as well. But we are behind the Russian devaluation. Objectively, for economic recovery, devaluation should be carried out even more quickly. For competitiveness of our products, the Belarusian ruble should be about 18,000 per dollar.

The second thing – we should understand what is happening in the world economy in general. I deliberately looked through the recent figures in The Economist: the economics dynamics all over the world is rather good. The growth is rather good, 2-3 or even 4% per year. 3-4% of the GDP is a steadfast growth rate. So when our industrial production is falling, and the government says about some external crisis, it is a lie.

We have a purely our own, domestic crisis. It is a result of the economic policy, which had been followed all this time. And amid the internal crisis, when our products are not bought, the Belarusian ruble should be devaluated. The prospects of the Belarusian ruble are naturally dim.

And I would not distinguish a certain period, until the end of the year or some other. It does not really matter anymore. The economic determination of this phenomenon is more important.

There is one more factor, repayment of debts. The government had to collect currency in order to pay in July, as informed by the chairman of the National Bank Pavel Kalaur. The state debt is 1.3 billion dollars. In the second half of the year the state would have to look for money again, in order to repay debts, and it should be better made through devaluation.

That is why the situation with depreciation of a currency is absolutely explainable, it is a result of previous actions. And I understand why Prime Minister does not make many statements now: there are not many things to say.

The best thing the Belarusian authorities could do is not to interfere with economic processes. Objectively, the economy itself could better cope with the crisis, than the habitual basket of specific “measures”, which remind not even firefighting, but rather wild dances of savages around a fire, a kind of workaround.

- The figure announced by you, Br18,000 per dollar – is it to become a reality before the “elections?” It is a serious psychological barrier for the population.

I understand that the situation is very bad here. Contrary to the objective laws of the economy, the exchange rate of the ruble against the dollar has become “a sacred value” for the government.

The exchange rate of 18,000 before the “elections” is sure to make distressing impression. That is why they are going to maintain the exchange rate of Br15,500 – 16,000 per dollar. Otherwise it could be dangerous. People have the established psychology like this.

- And after the “elections”?

- In Belarus it is usual that the exchange rate of the ruble is connected to some non-economic events – “elections”, the New Year, the People’s assembly… It reminds the Soviet Union. Such “ambitious” moves were made there in the same way, timing them to some holidays – the 7th of November, Lenin’s birthday. And it is a very bad tendency. No “elections”, presidential or parliamentary ones, should influence the objectivity of the economic policy. In fact, citizens of Belarus have been made just bystanders in a kind of a political theatre.