Stanislau Bahdankevich: Authorities don't want devaluation, but approaching it

The National Bank and the government failed to make right conclusions from the Belarusian ruble collapse in 2011.

Stanislau Bahdankevich, a former chief of the Belarusian National Bank, spoke to charter97.org about the high rate of buying foreign currency by Belarusians.

“The fact that many people buy foreign currency shows their distrust of the government's monetary policy and understanding that the country's economy is in crisis. It also shows that attempts to artificially control the exchange rate amid high inflation are wrong. The authorities should have begun to loosen the exchange rate,” the economist thinks.

He is confident that the situation will lead to the drop in the national currency.

“I think the authorities should begin to toughen the monetary policy: restrict issuing loans and stop decreasing the discount rate. The National Bank and the government don't want devaluation, but their monetary policy leads to devaluation. Belarus with its ineffective economy receives loans. A number of enterprises carry out 'modernisation' though they cannot guarantee they will be able to sell their products. They made a big mistake with Belaruskali. The money supply grows for these and other reasons,” the expert says.

The former National Bank chief added that the authorities made conclusions after the 2011 slump, but they were insufficient.

“We should have moved to a market economy, carried out reforms and created conditions for foreign capital inflow. It was failed. These half-measures will lead to the devaluation of the national currency and the ongoing increase in consumer prices,” Stanislau Bahdankeivch summed up.

We remind that Belarusians have bought about 1 billion dollars since the beginning of the year.