Stanislau Bahdankevich: Inflation rate to reach 20% next year

Peaceful Belarus and war-torn Ukraine have equal inflation rates.

Belarusian PM Mikhail Miasnikovich said on Monday that real salaries of public sector employees would rise in 2015: he promised their wages would grow faster than the inflation rate. Additional growth is expected due to “budgetary allocations and cost minimisation”.

Are the authorities able to secure the growth of real salaries? How will it influence the Belarusian economy?

Stanislau Bahdankevich, a former National Bank chief, spoke to Radio Svaboda and turned attention to the fact that Miasnikovich promised nothing radical.

“Firstly, the salary growth may be faster than the inflation rate only by 1%, and it can be called the salary increase. Secondly, the increase is most likely to be absorbed by the inflation, which will obviously exceed the estimated 12%. The inflation will be more, and it is clear even today. So, we shouldn't expect the growth of real wages,” the ex-National Bank chief says.

Bahdankevich thinks the Belarusian government is unable to curb the inflation.

“The government has done it for 20 years. We have a huge inflation rate every year that cannot be compared with the inflation in Russia or Ukraine. Ukraine is at war now, Belarus remains peaceful, but we have equal inflation rates. The inflation rate will high. It is likely to reach nearly 20% next year,” he says.

Bahdankevich explains the situation with chronic diseases of the Belarusian economy.

“We do not carry out economic reforms. Plants work only to fill their stocks. We have goods worth more than 33 trillion rubles in warehouses. Electricity, wages and other costs were spent to make these products, but they haven't been sold. The money was spent, but no one needs the products. Such an economy generates the inflation,” Stanislau Bahdankevich says.