Barys Zhaliba: “We should prepare for worst-case scenario in economy”

The optimism of the authorities has no grounds.

Professor Barys Zhaliba, an economist, spoke to Salidarnasts about the country's economy development scenarios for 2015 prepared by the government and the National Bank.

On February 20, minister of economy Uladzimir Zinouski presented Belarus's scenarios for the economic development for 2015 that were worked out by the government and the National Bank in correlation with oil prices and changes of the exchange rate of the Russian ruble.

The first scenario is based on an average annual oil price of $60 a barrel and a rate of 60 Russian rubles per dollar.

The second scenario relies on calculations of Russia's basic scenario and expects the average annual price for oil at $50 a barrel and the exchange rate of the Russian ruble at 61.5 rubles per dollar.

The third scenario, the stress one, expects an oil price of $40 a barrel and an average exchange rate of the Russian ruble of 80 rubles per dollar.

According to the minister, the economic authorities assess the best-case scenario as quite probable, which gives an opportunity for the government and the National Bank to soften the economic policy in the second half of the year.

“Survival of economy is in question”

Economist Prof. Barys Zhaliba draws attention to the fact that all scenarios are pegged to the Russian economy:

“We are reaping the fruits of our one-way dependence on the Russian economy.”

The expert, however, assesses the authorities' scenarios as rather realistic.

“Oil price is unlikely to rise by the end of the year. I think it won't get higher than $60 a barrel,” he says.

The economist thinks we need to prepare for the worst-case scenario:

“The Russian market continues to shrink. Russia's economy will decline because oil prices are not going to grow in the near future. Western sanctions play their role, too. The conflict in Ukraine goes on and gets more violent. The market of our second economic partner, Ukraine, is shrinking, too.”

The economist advises to think how to save what we already have and give up hopes for economic growth.

“The survival of the economy is in question,” the experts says and notes he is not as optimistic about “favourable developments” as the authorities.

What can be done?

Barys Zhaliba thinks the authorities have options of how to get rid of the total dependence on the Russian economy:

“Russian oil becomes more and more unprofitable for us after Russia's tax maneuver amid the global decline in oil prices. We need to look for other sources of deliveries, for example, Azerbaijan. We can buy liquefied gas in Lithuania, which can now afford such deals. We need to think how to diversify the country's export.”