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Leanid Zlotnikau: Exchange rate of Br18,000 per dollar possible this year

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Leanid Zlotnikau: Exchange rate of Br18,000 per dollar possible this year
LEANID ZLOTNIKAU

Many factors are contributing to the further devaluation of the Belarusian currency.

It was said by a well-known economist Leanid Zlotnikau in an interview to charter97.org.

- Today the exchange rate of the US dollar in Belarus has crossed another psychological milestone, Br16,000. To your mind, what are the reasons for this depreciation of currency?

- There are objective and subjective factors which influence weakening of Belarusian ruble’s rate to the dollar.

First of all, recently an impulse outflow of currency from Belarus has taken place, when the country had to pay $1 billion of debts for the loan taken by issuing Eurobonds. It was taken 5 years ago, and now repaid, that is, this currency has left our market, Belarus. And economic entities decreased offer of currency at the market, as this impulse outflow of currency had taken place.

Secondly, we have a situation when the credit amount of currency, received for paying back the previous debts, has decreased considerably. In previous years we were taking loans, and we had enough tranches to pay off the debts for previous credits, and to pay off the credit balance deficit of the current account.

This year this tendency has changed. The sums of loans are reduced for us. The first quarter of the year has demonstrated that the loans taken by our economic entities – the government, banks, enterprises – were equal to $1.2 billion, and the credits we had to reimburse -- $1.7 billion for the same quarter.

Thus, the adverse balance was $0.5 billion more. While last years the amounts of new loans were enough for reimbursing the previous ones, and something was left. This fact shows that our creditors have become more closefisted, and currency incoming from this source has decreased.

These two factors have given rise to the third one: it is no longer profitable to have money in deposits in Belarusian rubles. It resulted in “pumping” the money from Belarusian rubles’ deposits to foreign currency deposits.

Another important factor which had been working for increasing the foreign currency exchange rate previously was further devaluation of the Russian ruble. It means that in case Belarus won’t devaluate its own currency to the extent of the Russian one, the profitability of exports to Russia is to be lost. That is why there is a pressure of the industrial community on the government not to devaluate the Belarusian ruble, and be in step with Russia.

Devaluation of yuan has taken place in China, and the world in general is entering the period of “devaluations’ race”, that is, everyone is going to support their exports and devaluate their currencies.

In this sense Belarus is lagging behind the global trends: devaluation took place in Turkey, Kazakhstan and other countries two years ago. Now there is a new wave, and if Belarus won’t devaluate its currency, its exports are to drop considerably.

These are the objective factors. And the major factor is one, and it is subjective. It is a low efficiency of the Belarusian economy. We are not given credits as we do not want to implement market reforms. Even Russia has lost motivation to support us.

For example, the European Bank for Reconstruction and Development has not given the last tranche of the credit yet, which was to be given last summer. It is connected to the fact that we are not implementing reforms, and the credit had been issued under such a condition. The conditions were simple: privatization, including the one for Russian investors, creation of market economy. And now Russia does not want to provide loans for us as before.

- What your predictions on the exchange rate of the Belarusian ruble in the nearest future would be?

- Devaluation is to continue. This year the exchange rate of Br 18,000 for dollar is possible. I said so before the New Year, and I repeat that now.

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