Stanislau Bahdankevich: Wages May Reach the Level of the 1990s

Loans of Russia and the IMF will not help Lukashenka.

In December 2015 an average salary equaled to Br7.424 million or $412. In fact, it can be compared to the one in January 2015. However, if taking into account January devaluation an average wage in December 2015 decreased to $344.

Let's compare to that it was a year ago: in December 2014 an average salary equaled to Br6 million and 805.9 thousand or $619. In fact, it lost about $207.

How can such reduction be explained? What to expect in 2016? Ex-Chairman of the National Bank Stanislau Bahdankevich shared his opinion with Novy Chas.

- Reasons for a drop in wages are well-known. The economy is getting worse: the GDP dropped by 4%, according to official data. Industrial sector faced 7% drop, agricultural sector lost 3%, labour productivity decreased as well. It is an economic meltdown caused by absence of economic reforms, work for warehouses, loss-making activity of flagships of the Belarusian industry, MAZ, MTZ, BMZ.

A general decline of the economy, when authorities do not make conclusions, and no political leading apparatus is updated, and Lukashenka constantly says that no reforms are needed have resulted in general impoverishment of the population.

- The Belarusian ruble is in the top-9 list of the most loss-making currency for investment, based on results of 2015. According to Bloomberg, our currency has lost 42% of its value within a year. How did inflation affect wages?

- According to official data, the ruble lost 57%. The depreciation is caused by many reasons. What is more, the National Bank does not have a possibility now to maneuver because of absence of gold and foreign exchange reserves. Net gold and foreign exchange reserves make up today only $2 billion and this year government payments only equal to more than $3 billion. And if to take into account bank payments for redemption of borrowings, it reaches $7 billion. There are no reserves. If the economy suffers decline, the currency exchange rate declines as well. Even if it is determined by demand and supply. The foreign trade balance is allegedly almost balanced, but payment balance is not in balance – there is a need to pay debts.

The government asks for $6 billion credit: in Russia and the IMF. In case of a credit only the status quo could be retained. But without reforms neither Russia nor the West are ready to grant a credit. So, we are subject to drop in the living standards.

My conclusions are based on my own experience: pension is not increasing, but prices for medicines, according to the official data, increased by a third, prices on consumer goods are constantly increasing. It is announced prices for citizens of Belarus are growing amid world-wide price drop on energy resources: electricity rose by 20%, gas – 20%, housing and communal services - 30%. It is a gradual and steady impoverishment of people.

I hope that despite ignorant statements on non-admittance of reforms the government will start to work. However, the drop in the living standards will be still on. Currency component will decline as well, but it is hard to predict to what extent.

I wish the decision on structural transformations related to political component would finally be adopted. The government must be responsible to voters. It implies personnel shift in the government and director's apparatus: There are enough people, but the system is the thing of the past - to gain profit for overstated oil and gas prices together with Russia.

- But is it hard to predict a possible bottom for wages?

- They may reach the level of 1991-1995 years. It was the time when the USSR collapsed, and both the leadership and me had to take structural reforms in the industry. In 1991 about 40% of the Belarusian industry worked for the USSR Ministry of Defence. The USSR collapsed and work at plants stopped. But it was caused by reasonable factors, not it is based on subjective ones: the government has no idea what is going on neither in the world nor in the Belarusian economy.