Vadzim Iosub: Authorities Ask For Money, And Belarusians Get Poorer

If the supplies of Russian oil continue to reduce in the IV quarter, it may make Belarus be short of foreign currency earnings.

Foreign currency rivers have become shallow.

Foreign exchange earnings of Belarus amounted to 21.4 billion dollars in January-September, which is 14%, or $ 3.5 billion less than in the same period last year. The foreign exchange earnings have reduced due to the drop in prices for the main products of the Belarusian export - petroleum products and potash fertilizers.

“It is possible that the earnings will continue to fall”

The senior analyst at Alpari Vadzim Iosub commented on a current situation to the Belaruskaya Prauda (editor's note - Belarusian Truth) newspaper.

– The foreign exchange earnings have reduced due to the drop in prices for the main products of the Belarusian export – petroleum products and potash fertilizers – if compared to the previous year.

– How much is the amount of $ 3.5 billion noticeable to the Belarusian budget? After all, the official Minsk is asking the IMF for a loan of three billion dollars...

The power is asking for money, but not only the power is losing. In the first place Belaruskali and Belarusian oil refineries are suffering a loss; Belaruskali is a state-owned enterprise, but the refineries are joint stock companies. Therefore, we cannot say that all the losses caused by the petroleum product export decline are the state budget losses. The budget is losing on taxes in this case, and these are much smaller amounts.

– The decline in export of goods and services, and therefore, the reduction of foreign exchange earnings have been observed for the fourth consecutive year. So, maybe, the authorities conduct wrongly their policies…

– It is not the task of the government to maximize foreign exchange earnings in general, and export earnings in particular. I do not know any examples of a government, coping with this problem effectively. The market and the private owner should deal with it, which is a priori more efficient than the actions of government officials.

– Should we expect any further foreign exchange earnings decline under the existing market conditions?

– In fact, the price of oil and oil products has reached its bottom already, at least until the end of this year; next year, the prices will be higher than in the first quarter of 2016. The oil product sales revenue will grow next year, the potash fertilizer one – at least, stagnate. It is also possible that the revenue will continue to fall, although not as fast. Stagnation is the most probable scenario, changes might happen within zero.

– What impact on foreign exchange earnings do unresolved problems with Russian oil have?

– Since the third quarter of 2016, this factor has been essential, as well. But the practice of previous years, – and we are experiencing not the first and not the last oil and gas war, – gives hope that the parties will have settled the problem at least until by the end of the year. Although the decline in the crude oil supply in the 4th quarter with a high degree of probability can lead to the fact that we will get less foreign exchange earnings.