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Economists predict the destabilization of the Belarusian banking system.

The prospects of the Belarusian economy remain uncertain. But, even under the most favorable coincidence of internal and external factors, it’ll be less likely to achieve 12,1-15% growth in the years 2016-2020.

A number of unpredictable factors, which can be divided into three groups, will have an impact on the Belarusian economy. This is the situation in the world economy and the international markets; the geopolitical situation; decisions of the Belarusian authorities in the sphere of economic policy.

Western Ontario University Professor Ihar Liushyts said that in his interview to Thinktanks.by during the Annual International Conference on Economics and Finance, which was held by the Belarusian economic center BEROC last week.

"The main factors of the global economy, which will have an impact on the situation in Belarus, are the state of the financial markets and the world price of oil. But even if the oil price rises, and this will lead to the growth of the Belarusian economy, such growth will be extremely unsound," – Ihar Liushyts said. The example of Italy, which is once again on the verge of crisis, is quite disturbing in this regard: it shows that modern economies are not protected against shocks.

A large proportion of the uncertainty is associated with the global policy factors. For example, to date, it is unclear how relations between Russia and the United States are going to develop after Donald Trump’s coming to power.

"If Trump lifts sanctions against Russia, we can expect the Russian market’s recovery, which will give a chance to Belarusian goods to restore its presence in it," – Ihar Liushyts said. At the same time, the expert noted that to date there is no guarantee of recovery in demand for Belarusian goods on the Russian market, even if the situation there develops favorably for our country. Especially Chinese goods are strong competitors, the quality of which is not worse than of the Belarusian ones, and at that they are cheaper.

Ihar Liushyts says that the demand for Belarusian products has been maintained by inertia for many years: the Russians in Soviet times used to trust the quality of Belarusian products. However, it is unlikely that this momentum will continue to contribute to the maintenance of demand. However, in case of further cooling of Russian-American relations, the Belarusian economy also has certain chances.

No matter how the external events develop, structural problems continue to exist in the Belarusian economy, slowing down the economic growth. A political will is required to resolve these problems. "SOEs continue to suck money from the budget, there is nothing new in this. It is unclear whether there is a willingness to solve this problem," – Ihar Liushyts said. Despite the fact that in recent years there have been improvements in the private sector regulation, it is not enough to ensure stable economic growth.

The condition of the banking system causes concerns, which has increased the volumes of bad debts in recent years. Moreover, according to some economists, the official statistics do not reflect the volume of bad debts in full. This increases the chance of the banking system destabilization, which can be fraught with serious consequences.

The world experience knows a number of examples, where the state redeemed bad debts for the banks to avoid or minimize the crisis. In particular, it was made during the crisis in the USA. These measures were undertaken with simultaneous support of individuals, who were experiencing difficulties with payments on loans. It was then decided that it was easier to get lower mortgage payments than to evict debtors from the houses, the liquidity of which had decreased dramatically.

However, according to Ihar Liushyts, the reacquisition of the doubtful assets by the state is only possible if there is a high level of confidence in the actions of state institutions and full transparency of the process. He said that even now there are discussions in the United States about whether it was necessary to save all the banks and financial institutions, which got assisted. According to the expert, It is hardly advisable for the state to support banks in the current situation in Belarus.

"The most important question for an economist to ask when resolving a problem: how can it be resolved without the participation of the state?" – Ihar Liushyts said.