"Plummeting of Exchange Rates to Be Expected": Lukashenka Has No Money to Pay Debts

There is no piece of hope for soon recovery of the Belarusian economy.

The debt problem is one of the most urgent and serious.

Thus, the case is both about external and domestic debt, Thinktanks.by writes.

"Today we can mention some signs of "the recovery". In particular, the GDP statistics in the last months has proved that there is certain stabilization in consumption of domestic entities. The indicator of the net export has raised. But it happened due to import reduction - consumption adjustment and measures performed by the government. As for the export, its price volumes continue to decline in the result of the dynamics of world prices on main export goods", Dzmitry Kruk, expert of BEROC said.

According to the expert, "now the economy is in the recession, there is no a piece of hope for soon recovery."

Main risks now concern debts. External debts of Belarus are mainly covered by the debt rollover with the use of new loans. A grave problem is that the total sum of the external debt in foreign currency remains, but the GDP volumes in dollar terms constantly reduce because of the decline in the economy and the national currency exchange rate.

- As of today exchange commitments of Belarus equal to $14 billion. In 2014 the GDP in currency terms amounted to about $75 billion, this year it reached only $45 billion. Thus, the pressure on the country's economy is raising, Dzmitry Kruk noted.

Other problem is that an enormous part of the domestic debt is also dollar-nominated, but the dollar-revenue is decreasing. In course of time it may result into either other plummeting of exchange rates or large-scale problems concerning repayment of debts.

The debt quality of enterprises is likely to continue affecting the economic situation; however, it is hard to size up its depth.

- It is known that the volume of bad debts has increased. Unfortunately, it is unlikely that the available statistics fully reflects the situation. There are some ways of window dressing. The National Bank has knowingly launched an inspection of asset quality. It is essential to see the real debt quality, it affects the margin of safety of the economy and hazards, Dzmitry Kruk believes.

According to the expert, "this year economic slowdown is to be observed. Next year the economic growth is possible, but it is likely be equal to zero. In case of further debt problem the economic decline will continue."

"Debts are underlying problem, which constantly hangs over like the sword of Damocles. Safe way to escape from the situation is to succeed in the GDP growth and the strengthening of the currency exchange rate. It is possible only in case of structural reforms, which can bring good results in 5-10 years, Dzmitry Kruk says.