Leu Marholin: Further Inflation And Weakening Rouble To Be Up In Belarus

The authorities are deepening the problem, taking financial resources from profitable sectors of the economy to subsidize loss-making state-owned enterprises.

Following the results of the first seven months of the year, imports of goods exceeded exports by nearly $ 2 billion. This was 0, 5 billion less than last year, and $ 100 million less than in the previous month, Belsat reports.

“It involves regular inflation, further depreciation of the Belarusian ruble,” – economist Leu Marholin says.

The ruble is overvalued by 7-12%

Outflow of currency due to the negative foreign balance is the main cause of the constant devaluations in our country. The Belarusian ruble has weakened against the dollar by only 4.5% since the beginning of the year, but is staying up solely due to high interest rates for loans, foreign loans and the fact that the population is selling out its currency reserves. The Eurasian Development Stabilization Fund warns that the Belarusian ruble exchange rate is still too high.

“Our calculations show that the overvaluation of the ruble exchange rate is volatile between 7-12%,” – EDSF manager on stabilization loans Alisher Usmanov said.

Recognizing threats to the domestic currency, the authorities are trying to diversify exports from the stagnant Russian market. Despite the loud statements and active attempts to sign lucrative contracts with Vietnam, for example, the Belarusian export to this country has fallen by half this year. Experts explain: political agreements are not longer able to compensate the unavoidable loss of the Belarusian public sector’s competitiveness.

“We can say that one of the reasons for the export decline is the Russian market decrease, but it is interesting that the share of Belarusian trucks in the Russian market is also declining. And it means that we are losing the competition,” – Leu Marholin said.

The Eurasian Stabilization and Development Fund emphasizes that the fall in commodity prices only exacerbates the Belarusian economic model problems. According to the Fund’s estimates, from 2013 to 2015 year, non-extractive exports of Belarus, excluding oil products and potassium, fell by 17%, and sales of innovative products fell by half. According to economist Leu Marholin, the authorities are deepening the problem, taking financial resources from profitable sectors of the economy to subsidize loss-making state-owned enterprises.