Leanid Zaika: “Belarusians to receive a blow in a form of second devaluation”

Growth of foreign trade adverse balance by factor of 6, could result in another devaluation of Belarusian ruble.

As compared to the same period of the last year, the foreign trade adverse balance has grown by more than 6 and made 1,445 billion dollars as compared to 217.2 million dollars in the first quarter of 2008. “Euromost” talked to the head of “Strategy” centre Leanid Zaika about its consequences for the Belarusian economy and common citizens of Belarus.

- What such a foreign trade adverse balance could mean?

- We have an extraordinary situation in this respect. Last year every month negative balance in trade with Russia grew 1 billion each month. Now the situation is repeating, but at the scale of all vectors of foreign trade. And it brings pressure on Belarusian ruble. It could bring about another devaluation of Belarusian ruble in the nearest future. It does not allow the entire economy to work adequately. Adverse trade balance is usually extinguished by growth of outward investments, and any government always encourages that. In general, it is a complicated problem, which is to influence stability of the exchange rate of Belarusian ruble.

- And how could it influence wellbeing of a common citizen?

- Very often misbalance between export and import is caused by the fact that incomes policy is implemented inadequately. And the population itself responses the changed situation inadequately. People prefer to buy foreign goods, expensive wines, tobacco, different bananas and oranges. The same happened in different countries, and this situation takes place in our country too. Consumption develops in a wrong way. As for the adverse balance in foreign trade, population won’t feel that so far. But sometimes situations might occur when importers are to overprice, and slow work on increase of internal prices would take place. This happens in our country. We have very high prices; they are higher than in other European countries. In addition, population is to receive a blow in the form of devaluation, which is to decrease standards of living.

- One of these days Lukashenka adopted two decisions. Firstly, to guarantee support to sugar plants. Secondly, he ordered potassium fertilizers producers not to reduce prices for their goods for foreign buyers. Will such measures help Belarusian manufacturers?

- Mistakes done by the Belarusian leadership are specifically economic. They are caused by banal ignorance about economy theory. Now we have almost half a year store of sugar in the country. Now all workers of sugar industry could easily be placed on leave for half a year. We have over-production of sugar. In such cases production is stopped.

As for Lukashenka, who orders not to increase prices for potassium fertilizers, and keep to the old prices… In any economy theory one could read that prices are regulated by markets, not by presidents. It is written in all textbooks I would recommend to read.

- All sugar plants are situated in the regions and are city-forming. The decision to give them state support is explained by unwillingness to leave people without work and means for living. Plants will continue to work and produce sugar, but what would be done with it later?

- Look how people react to the situation in other countries. Nobody supports anyone or freezes prices. I have just arrived from the Central Europe. Prices go down everywhere rapidly. If we compare with Belarus, the gap could be from 5 to 10 times. The events at consumer markets of Central and Eastern Europe shows that extraordinary falling of prices is taking place. As for our sugar plants… Enterprises should react to changes in the economic situation adequately, and if needed, to reduce prices for their goods. If they would diversify and survive, it means that everything is good there, and they are to continue their existence. If not, we would have to pay for its existence. That’s what the government offers us to do today.