Barys Zhaliba: Axe of devaluation falling on neck of economy

The negative balance of trade is the main reason for the foreign currency deficit and the devaluation of the Belarusian ruble.

Economist Barys Zhaliba spoke to charter97.org about the deep deficit of trade in Belarus in January-June 2013.

“I agree with the opinion that the current situation was caused by the stopped smuggling of solvents and thinners. According to different estimates, they added at least 2 billion dollars to our export last year. That's why we have this difference. Other factors are also important: Belarus produces more tractors, trucks and other products than last year, but the Russian market doesn't buy as many goods as it did last year. Russia is the main market for vehicles and agricultural equipment for Belarus,” the scientist noted.

The expert underlines that the negative balance of trade and payments is the main reason for the deficit of foreign currency in the country that will be followed by the Belarusian rubles devaluation.

“The deeper the negative balance is, the lower the axe of devaluation will be falling on the neck of Belarus's economy. The government keeps the foreign-exchange reserves on the level of $8bn so far, but it is to a certain degree an artificial measure. They transfer assets to forex reserves to prevent panic among deposit holders. But some tension can be felt already,” the economic is sure.

There are talks among analysts about the need of radical economic reforms relating not only to technologies, but also to production and ownership relations, he adds.

“We need diversification of the country's export that depends potash fertilisers and oil products. Moreoever, Uralkali's shares slumped due to the conflict with the Belarusian party. It's logical that forecasts promising the end of BPC appeared. We need to boost the development of our core industries: engineering and agricultural machinery. We need to develop the private sector that still remains underestimated. Experts have been talking about it for a long time, but no steps have been made,” Barys Zhaliba sums up.

The balance of trade in January-June 2013 was minus 1,682.3mn dollars; exports to the EU fell 49.4%.