Inflation and Deflation to Be an All-Time High, Vadzim Iasub Says

An expert told what would happen if the authorities listened to Prakapovich.

The former head of the National Bank of Belarus Pyotr Prakapovich wrote a letter to Lukashenka to convince him to turn to the practice of "moderate emission" again (in other words, to turn on the "printing press"). According to the former banker, it will help to create new growth points for the Belarusian economy.

- A salary of 400-500 rubles is the happiness for people in the regions. No one offers an alternative to satisfy ordinary needs of people. It is easy to be in Minsk and tell about macroeconomic stability. In this situation a moderate issue is the only solution, I think, the source of the government quotes Prakapovich.

Salidarnast asked financial expert, senior analyst of Alpari Vadzim Iosub to assess benefits and risks of such an initiative.

- I see no positive sides here, he notes. - Only risks. They even need no citation, they are well-known: everyone remembers how our economy looked like when the "printing press" was on. Inflation and deflation were all-time high...

According to the expert, such initiatives show lack of understanding of the basic fundamentals of the economy:

- True wealth and capital is something that is earned, not printed.

The economist also criticized the concept of "growth points", which are offered by Pyotr Prakapovich, calling to send printed money to finance companies to promote economic growth:

- What is the blind spot? First, all the production depend on foreign currency, no matter how much you invest, it will be spend for foreign currency purchase. If the demand for currency grows, it provokes devaluation. Second, if money is spent on salary growth, then people will take them to currency exchange offices that gives similar results.

Growth points are false and senseless dimension, no one can know for sure what can perform as a growth point, Vadzim Iasub believes.

For example, once the country's leadership decided that woodworking industry would be the growth point, it had invested a lot of money and it all failed. One need to be a genius in the economy to be totally sure about the issue. And even businessmen often go wrong here. But if they risk their money, the state loses taxpayers' money. And if there is emission money, we will have both deflation and inflation in the result.

The inefficiency of these proposals is historically grounded; and this must be a desire to run into the same trap, the interlocutor summed up.