Ban on Purchase of Foreign Currency May Be Introduced in Belarus

The outflow of investors is a sign of default.

Economist Leu Marholin told in the interview with Charter97.org.

- in the first quarter of this year the number of closed-down foreign companies was 1.7 times higher than permissions for work granted by the Belarusian Foreign Ministry. What does it mean?

- When something is wrong, it is said that "first of all, rats leave a sinking ship". "Rats" here is a bit different thing; business is very sensitive to the events in the country. And Lukashenka has no power to influence it with his spells, promises. Business operates only with real facts and data.

And they prove that the economic situation in the country is getting worse. As a result, the situation in a monetary sphere is deteriorating. And it bears an immediate threat to a foreign capital. The first thing authoritarian regimes turn to when a shortage of currency is restrictions on the profit repatriation. It means that you work but you cannot take the profit.

Foreign investors feel it and try to protect their investments and withdraw them unless it is too late.

- Is the shortage of currency tied to the necessity to repay huge external debts?

- Yes, of course. The biggest item of expenditure in our country is the repayment of external loans and interests on them. Earlier it was resolved with debt refinancing. This year this variant is barely possible. The Eurasian Fund has suspended the service of already given loans and loan granting, and the authorities have no chances with the IMF, in principle. So, they are not able to refinance debts and they have to be paid at the expense of current revenues.

The only source which is still valid is the net sale of foreign currency by the population. First, it is not enough, second, we do not know how long it will last. We are talking about the sale of the currency which has been saved. It is possible that this source will run dry in two months.

Then all these signs of default will unveil: first, it will be banned to repatriate profits abroad, then the ban to buy foreign currency by the population and enterprises will be introduced. This is what foreign investors fear of.

It can be said that, to some extent, the outflow of investors in the first quarter of this year is the sign of default.