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"Turbulent Zone" For The Belarusian Ruble

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"Turbulent Zone" For The Belarusian Ruble

Economists predict depreciation and growth of utility tariff rates.

US sanctions caused tension in the financial market of Russia and large-scale currency and economic crisis in Turkey.

Experts believe that BRIC countries may suffer the "domino effect". Belarus is not the part of BRIC, but its key trading partner - Russia - is.

How profound will the new crisis be and how will it influence our economy and well-being of citizens?

Charter97.org asked economist Leu Marholin for comments:

- Most BRIC countries are economy market majors. Urgency of the situation is that such small countries as Belarus have open economy and export-import transactions command a large part of GDP.

Large countries such as Russia, India, China the major part of GDP is consumed within the country. That is, they are less dependent on fluctuations of national currency against dollar and euro.

As for Russia, the major threat for it lies within the country rather than within BRIC or Turkey. The very threat of new US sanctions caused the drop of ruble up to the crisis of the year 2015. It can be believed that after the real imposition of sanctions the Russian ruble will depreciate even more. According to US laws, three month after their imposition, sanctions can be tightened.

The paradox is that large domestic market made the depreciation of the Russian ruble not critical even in 2015, and Russians did not even mention it unless they went on vacation in Turkey.

Fluctuations of national currency will be more acute in Belarus. I believe that the Russian ruble will continue its falling and it will affect Belarus. We have an open economy and a half of our trading transactions go through Russia.

The Belarusian ruble has already experienced the "turbulence": for 1.5 year dollar cost less than 2 rubles, not this ceiling is met. It may happen that it will depreciate even more; everything depends on Russia, we are, unfortunately, inextricably linked.

- Some Russian analytics believe that the default of 1998 can reoccur in their country. Is this possible and who will it affect Belarus?

- There is a big difference between the current situation and the one occurred 20 years ago: the share of external borrowings against GDP is well below than it was in 1998 in Russia. There are few official debts. These are borrowings of banks, enterprises and so on. That is, defaults of banks, some companies are quite possible, unlike it was in 1998.

The situation in Belarus is more challenging. Every depreciation of our ruble increases tension in currency market and jeopardises repayment of a huge official debt in foreign currency. It may cause grave problems.

Russia is barely going to help Belarus; it should take care of itself. It's quite possible that the authorities will increase utility tariff rates fearing of the default and A great bargain is about to happen; it is likely to result into growth of utility tariff rates. The situation is challenging, and the authorities are prone to bargaining.

The Belarusian authorities will fail to repay interest on the official debt on their own. In all likelihood, the time of empty promises has passed away.

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