‘Only One Person Cannot Get That It Drives Into A Domestic Default’

Pensioners and public sector employees should be ready.

Economists predict a new wave of devaluation in Belarus, which "eats up" the already small income of the population, far beyond the promised "five hundred dollars".

"If there is no restructuring of state-owned enterprises in Belarus, the country will accumulate domestic debt, which inevitably leads to devaluation," Director of IPM Business School Pavel Daneika said.

Experts believe that those who are at social risk will suffer the most: children under 18 years old, living in families with income below the poverty line, large families, as well as residents of rural areas.

Meanwhile, even Minsk residents already inform that they have to save on food.

How will the situation develop? Leu Marholin answers questions of Charter97.org.

- Belarus has high rates of absolute poverty - 23.9%. How do you assess this indicator?

- When every fourth person is below the poverty line, it is, of course, a lot. Especially since all the rest who are not included in this percentage do not get rich either. It would be a different story if there were 76% of the rich and 24% of the poor. Then we have 24% of the very poor, 50% below average, and only 25% have some average income level.

I guess that the indicator of absolute poverty of 24%, is much higher than in neighbouring countries, especially when compared to Poland and Lithuania.

- Speaking about Belarus, I have heard such an expression as "working poverty". What does this phenomenon mean and why has it become a reality here?

- This is a very serious phenomenon. It is one thing when the poor are people who are not working and they are asocial elements. And it is quite another thing when the poor are people who work and work hard.

And they have no other job to quit poverty. Most of the district and regional centres of Belarus offer salaries of 300-400 rubles (about $150-200). It's still a great mystery of Belstat who gets an "average salary" of Br1.000 in Belarus.

And if the majority of salaries in the country are of $150-200, it is clear that "wealth", and even a normal standard of living for the majority of citizens is far from being met. Therefore, people are trying to survive. They either have household plots (in small towns) or part-time jobs.

- Such phenomena as a loss-making public sector and an increase in domestic debt determine the current economic situation. What can this lead to?

- These two factors may lead to a domestic default. That is, the state will have to somehow zero out its debts, either through the devaluation of the national currency (so that domestic debts devalue hard) or in some other way.

All experts, both Belarusian and international, have been talking about it. Given the current state of the economy, Belarus cannot support such a loss-making public sector of the economy.

Everyone here understands this: both independent experts and even government officials. Only one person ignores it. And, unfortunately, there are no signs that he will understand this in the near future. Therefore, the outlooks are not bright.

In this situation, people are increasingly turning to "internal migration", looking for sources to survive not related to the state. Pensioners may face the gravest problems when it becomes absolutely impossible to maintain the required level of expenditures of the Social Security Fund (SSF) and state employees.

- Economists stress that nominal wages, before inflation, are growing 8 times faster than the GDP of the country. A similar phenomenon was observed before the elections of 2010 and led to a sharp drop in the ruble exchange rate in 2011. May the crisis of 2011 repeat itself?

- In view of the voluntaristic nature of the Belarusian economy, it may happen. It is better to analyze the average level of labour efficiency rather than GDP. Because there are situations when the nominal wage increases, while GDP does not grow caused by a reduction in the number of employees in the economy. That is, when jobs are liquidated, labour efficiency grows, GDP remains at the same level, while nominal wages also grow due to cuts.

But if labour efficiency does not grow, and only the nominal wage grows, then sooner or later it will come to the devaluation of the ruble, and even to the repeated devaluation.

- What will happen to the poorest strata of the population if it happens?

- The poorest strata of society, especially in rural areas, will not be affected by this devaluation: even now they are tightening their belts hard, and their ration includes products of their household plots.

Anyway, Belarus is the country with a slightly open economy, and any person who goes to the store will sooner or later face the repercussions of devaluation. Even bread is not produced in our country without imported components. It means that (maybe not at once, maybe in 2-3 months) if devaluation occurs, all goods will start to grow in value. Slowly but surely.

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