Former Head of the National Bank: Inflation in Belarus Will Be Displayed in Double Digits and Even Much Higher

The ruble is rapidly depreciating due to a combination of several factors.

Official inflation in October this year amounted to 10.5%. Meanwhile, the National Bank plans to set an inflation target for 2022 of no more than 6%. The head of the research and strategic development department of the National Bank Natallia Mironchyk announced this.

The newspaper Belorusy i Rynok asked experts how realistic the National Bank's plans to curb inflation are.

Stanislau Bahdankevich: Inflation will be displayed in double digits

If you do not know the situation in Belarus, then the National Bank's plans are complete. This year they announced inflation of 5%, and we have 10%. And they explained, found the reason for the growth. And next year, they will explain why inflation could not be kept within limits, says the ex-head of the National Bank of Belarus Stanislau Bahdankevich, recalling that the sanctions imposed by the United States and the European Union will come into force next year, and more serious difficulties in the economy associated with the international isolation of Belarus.

"I just think that the main deterioration will occur at the level of prices, at the level of inflation. Even if the National Bank does not turn on the printing press and limits the money supply, inflation will continue to grow. I predict that inflation will be at least two-digit, about 15%. But the inflation will be much higher if the current government forces the National Bank to make non-resource issues," said the ex-banker.

In his opinion, although there will be huge assistance from Russia, it will not be able to cover all the miscalculations and losses of the Belarusian authorities, so we should expect the situation to worsen and the standard of living to decline.

Vadzim Iasub: National Bank does not express confidence

During the year, the National Bank will change its monetary policy so that inflation would drop to 6%. At the same time, he does not express confidence in achieving the set goal. After all, the inflation rate this year has little to do with the actions of the National Bank, said Vadzim Iasub, senior analyst at Alpari Eurasia. In his opinion, the main contribution to the current inflation rate in Belarus was made not by the National Bank but by the global economy.

- I think that more than half of the contribution to the current inflation was made by global causes associated with the rise in prices for raw materials and food products on world markets. It is worth recalling that, in the United States, inflation in annual terms was 6.2%, our plans were 5%, and at the end of October - 10.2%. I agree that it's hard to imagine inflation in the US at 6.2% and in Belarus at 5%. The second most important factor is the increase in VAT at the beginning of the year on medicines, medical products, and children's products. The remaining small share is accounted for by “Belarusian peculiarities,” says Iasub.

Will the National Bank manage to curb inflation at 6% in 2022? The analyst believes that little depends on his actions. In his opinion, next year in the world (in the US, in Europe) inflation is expected to decrease. It is not known whether this will happen or not. Moreover, the National Bank definitely has no influence on world prices. If everything goes well, if inflation in the world is significantly reduced, you can set a goal and try to reduce inflation in Belarus to 6%. If inflation in the United States and Europe exceeds 3%, then a decrease in inflation to 6% in Belarus is unlikely, no matter what the National Bank does. If there is no administrative pumping of salaries and the printing press is not turned on, then a decrease in inflation to 7% is quite possible.