8 August 2022, Monday, 1:35
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Former National Bank Head: 36.7% Inflation Is Real Scenario

Former National Bank Head: 36.7% Inflation Is Real Scenario

The GDP drop is much higher than official statistics show.

Raiffeisen Bank International has published a forecast for inflation in Belarus. One of the scenarios says that in 2023 price growth could reach 36.7%. Will this prediction come true? The website Charter97.org asked the former head of the National Bank of Belarus, Stanislau Bahdankevich, about it.

— This is a very realistic scenario, because according to official data this year inflation will be about 20%, and in reality even higher. It is unlikely that anything will change next year, given the real situation in the economy and the isolation of Belarus from the civilized world. The supply of those high-quality goods that are available in the West will be less and less, given the sanctions and economic isolation into which the Lukashenka regime has fallen.

The money supply is there, but the mass of commodities is declining. All this leads to higher prices. The exchange rate is worth it, but this is due to the fact that there is no demand for currency, there is no opportunity to purchase high-quality Western goods. Isolation and sanctions are affecting. This year, the cargo turnover suffered a volume decline, according to official statistics, fell by more than 20%. This means that there is a mass of commodities, there is no production. It is true, that the GDP drop is much higher than official statistics show.

— What are the main reasons for the acceleration of inflation?

— Hundreds of thousands of people left the country, the able-bodied part of the population has significantly decreased. The departure of representatives of information technology also had a noticeable impact, many programmers left for Georgia, Poland, Lithuania and other countries. This should have had an effect the economy. The GDP is falling because of the staff decrease. There is also decrease in quality and volume of services provided by Belarus. The money supply does not decrease, it even grows slightly, while the mass of commodities is reduced. All this leads to the inflation acceleration.

— What is the degree of the impoverishment of the Belarusian population due to inflation? After all, the increase in wages and social benefits does not keep up with the increase in prices.

— There is a direct progression in this relation. My pension remained the same, but the prices soared by more than 20%. This means that I have become poorer by more than 20%. At the same time, people's incomes are falling on the background of the level of wages, pensions and rising prices. A nominal payments increase can not cover the prices increase. A drop in the standard of living in such a situation, if not by 20%, but a little lower, but it will be. It already exists.

I am an eighty-five-year-old man, judging by the cost of medicines. The prices are inflated, they are going up. But not only on medicines make population poorer, it concerns almost everyting. Fish, meat and many other products become more expensive. Prices for these products rise on average faster than inflation. This primarily affects that part of the population that spends most of its income on essential goods, food, and so on. Now there is an impoverishment of the population.

Belarusians are reaping the benefits of the first more or less democratic elections that brought Lukashenka to power. The people had a real opportunity to vote for the right-wing nationalist Pazniak, Corresponding Member of the Academy of Sciences Shushkevich or for the communist Novikau. But people chose the populist and collective farmer Lukashenka and are now responsible for it. If democracy had been preserved, he would not have won the next election.

— Should we prepare for even more difficult times?

— Hard times are yet to come. There is a loss of sovereignty, independence, militarization of economy. There is a transfer of the gross product to the so-called defence, military needs and the repressive apparatus. All this leads to the fact that there are simply no objective opportunities to improve the standard of living.

But I hope that my sons and grandchildren will live in a free, civilized and democratic Belarus. And the younger generation will raise the standard of living, will restore respect for the rights and freedoms of the individual. I hope for a better future for my native Belarus.