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Expert: Lukashenka's Epic With Alternative Oil Is Unprofitable

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Expert: Lukashenka's Epic With Alternative Oil Is Unprofitable

The "safety net" of the Belarusian authorities will be eaten this year.

Senior scientist of the Belarusian Economic Research and Outreach Center (BEROC) Dzmitry Kruk notes that "if we realize that we don't have the same old conditions of oil supply, the optimal solution is less refining," - naviny.by reports.

According to the expert, this is what is at stake, not that these losses will accumulate endlessly.

"The refineries will work for the domestic market, and the margin there will depend on how high the prices can be raised in the domestic market. But then the export of oil products will be in question. There is still a very big question about what is the real profitability of oil refineries now and what purchase price they can afford," - Kruk says.

The economist gives rough estimates of the Belarusian GDP decline while maintaining the status quo: "If we work only for the domestic market, the direct losses will amount to 1-1.5% of GDP. All that is associated with indirect effects - the wholesale trade, the petrochemicals - is more significant. Here the estimates are absolutely different, ranging from 2 to 5%".

According to the expert, there is a probability of recession, but the authorities still have time for trading.

"The epic with alternative oil supplies has begun. Most likely, it is unprofitable, but to prevent the recession, I assume that for the current year, the refineries will be loaded not at full capacity, and the corresponding margin will be compensated from the budget. If to put it in a simple way, it is possible that the budget will take the hit. It can be afforded for the year 2020, but that means that the safety net will be eaten," - Kruk says.

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