The ex-head of the National Bank of Belarus spoke about the situation in the economy.
Inflation in Belarus has reached shocking levels. This year it is the highest in five years. The website Charter97.org asked ex-head of the National Bank of Belarus Stanislau Bahdankevich about the possible reasons for that:
- I believe that this is due to the state of the economy. It is less connected with monetary policy, because it is quite tough. As of July 1, our money supply even decreased by 2.2% compared to last year, that is, prices increased for other reasons as well.
I believe that such inflation is due to the lack of competitive goods in the consumer market because of its administrative regulation. The deeper reasons lie in the tight control of public and private property, because the money supply does not grow properly, but prices increase.
- Inflation often decreases during the summer period, as prices for seasonal products fall at this time. However, we do not see a noticeable decrease. Why so?
- This is due to distrust of the policy of the authorities, the National Bank, although it is trying to pursue a relatively reasonable policy. The population has a huge distrust of this repressive and totalitarian regime, as well as the manual management of the economy.
I sometimes think of a wild situation. Lukashenka gives the command “let's start harvesting” - and harvesting begins. Agricultural equipment has not been repaired by 10%, he gives the command to immediately repair it. As if we have a population, a working class, some dummies, and not educated citizens of the country. Wild country, wild management, and this affects inflation at the end of the day. This is a distrust of society in the government that exists today.
- The rise in prices occurs against the background of the fact that prices for many products are frozen. Is it a spring effect?
- To some extent, yes, the spring effect. In theory, prices should not rise, because the real income of the population does not increase. However, they grow, so you need to look for a deeper reason.
The reason is in the power, in the structure of power, property, persecution of small and medium-sized businesses. We observe that first there was an attack on the media, then on individual and free entrepreneurs. Ultimately, this affects the rise in prices.
- Some positions have risen in price by up to 20 percent. How can this phenomenon be explained?
- This cannot be explained by any specific facts. In our country, inflation is not 9.9%, as the statistics showed, but in reality it is somewhere around 20%.
Even with a stable exchange rate, it would concern that inflation should not be provoked, but we see an increase in prices for imported goods. My wife gave our youngest granddaughter, who turned 5 on July 27, a dress for 130 rubles. An ordinary little dress. A year ago it was worth half that amount. These are the prices that are determined by a combination of reasons. Everything converges to the mistrust of the authorities that exist in the country today, because they are illegitimate and not elected by the people.
- Which is a more serious problem today - the growth of inflation or the fact that the salaries of Belarusians are not growing?
- I think that salaries should also be determined by the market. Today we do not have enough manpower, there are 100 thousand vacant jobs. So if there are jobs, then the cost of this manpower should increase, the nominal wage should increase, but it does not grow either.
All of this has to do with administration, intervention in the natural market, attitudes towards business, labor, and so on.
Of course, if we had a crowded market for the mass of commodities, then prices would not decrease, but would stabilize. This happens in the West, when the excess money supply does not lead to higher prices, because there are a lot of goods in stores. Therefore, the desire to somehow get rid of Belarusian products does not lead to stabilization. We have some goods, say, dairy or meat products, but the authorities are exporting them in excess volumes in order to get hard currency. Forced exports are also one of the causes of domestic inflation.
Our Belarusian cheeses and other dairy products are exported. Russia is big, China is great, there is a large consumer demand market. There is a process of outflow of the mass of commodities to this eastern market, so the internal market is not overfilled.
I judge the rise in prices, given my age, by the cost of medicines. They are growing all the time. And they grow not by 10%, but by 20-30%, or even more. This is also an indirect indicator.
- Your forecast. How can the situation develop further?
- I told you earlier that I am an optimist, and dictator Lukashenka will not survive as president until the end of this year. He will retire. I used to bet on a box of brandy with a colleague, but today it’s one bottle of brandy. Still, I hope that, for many reasons, in one way or another, this regime headed by Lukashenka, this Lukashism, will not survive until the New Year. Of course, this is a very optimistic point of view.