Economists: It Is Unlikely That Something Will Save Lukashenka Regime

The sanctions hit the country's economy hard.

The Belarusian government has officially stated that it needs macro-financial assistance, and the GDP will fall significantly before the end of the year if Russia does not help.

What is wrong with the Belarusian economy

The economy of Belarus already needs USD 7 billion because of the sanctions, according to the Belarusian media. Deputy Prime Minister of Belarus Snapko predicted that the country will lose about USD 16 billion by the end of the year. Therefore, Minsk traditionally counts on financial assistance from Russia, since foreign creditors are reluctant to lend money to the sanctioned country.

Economic expert Oleh Pendzin, in a comment to Channel 24, said that Russia is unlikely to be able to give such an amount (USD 7 billion). The problem is that Russia itself at the moment, has a deficit budget instead of a surplus one.

“They do not have enough money in Russia. So I think that Belarus will certainly receive some amount - three billion - four, but definitely not seven,” the economist said.

He also added that the Belarusian ruble at the moment also depends on the financial assistance that Russia gives to Belarus. So if Belarus receives financial assistance, the country will be fine, but only temporarily. If not, then there will be a default on all obligations.

Dependence on Russia

Economic expert Oleh Hetman sums up that the economy of Belarus has long been largely dependent on Russia. For example, the country receives oil and gas at fairly low prices, which it then sells as oil products.

"They have been addicted to these oil products for a long time. They process them and then sell them as petroleum products: diesel fuel, gasoline, and they have been earning money on this for many decades. A significant part of their industry and export earnings were based on this, and now it has ended. Because European countries have imposed sanctions, partly on oil products and other products. So the Belarusian economy has significant problems,” the expert said.

Belarus has no opportunity to sell products

Recall that earlier Belarus exported a significant part of oil products along with fertilizers to the EU. The volume of trade between Belarus and civilized countries has fallen significantly since the beginning of the full-scale war in Ukraine. Since 100% of the Belarusian industry is under the influence of sanctions.

The country's government plans to compensate for this by increasing exports to Russia, up to 80-90% of the total, according to the Belarusian media. Thus, Belarus wants to turn Russia into a monopoly trading partner. However, in this case, economic dependence on Russia will only increase.

Due to the fact that Belarus has nowhere to sell its products, the country has nothing to fill its budget with, according to Pendzin.

“Sanctions have led to the situation that Belarus has nowhere to sell its products. Because Russia does not need Belarusian oil products. Russia does not need products similar to those of Belaruskali. Russia has its own. And it turns out that these enterprises, which essentially created the export potential for Belarus and provided the main revenues to the state budget, are stopped today. They do not know where to sell their products today,” says the expert.

“That is the reason for Belarus to worry at the moment, because by and large it does not produce anything, well, except for knitwear, which does not benefit a lot to the budget. The country is forced to spend budgetary funds, including for social needs, in the absence of budget replenishment due to the lack of exports. It has come under sanctions, and its refineries are standing.

So in this situation, hardly anything will save Belarus today. And the more money it takes from Russia, the more it will be dependent on Russia in financial terms,” the expert emphasized.

Solvency of Belarusians

According to Hetman, in 2022 there will be a significant decline in the economy of Belarus. Perhaps it is 8%-10%, perhaps they will lose 15% of the GDP. Deputy Prime Minister of Belarus Snapko emphasized earlier that the direct impact of sanctions has already affected about 20% of the country's economy, which led to a 30% decrease in exports and a shortfall of 2.3% of the GDP.

The expert explains that when the economy shrinks, solvency also falls. The population will become poorer by about the same amount as the GDP will fall.

“These are not catastrophic figures, it is 10-12%. But all these sanctions, all these consequences, have a lasting effect. That is, for the first year it is such a reduction, for the next year it can be more severe. That is, everything will depend on further developments” the expert says.