Leanid Zlotnikau: Prices Increased Millions Of Times Since Lukashenka Came To Power

What is happening to the Belarusian economy?

Famous economist Leanid Zlotnikau commented to Salidarnast on the words of First Deputy Prime Minister Dzmitry Krutoi about "the main successes of the Belarusian economy" in 2019.

- There is a growth in wages, but this growth is unfounded, - Leanid Zlotnikau says. - There is no product, created by the economy - that is, this consumption will have to be somehow paid for in the future.

A simple example: it happens when a family earns Br1,000 and consumes Br1,100. Where did this money come from? Salaries have not increased, but consumption has increased. So one day you will have to pay for it.

First, at the expense of inflation. The Belarusians seem to have got more money, and people go to the market with this money. And the number of goods has not increased. So, it turns out that prices are rising. As a result, all this alleged increase in wages is simply devalued.

According to the economist, very often Belarusians do not understand the meaning of inflation, they think that their wages have actually increased.

- Second, money for consumption growth can be taken abroad, which is also happening. But at the same time, external debt is also growing. It's like in a family that has taken a consumer loan and just eats it. But still, one day it will have to give it back, - Zlotnikau warns.

The economist also expressed his opinion about the gold and foreign currency reserves, which, according to Deputy Prime Minister, have increased by 28%.

- Belarus takes out loans of about $2 billion a year. This allows maintaining consumption at a certain level. But we've been taking this money at a very high interest rate for the last two years. It's about 7%. At the same time, some Russian private companies take loans on the world market at 2%.

Why does Belarus have to pay huge interest for the taken loans? Because the creditors believe that the country is in a bad position. Our credit rating is low - as they say, a "trash" one.

It turns out that we again take almost irrecoverable loans and get more and more trapped by this financial pyramid. And in order to attract loans at lower interest rates, the government is trying to artificially pump up the gold and foreign exchange reserves. But again, it does so through borrowings - external and internal. And if we increase gold reserves on credit, then in the future we will all have to tighten our belts.

Leanid Zlotnikau stresses: the most important danger for Belarus is that consumption in the country is higher than the capacity of the economy.

- This is a very dangerous thing. Belarus has always used inflation to plug the holes since the moment it became independent. Especially at the moment when the elections.

That's why we lag behind Lithuania or Poland all the time. And before, after the collapse of the USSR, we were on the same level. And all because Belarus is among the top three countries in the world with the highest inflation. Since 1995, when Lukashenka came to power, our prices have increased by 100 million times! This is the price we pay for all these allegedly high wages, - the economist sums up.