National Bank: The state will stop stimulating wage growth
Belarus had to submit a plan of measures to overcome the consequences of the world financial crisis in order to obtain a loan from the International Monetary Fund (IMF). According to Siarhei Dubko, a deputy chief of department at Belarus' National Bank, the plan was submitted and accepted. But nobody apart from the International Monetary Fund has seen this document. The European Radio for Belarus explores the plan. Siarhei Dubkou: “During their decision-making, IMF's board of directors studied the plan of the government and the Central Bank of Belarus how to react to the world financial crisis. This is one of the conditions in order to approve a loan. The plan was considered and accepted, because it had been developped together with the IMF mission in Minsk”.
Siarhei Dubkou voiced some of the measures, mentioned in the plan, to the European Radio for Belarus. For instance, government's next step will be to revise the mandatory lending.
Siarhei Dubkou: “Firstly, it is the reduction of budget spendings, i.e. a deficit-free budget. A relevant decision has already been made. Next, we aim to cut the mandatory lending. We also talk about the reduction of budget spendings through a stringent regulation of wages. The devaluation of the national currency is a technical measure which stabilizes the exchange rate. Our major trade partners, Russia in particular, have recently depreciated their currencies significantly and continue doing so in the New Year. The devaluation of the Russian rouble currently stands at around 25 percent.
Ukraine is a good example. This country's trade turnover with Belarus has exceeded $5 billion. Ukraine devalued its national currency against the US dollar by over 60 percent over a very short period of time. The IMF also welcomed a new exchange rate policy which ties the national currency with a basket of three currencies: USD, Euro and the Russian rouble. The mentioned currencies are valued equally in the basket, and this corresponds with the currency of payments of our trade balance”.
Siarhei Dubkou would not elaborate on whether a further devaluation of the Belarusian currency would be possible. He reminds that according to the calculated parameters, the Belarusian rubel's exchange rate will hover at the current level plus-minus 5 percent. However, if the Russian rouble continues getting weaker, a further devaluation is possible. Otherwise, Belarus-made goods will not be able to compete at foreign markets, while the imported commodities wil prevail at the domestic market.
How will the budget spendings be reduced and what is "optimization of wages"? According to Siarhei Dubkou, the wages will not be higher than the production growth pace.
The banker admits that even if the wages in the public sector are not to become less nominally, people will be getting less factually.
Siarhei Dubkou: “Taking the inflation and utilities cost growth into account, the wage growth rate can be less than the production growth regarding these services.
Photo: respublika.info
Siarhei Dubkou voiced some of the measures, mentioned in the plan, to the European Radio for Belarus. For instance, government's next step will be to revise the mandatory lending.
Siarhei Dubkou: “Firstly, it is the reduction of budget spendings, i.e. a deficit-free budget. A relevant decision has already been made. Next, we aim to cut the mandatory lending. We also talk about the reduction of budget spendings through a stringent regulation of wages. The devaluation of the national currency is a technical measure which stabilizes the exchange rate. Our major trade partners, Russia in particular, have recently depreciated their currencies significantly and continue doing so in the New Year. The devaluation of the Russian rouble currently stands at around 25 percent.
Ukraine is a good example. This country's trade turnover with Belarus has exceeded $5 billion. Ukraine devalued its national currency against the US dollar by over 60 percent over a very short period of time. The IMF also welcomed a new exchange rate policy which ties the national currency with a basket of three currencies: USD, Euro and the Russian rouble. The mentioned currencies are valued equally in the basket, and this corresponds with the currency of payments of our trade balance”.
Siarhei Dubkou would not elaborate on whether a further devaluation of the Belarusian currency would be possible. He reminds that according to the calculated parameters, the Belarusian rubel's exchange rate will hover at the current level plus-minus 5 percent. However, if the Russian rouble continues getting weaker, a further devaluation is possible. Otherwise, Belarus-made goods will not be able to compete at foreign markets, while the imported commodities wil prevail at the domestic market.
How will the budget spendings be reduced and what is "optimization of wages"? According to Siarhei Dubkou, the wages will not be higher than the production growth pace.
The banker admits that even if the wages in the public sector are not to become less nominally, people will be getting less factually.
Siarhei Dubkou: “Taking the inflation and utilities cost growth into account, the wage growth rate can be less than the production growth regarding these services.
Photo: respublika.info
