Stanislau Bahdankevich: Crisis goes on

The former chairman of the National Bank of Belarus comments on the data of the interbank loans market statistical report.

These are the loans given by banks to each other. According to the report, in the national currency this market has dropped by 77%, and the rate at this market has dropped to 28%.

The turnover of the interbank loans in Belarusian rubles in March this year was Br 2.5 trillion. Last time such a low turnover of ruble interbank loans was recorded in the middle of 2008.

"The demand for money is decreasing. And lower demand for the money shows that slowing down of the growth is taking place in the economy. The rate should be a definite quantity, then it is a more or less normal situation. And when it is 20-30 %, then rates on ruble deposits are 30-40%, it is no good. It is not a normal economy", Stanislau Bahdankevich said in an interview to Radio Svaboda.

"I watch our TV. Everybody says everything is all right, the crisis had been overcome, or there have been no crisis at all. It is lies, populist declarations. The crisis goes on. Even exchange rates have stabilized in our country, but the prices are growing. How could it be explained? Earlier it was explained by the fact that our country pays a lot for gas. And now gas and oil prices are cheap for us, and the prices inside the country are growing. The prices for electricity, for petrol and so on. There is something wrong with the economy.

And double-digit interest rates show that. The growth of residual stock of unsold products at storehouses, rise of indebtedness between enterprises and organizations, rise of aggregate external indebtedness, not only state one, but debts of banks and business enterprises, demonstrate that as well.

A new government of more educated, talented people who would courageously embark upon reforms, shut loss-making enterprises, create new working places, give cheaper loans, is needed. And to make them cheaper, the payment of banks for resources should be decreased. If a bank pays 40% of interest on deposits, can it accommodate with a loan with at 10%? Certainly not. Resources for banks should be cheap so that they would be able to provide cheap loans. Then enterprises would be able to create new working places, buy modern equipment, technologies… and this does not exist in Belarus in complex. We are living as before, and maintain status quo", said the former head of the National Bank of Belarus.