Leonid Zaiko, the director of the analytical centre "Strategy", has explained in an interview with "Deutsche Welle" what threat is posed to the ruble deposits of the population by the currency crisis in Belarus, and he gave advice on where it is best to invest their savings.
He analyzed the causes which have brought Belarus into the severe currency crisis. Zaiko also explained what Belarusians need to do in order to rescue their savings in the conditions of an actual devaluation of the national currency, and he also evaluated the possible influence of economic problems on the political situation in the country.
Deutsche Welle: What is the reason for Belarusians having to spend day and night at exchange booths in order to buy foreign currency?
Leonid Zaiko: The current situation in the Belarusian economy is absolutely absurd. Its causes must be sought in 2009 and especially at the end of 2010, when the average monthly pay was sharply increased in Belarus from 330 to 500 dollars. I remind you that at one time in the U.S.A. wages grew by such a magnitude over quite a few years – from 330 dollars in 1961 to 550 dollars in 1969.
But perhaps Belarusian officials believe that the Belarusians are working in 9 times more productively than the Americans. The sharp rise of income in Belarus, timed for the presidential elections, has led to the situation where – due to the large amount of cash in early 2011 which increased domestic demand – there are rubles but not any dollars; the exchange booths are empty.
Furthermore, a massive imbalance of exports and imports of almost 10 billion per year has led the need to adjust the exchange rate of the ruble. If there had been a gentle devaluation of 1 – 1.5 per cent per month, it would not have been specially noticed, and Belarus – even with such abnormal figures for revenue growth – would have remained today with a more or less balanced currency market.
There were also purely technical mistakes: it was necessary to make savings, and the president should have reduced both his own wages and those of his officials. That is where the inflated expenses and completely incomprehensible consumption have been flourishing – when money is directed towards repairs of bureaucrats’ offices and housing for young families with a credit charge of under one percent a year. These actions go absolutely against our economic interests. That’s why usually the bureaucrats usually either retire or are removed from their posts.
– The situation on the foreign exchange market – what is its threat to Belarusian ruble savings?
– The savings of citizens in the national currency will decrease, because at the present time the Belarusian ruble does not fulfil two important functions: the measures of value and savings. That is to say it is just a cash replacement – as a substitute for sugar, for example.
The world’s currencies – dollars, euros, or regional (the Russian ruble) – can be a means of savings at the moment. But citizens who kept saving only in Belarusian rubles are now bear heavy losses, because they put too much trust in the government and all those who spoke about the good economic situation. The loss to those who behaved more rationally and retained savings in dollars, euros, in Belarusian and Russian rubles, will be insignificant – at the level of 3 – 4 percent.
– The mayor of Minsk recently declared that the Belarusian people have savings amounting to 12 – 14 billion dollars. In your view, how close are these figures to reality?
– I think twice less than that, as a minimum. Strictly speaking, expert estimates of savings are carried out using different methods of comparing income and expenditure, receipts from abroad. These so-called non-institutional savings, the money for operational use, is for the purchase of goods or travel abroad. And institutional savings can be in Belarusian, Russian and Swiss banks. But it is necessary to talk about them separately, because Belarusian savings, according to my data, are upward of 4 billion dollars.
– How can the current economic problems in Belarus influence the political situation in the country?
– It is now easier for the government to pass over to the Russian ruble, and the citizens just need to live and enjoy life. I have had to give recommendations and forecasts of economic policy several times, but any suggestions by experts are used by the government in Belarus at intervals of 10-15 years. Unfortunately, the power elite are poorly educated and in a professional sense simply “empty space”. So I am sorry that the country has lost so much time.
– What advice would you give to the Belarusians, as to how they can save their personal savings from depreciation?
– Belarusians have nowhere to invest; this is not Rio de Janeiro or Moscow, where you can buy shares of companies, property or land. In Belarus, the citizens are treated as subjects of a temporary stay in the country. They must own neither property, nor industrial plants, nor factories. Such is the current nomenclature, which itself wants to divide everything for its own use.
One can recommend to Belarusians to use the good old rule – keep your eggs in various baskets: that is, do not keep money in only one currency. And I advise you to buy something you’ve always wanted. Do not keep the money for window-savings institutions; buy a new suit of clothes, a washing machine, a television or a computer. More profitable to buy domestically produced goods, because inflationary processes operate on their prices with a small lag.
Money can also be turned into a marketable form of savings, which Belarusians have already used in the 90’s, when they were buying two or three refrigerators. I remember how in the central department store of Minsk people were even buying the red flags of the winners of socialist competitions, because the material was good.
It is not worth buying gold and diamonds; this is a market for professionals, not amateurs. On the other hand, antiques have always been a good investment. But in general it is not worth getting agitated; the more people rush between the banks and exchange booths, the worse it becomes for the population itself. Watch television and listen carefully to what the president and prime minister say. With regard to politicians and women the old proverb applies: “Listen to what they say and do the opposite.”