"It's No Longer A Bell, It's A Bell."

The economist accused the authorities of eating up the currency.

The National Bank has calculated that in January-March Belarus lost $625 million on foreign trade - that's how much the deficit turned out to be. Economist Dmitry Kruk explained to "Belsat" why the country is not earning foreign currency and how the authorities are involved.

The sale of goods and services abroad is an extremely important source of foreign currency, but for the seventh month in a row, statistics show that this stream is flowing the wrong way, and money is flowing out of Belarus.

In January-March, according to the calculations of the National Bank, total exports fell year-on-year by 1.1%, while imports rose by 4.6%. The supply of goods abroad fell by 4.6%, while imported goods were brought to Belarus by 3% more. In services, there was a significant growth in both imports and exports (by 16.1% and 14.8%, respectively).

As a result - a negative foreign trade balance of $625 million, although last year the country traded in the plus.

Senior researcher at BEROC Dmitri Kruk said in a commentary for "Belsat" that partly such a disappointing result was due to our main ally - Russia. And this is a consequence of the catastrophic dependence: if the economy is fine there, Belarus is in chocolate; but when there are problems there, our country falls into the swamp.

"The fall in exports, most likely, is due to investment goods. In simpler words, it is machinery and equipment. For example, those famous MAZs, combines, this kind of machinery. Also, according to the available data, we can say that the volume of exports of petroleum products has dropped, and it's probably quite noticeable," says the expert, complaining that there's a lack of statistics for a detailed analysis, which the authorities are carefully hiding.

The golden hour for Belarusian goods in Russia came when many brands left the eastern neighbor after the full-scale war. However, rather quickly manufacturers from other countries, primarily China, moved in, and it became more difficult for our exports to break through to the Russian consumer.

"The relative void, which appeared in the Russian market after 2022, is being filled more and more, and there is no such freedom, which was felt in 2022-2023 for Belarusians, when they could flood the market with their offer," states Kruk.

In addition, the Central Bank of the Russian Federation has raised the key rate to a historical maximum in order to combat the sharp rise in prices, which made money expensive. Both companies and individuals began to take fewer loans, began to consume less, and, accordingly, Belarusian goods are no longer demanded there in the previous volumes.

But, according to the interlocutor of "Belsat," Belarusian products and products for the Russian "defense industry" are doing quite well abroad. "But this is already speculation, since the supplies related to the war are classified," says Kruk.

And if the export of goods is not in the best shape now, to put it mildly, imports are flourishing. Here the responsibility is fully on the current authorities, said the economist of the BEROC center:

"Overheating of the economy generates additional demand for imports. That is, if consumption and investment are artificially inflated, then, accordingly, some part of consumption and investment automatically assumes that imported goods are in the basket. And what has been happening in our country for the last two years is such a deliberate inflating of domestic demand. And accordingly, it entails imports".

In April, the National Bank demanded from commercial banks to flood enterprises with so-called investment loans - this is money, not for salaries of employees, but for business development: for the purchase of equipment, technology, construction of a new production line or the launch of a new business.

"Companies are proving: let's implement investment projects. But for these projects to be effective, the equipment to be purchased should be at least partially imported. Belarus does not produce everything, so that investments should be fully domestic. Often it is also a question of quality: if imported, it will probably be of higher quality," explains Dmitry Kruk.

As for services, exports seem to be pulled by the IT-sector. "Its contraction, which lasted for several years, is over, and, probably, such a gradual recovery has begun," the analyst argues.

Transportation is also earning: "It is already more connected with railway and automobile transit. It is not a secret that last year Chinese, for example, transit rail transportation increased. This kind of transit services allowed to increase exports".

But the transport industry also washes out the currency, says the economist and explains on the example of potash fertilizers: "They need to be transported by the Russian railroad, and, accordingly, the export of potash fertilizers entails additional imports of transport services from Russia."

Another import of services, for which the currency is spent, is associated with travels of Belarusians, does not exclude the interlocutor of "Belsat": "In 2024, Belarusians simply began to travel more. It's not only and not so much the Western countries, unfortunately, there's Russia and others, but the increase in incomes allows more people to go on vacation to some distant countries. In the statistics it will be recorded as import of services."

Dmitry Kruk emphasizes that "artificial pumping of the Belarusian economy with stimuli and inflating domestic demand leads to price pressure and pressure on the balance of foreign trade.

"This is not just a bell for the authorities, but I would say a bell that something is wrong in their policy. And I think that, perhaps, not purposefully, but little by little, they will weaken this over-stimulating policy - either consciously or involuntarily - against the background of the growing deficit of foreign trade."

According to the economist, earlier Belarus could afford a large deficit in foreign trade: loans saved it.

"Today, there are almost no sources of financing this deficit. Therefore, even the current levels of the deficit are quite tangible. I won't say it's already critical, but these are indicators that pose a threat to the macroeconomic situation in the country," concluded the expert of the BEROC center.

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