Siarhei Balykin: Someone will go bankrupt, and someone will work on gray market and get sanctions

A 30% levy on purchasing currency made Belarusan businessmen freeze in anticipation. The only business that functions today is retailing, as it sells goods that were already imported to the country.

Belarus’ business associations suggest the official devaluation of ruble on January 1, 2015. They advice the government to take emergency measures in order to settle the situation at the currency exchange market. The corresponding letter from business-unions has already been sent to the Deputy PM Piotr Prakapovich, who calms down people before every devaluation.

Let us recall that on December 19 the terms of purchasing foreign currency were toughened in Belarus. The National Bank explained it by the economic situation in the neighboring states, and first of all Russia. A 30% levy on purchasing foreign currency was introduced. Enterprises and banks are to pay it at the exchange, while citizens pay it as a commission while purchasing currency in banks.

The Chairman of the Board of the National Bank Nadzeya Ermakova has already stated that the levy might be cancelled before February 1.

Business health under new circumstances, leaching of working capital by currency fee imposed on enterprises, and sharp decline in their income “EuroBelarus” Information Service discussed with Siarhei Balykin, a lawyer, the head of the Association for small and medium business.

- Business-unions sent a letter to the government, National Bank, and President Administration in order to voice the stance of business unions re devaluation and introduce their suggestions re overcoming the economic crisis. Did your association take part in it?

- No, though we clarified our stance earlier – through media. Let me note that for business, small business in particular, the situation is really close to critical; but for large business the situation is not that favorable, too, as they are losing funds.

The only thing that helps in this disastrous situation now is Christmas and New Year’s fuss: everyone is busy with household tasks and celebrations at work.

The only business that is working now is retailing; though the situation is somewhat easier for them as they sell goods that are already imported to Belarus. However, if this situation at the currency exchange market is preserved, someone will leave the market, someone will go bankrupt, and some start using gray market and get sanctions.

- What do you think, can the forthcoming election be the reason why Belarusan authorities do not recognize devaluation?

- Personally, I think that this has to do with Lukashenka’s election campaign. Devaluation is painful for him. He believes that he achieved something, and suddenly it disappears. Therefore, he doesn’t want to admit that devaluation did take place, but wants to tell fairy tales instead.

Introduction of a 30% levy was a stupid thing to do. According to the President, by introducing this levy he made a “proper market decision”, even though he claims it to be temporary.

The situation that we have today is nontransparent: it presupposes additional expenses for business entities, as they have to pay the fee from their income and sanctions against small business if it decides to work at grey market.

- Why do you think the Trade Ministry has closed a number of shops with few Belarusan goods at the same time as the levy was introduced? Is it a cleanup against competitors of Belarusan manufacturers?

- I can’t exclude the possibility of mere coincidence. As to the elimination of competitors, there has always existed an order on availability of Belarusan goods; but before this moment the Trade Ministry didn’t have enough resources to trace its implementation.

Not so long time ago, only six months earlier, trade inspection was formed, and now it performs its function – it traces the rage of Belarusan goods, which, I think, we don’t have, just like there is no sense in imposing business entities Belarusan and any other production administratively.

However, in the Trade Ministry a new intelligent service has appeared, as earlier the Ministry was unable to shut down shops. But as soon as one gets such function, it is hard to resist the temptation to use it.