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Uladzimir Kavalkin: Belarusians spend their savings on their current expenses –survival is at stake

08.08.2016  |  Economy   |  EuroBelarus Information Service,  
Uladzimir Kavalkin: Belarusians spend their savings on their current expenses –survival is at stake

The latest data of the National Bank re foreign currency transactions reflects not only people's desire to preserve the quality of life; the problem is that the savings of Belarusians are running out.

Belarusians, according to the National Bank, in July abruptly lost interest in purchasing currency, whereas the volume of net sales of foreign currency by citizens totaled $284.3 million, setting this year’s record.

When the level of income of the population drops, the habit of consumption is retained, i.e. savings are spent, claims the National Bank. According to Dmitry Murin, head of the Monetary Policy and Economic Analysis Directorate of the National Bank, the desire to spend savings has to do with the need to maintain the level of consumption, not with the distrust to the banking system.

In the interview with the “EuroBelarus” Information Service Uladzimir Kavalkin, an expert on the problem of state service reform and the head of the “Cost of government” project within the BIPART project comments that “of course, decline in income forces people to spend their savings." "People spend their savings, as it usually happens in times of crisis, to maintain the usual level of consumption. Although I would look at the problem wider, - said Uladzimir Kavalkin. – We are not talking about the middle class, which has lost a little bit of income and wants to retain its ability to travel, purchase expensive equipment, cars, flats and so on. People’s survival is at stake. The incomes of the significant part of the population have fallen so that they can already be not enough for current consumption: rent, food, clothes, and sending children to school."

Besides, as the expert said, "in the past year and a half - from January 1, 2015 until May 1, 2016 - 153.000 jobs have disappeared from the economy": "That is, it is not that these people have lost their income and they try to keep the usual standard of living, but it is that 153,000 people simply don’t have enough money to live on."

According to Uladzimir Kavalkin, "most people don’t have savings for more than a year." "I'm talking about common people rather than about 2-3% of rich people. I’m talking about those wage workers, who are forced to exchange currency not to show off, but to survive,"- said the expert.

Labor market trends do not add optimism either. "There is only potential for expansion of the labor market when there is expansion of the consumer market. But our main consumer market is Russia, which is also reducing. Now we cannot trade with Europe, since the quality of our products doesn’t meet European standards. All the leaders of our industry are down, except for its giant "Belaruskalij". They cannot supply neither debts nor loans," - Uladzimir Kavalkin said.

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