Permanent Representative of International Monetary Fund (IMF) in Belarus, Natalia Koliadina, criticized the sharp increase in wages at the end of 2010, while commenting on the economic situation in the country. In her opinion, it was triggered not by economic reasons, but the administrative ones, as well as "the authorities' desire to perform the tasks, set in the early five-year plan."
Natalia Koliadina noted that such a wage growth might lead to very significant errors. «Increasing costs in the economy, caused by higher wages, leads to the reduction of the Belarusian goods’ competitiveness on the world markets, which, in its turn, causes similar increase in the current account’s deficit or trade deficit. Ultimately, inflation and expansion of the current account’s deficit will trigger slower economic growth. This can occur through inflation or through a depreciation of the ruble, but ultimately, our and your real wages will fall and reach the level, it used to respond,» said the IMF representative, TTT.BY.
She also has showed concern about the increasing foreign trade deficit in 2010 against 2009, a decrease of international reserves, despite the significant external borrowing. «These two phenomena can be explained by quite a weak monetary policy during 2010, as well as some easing of fiscal policy and a significant increase in wages in the public sector at the end of the year. All this is certainly a reason for concern, because these events, although happened last year, will have an impact on economic development this year,» said Natalia Koliadina.
However, she supported the rise of utility services’ rates for the population in Belarus as «the fees, people pay, don’t cover the costs.» The IMF representative has a positive attitude towards Belarus’s joining the Common Economic Space with Russia and Kazakhstan. In her view, the СES agreements will reduce the price of Russian energy supplies to Minsk.
In addition, Natalia Koliadina considers plans of the Belarusian authorities to reach the foreign trade surplus in goods and services by 2014 as realistic. But this will demand tougher monetary and fiscal policies, as well as a more flexible exchange rate within the existing corridor. «This will reduce the number of account deficit on trade. In this situation, external borrowing would contribute to the structural reforms, in particular, more investment, and will increase the gold and currency reserves of the country, which means the stability of the economy,» said the IMF representative.
