Take off for a ruble, a blow for a penny. Why large-scale sanctions against Belarus do not scare Lukashenka too much

Second origin – internal resources and assets of the Belarusian economy… Economic growth exceeds 3% of GDP, industrial production – about 10%. In January-June of this year, exports of goods and services increased by 32.7%, imports – by 28.3%. Moreover, the export of goods soared by 37.6%, services – by 17.6%. Exports of goods and services added $ 5.43 billion to the budget. The surplus increased from $ 782.4 million to $ 1,725.1 million (2.9% of GDP). This is much more important than receiving $ 920 million from the International Monetary Fund. Even without IMF money, there is no pressure on the Belarusian ruble exchange rate, also because the National Bank is pursuing a fairly tough monetary policy.

In the first half of 2021, the volume of cash in circulation (M0) increased by 4.7%. For comparison, in the first half of 2020 the growth was 10.9%, in the first half of 2019 – by 8.4%. At the same time, the rate of GDP growth this year is significantly higher than in previous years. Broad money supply (M3) in the first half of this year decreased by 2.6%, while last year in the first six months there was an increase of 4.8%.

Despite the rapid growth of export foreign exchange earnings, the National Bank clearly did not want the formation of a large BYN-ruble monetary overhang. He understands that this would further fuel the already high inflationary expectations and lead to increased pressure on the Belarusian ruble exchange rate. Hence, such parameters of broad money supply and a fairly strong position of gold and foreign exchange reserves, which amounted to $ 7.44 billion as of August 1, 2021.

At the end of the first half of 2021, the revenues of the consolidated budget of Belarus amounted to 21.4 billion Belarusian rubles. In nominal terms, this is 19.8% more compared to the same period last year. Adjusted for inflation, the growth was 3.5%. Consolidated budget expenditures amounted to 22.46 billion Belarusian rubles, having added 11.8% in nominal terms. Consequently, the deficit of the consolidated budget amounted to only about BYN 1.1 billion (about 1.4% of GDP).

Taking into account the resources of the Fund for Social Protection of the Population, budget revenues of the public administration sector amounted to 28.2 billion (35.7% of GDP), expenditures – 29.1 billion (36.9% of GDP). It is difficult to believe that such a significant reduction in the share of state finances to GDP has occurred this year. At the end of last year, the revenues of the enlarged government amounted to 38.4% of GDP, expenditures – 40% of GDP. Obviously, there are distortions caused by the assessment of the inflation rate, but even taking into account this statistical creativity, the state of the state finances of Belarus cannot be considered critical or even crisis.