Economist: National Bank Has Become A Branch Of Lukashenka's Administration

What is behind the personnel reshuffle in the main bank of Belarus.

Lukashenka has dismissed the head of the National Bank, Pavel Kallaur. He led the country's main bank for 10 years.

Kallaur's place will be taken by the country's dismissed Prime Minister Raman Halouchanka.

— Kallaur can in some sense be called a symbol of the thaw era in Belarus, this period of 2017-2020, — BEROC Academic Director Leu Lvouski noted in an interview with Filin. — He is one of the few chairmen of the National Bank who is a professional economist.

He came with a professional team. His initial goals were not particularly politicized. He wanted to do exactly what the head of the National Bank should do.

That is, fight inflation, modernize the institution itself, its instruments, and even once tried to launch research. And in many countries, the National Bank is also an important research institute.

— A number of experts believed that he succeeded in many things.

— Yes, in many things. Of course, he failed to create a serious research center from the National Bank, he simply did not have sufficient funding for this.

But as for the activities of the National Bank itself, at first Kallaur succeeded in almost everything. And we saw the result.

By 2020, inflation reached a level that was quite decent for Belarus, relatively low and stable. The National Bank began to gain authority.

And this is extremely important, because this is an institution that market agents must trust. And Kallaur began to build this system of trust.

But in 2020, as in many other areas, everything changed, and everything Kallaur had worked on, as well as his professional qualities, were buried.

The ideal modern National Bank looks something like this — it is an organization independent from the government and political structures, which deals only with its own business, that is, only monetary policy. And which, naturally, does not hide data, which is why it is trusted.

That is, when the head of the National Bank says that, conditionally, inflation will decrease, everyone understands that this is not an unfounded statement, and economic agents believe it.

And so in 2020, this main capital — trust in the National Bank — was lost. Kallaur, like the others, began to hide information, not to finish the story, to lie somewhere, to pretend somewhere that he does not understand what is happening around him.

Indeed, there were rumors that he seemed to want to resign. But there is no evidence. Therefore, I cannot say whether he really had such aspirations, or maybe people wanted to think so about him.

He was not the most active supporter of Lukashenka, not everyone was fired from the National Bank, but a sufficient number of strong professionals were still fired for their civic position.

However, the main thing that changed in the policy of the National Bank was that Kallaur could no longer speak honestly about the state of the economy.

And in the last two years, monetary policy has generally faded into the background, and it was replaced by Soviet price regulation, which was handled by another ministry.

There were all sorts of things, even security officials were supposedly formally assigned to monitor the National Bank. All this testified to the loss of independence of the institution.

— Does the Central Bank of the Russian Federation strongly influence the policy of the National Bank of the Republic of Belarus, has it not turned into a conditional branch?

— The Russian Central Bank has much more independence, autonomy and the ability to openly tell the truth than the Belarusian National Bank.

Let's say that similar processes are happening in Russia with the overheating of the economy. And the head of the Russian bank officially stated that yes, there is such a problem, rates need to be raised, and rates were raised.

Our National Bank pretends that nothing is happening, that they do not notice anything, rates are practically not raised. And the main object of monetary policy, as I already said, has become the resurrected Soviet system of price control.

That is, it is obvious that even compared to the Russian one, the Belarusian National Bank has a different degree of dependence. Our bank did not become a branch of the Russian Central Bank, rather, it became a branch of the State Control Committee or the KGB, or even the Lukashenka administration.

— And what do you know about Halouchanka as a banker?

— As far as I know, he has no experience in working with monetary policy. Of course, he knows something about economics, that's true. Let's say, I also know something about economics, perhaps even more than Halouchanka knows about what the Central Bank does.

But in order to occupy the position of the head of the National Bank, you need a very high qualification. This is a rather specific area. And Halouchanka has no experience in this area specifically. I don't understand what he will do there.

Unless he loyally serves the authorities. I don't think he has any ideas regarding monetary policy.

— So you don't think that he will be able, for example, to influence the situation with the overheating of the economy, don't expect bold initiatives from him to change the policy of state regulation?

— I don't think that he plans to contradict Lukashenka in any way. I am sure that Kallaur somehow hinted to Lukashenka about both overheating and the fact that state regulation of prices is not the best idea.

The result is obvious to everyone. Why should Halouchanka change anything?

— It turns out that the head of the National Bank was replaced solely as a result of another reshuffle of the so-called deck of Lukashenka, when the Minister of Architecture can become a regional assistant and vice versa, and Kallaur can generally be appointed Minister of Culture, for example?

— In terms of qualifications, Kallaur as Minister of Culture is about the same as Halouchanka as the head of the National Bank.

I said that Kallaur was one of the symbols of liberalization, the thaw. And under him, all this symbolically ended.

We have already had many heads of the National Bank who had nothing to do with either macroeconomics or monetary policy. Kallaur was a professional and when he could do something, he did it.

But since 2020, it has become unimportant who heads the National Bank.

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