Tiraspol, 1 June. /Novosti Pridnestrovya/. Pridenstrovie's government have again faced MPs' reluctance to objectively view the existing foreign exchange problems. Having ignored the economic calculations, analysis of the reasons led to this situation, current state of affairs and further developments submitted by the executive and Pridnestovian Republican Bank, lawmakers continued activities aimed at gaining certain political dividends. The Supreme Council again refused to increase the PRB's powers to regulate the currency corridor. This was the subject of today's plenary session, the government's press service reports.
«At the same time, MPs do not risk making an independent decision on changing the rouble's exchange rate against the US dollar, as is required by the objective reality. Under current circumstances the reluctance to damage their own reputation in advance of the elections is the main reason for worsening the situation both in the non-cash and cash foreign exchange market. It is evident that populist slogans do not help to resolve the problem, but are only whipping up agiotage among the population, which negatively affects the social situation and creates conditions for the development of «foreign exchange black market," reads the statement.
Later today, at a meeting of the government's presidium the prime minister, Pavel Prokudin, underscored that attempts to have a constructive dialogue had failed, but the rhetoric did not change.
«As before, they say who is guilty, sometimes veiledly, but do not propose what to do," added Prokoudin, noting, in the meantime, that the problem of «foreign currency speculators» was only worsening.
«The black market de facto exists today. Whether we like it or not. It exists. And side-stepping the problem means to spur on expectations that this problem has no end," underscored Pavel Prokudin.
The government, at the same time, was accused of having no economic estimates of the implications of the 10% devaluation proposed by the central bank.
As the minister of economic development, Dmitry Boltrushko, clarified, devaluation, according to the PRB, is the only instrument which will enable a short-run stabilisation in the foreign exchange market. Inflation will inevitably follow devaluation.
According to the first deputy prime minister, it is not the first time when the central bank presents such a proposal, and all possible scenarios have been many times estimated by the government's economic block.
«Not once did we hold meetings, and decisions were not made by a person or two, but were conceptually discussed. And then we began to estimate the inflation rate, proceeding from the proposals put forth by the central bank," said Alevtins Slinchenko.
So, if the rouble's exchange rate against the US dollar will rise to 12.5, the inflation is estimated at 4.6%. But to restrain it at this level is only possible if the whole package of state regulation measures will be approved at the same time.
«And namely: tariff freezing, customs duty reduction, state regulation of prices. All these measures will help to check the level of inflation. There is an inflation prediction model that determines the ratio of all categories of goods which are included in the composite consumer price index. And we can see to which categories of goods we must pay special attention to prevent a rise in overall inflation," Dmitry Boltrushko specified.
It was already decided at the previous governmental meeting to avoid increasing tariffs for natural monopoly services. As regards the state regulation of prices for socially important goods, an article in the recently approved anti-crisis law provides for it, with implementation mechanisms being currently elaborated. Besides, the government believes it advisable to put POL on this list: the price of fuel directly influences the net cost of the majority of goods and services and, finally, the rate of inflation.
«If measures of state regulation of prices and tariffs for the corresponding groups of goods are not adopted, the rate of inflation is sure to rise higher," underscored Alevtina Slinchenko. According to the income indexation law, if the inflation de facto exceeds 5%, the state applies indexation. If the inflation is predicted at 4.6%, then pursuant to the law we will not have to apply indexation.»
As the government's press office reports, devaluation will increase tax receipts. But if the inflation will exceed 6%, the budget revenues will not suffice to pay indexed salaries, pensions and allowances. In this case our economy risks getting into the so-called «inflation-devaluation spiral», experts of the Ministry of Economic Develop believe.
«Devaluation is followed by inflation, which results in indexation, and the cycle repeats — devaluation, inflation, indexation. To avoid this, we insist on the whole spectrum of measures being employed JOINTLY," the minister commented. According to Dmitry Boltrushko, not once were all calculations voiced at various meetings and sessions, including in the presence of MPs. «It is unfortunate that many do not remember the sessions and meetings which took place earlier and where all these things were spoken about," noted the minister.
At the end of the government's presidium meeting, Pavel Prokudin expressed regret that the executive authorities again failed to find common ground with lawmakers. Under such circumstances the government should undertake all possible measures to prevent the situation from worsening. Only efficient actions rather than populist slogans could save the country's economy.
