Briefly:

• In January and February, we observe a significant (almost halved) reduction in oil and gas revenues of the Russian budget.

• For the Kremlin, the absolute priority is the war, not the economy.

• So far, such a dilemma — either military spending or the economy — in 2023 is not so tough for Russia.

• Minsk does not want to sink to the bottom together with Russia, but there are no strategic possibilities to avoid it.

• There is no hope for a sharp increase in Belarusian exports to China.

- In recent months, there has been information about a rather radical drop in the income of the Russian budget as a result of a decrease in income from the sale of oil and gas.

How noticeable is it, and which numbers should you pay attention to first?

- Indeed, there is a significant decrease in Russia's oil and gas revenues, as a result, export revenue in general has also decreased significantly.

All this affects the exchange rate of the Russian ruble.

The budget deficit is growing, and if Russia receives less income from oil and gas, then the Russian authorities face a dilemma: spend as much as was planned, or cut spending?

It's a question of priorities.

In January and February, we observe a significant, almost halved, reduction of oil and gas revenues of the Russian budget.

This obviously affects, among other things, the possibility of financing the war, as well as the dynamics of the exchange rate.

But I would not yet predict that there will be such a fall for the whole of 2023.

Russia is looking for new ways to deliver its oil products, and it is not yet clear how successful these attempts will be.

- So far, such a dilemma - either military spending or the economy - in 2023 is not so tough for Russia.

First of all thanks to the reserves they have in the National Welfare Fund.

The funds concentrated there can compensate for an unplanned budget deficit.

Therefore, the question turns into such a layer: how much can these reserves be enough for?

And the dilemma - war or economy - the Russian authorities somehow want to postpone for the future.

If, after all, there is a need to choose between spending on war and internal prosperity, then my personal opinion is that for them, war is definitely a priority.

If it were not so, then the war of such a scale would not have started.

— How can these economic changes affect the volume of Russian aid to official Minsk, Russia's purchases of Belarusian exports?

— Belarusian exports to the Russian market expanded significantly in 2022.

First of all, it was connected with the favorable exchange rate for Belarus.

But over the past 3 months, the Russian ruble has fallen against the dollar by approximately 15 percent, and the Belarusian exchange rate has also fallen.

As a result, the successful, even excessive competitiveness of Belarusian exports to Russia is gradually disappearing.

And this factor will increase in 2023.

As for the direct effects of military spending in 2023, which is more related to the budget, on the contrary, there are favorable factors for the Belarusian economy.

These are additional orders related to military expenses - sewing uniforms and so on.

However, the first factor (deterioration of conditions for Belarusian exports) is much more significant and large-scale.

And the third.

The reduction of Russia's budget capabilities reduces the demand, including for Belarusian goods.

The less income Russia receives, the less economic activity it will have.

And this will affect Belarus as well.

The Russian economy will shrink from zero to three percent in 2023 — and this will certainly have a negative impact on Belarusian exports and the entire economy.

- They are trying to find an alternative, but there are really few opportunities to find new markets.

The same visit of Lukashenka to China is another attempt to find a political answer to economic problems.

However, dependence on Russia exists not only through economic mechanisms.

It is realized both through the reduced price of gas and through the favorable conditions of oil trade - and this trade has even grown over the last year.

This is what will keep the Belarusian authorities in Russia's orbit.

Minsk does not want to sink to the bottom together with Russia, but there are absolutely no strategic possibilities to avoid it.

— If you already mentioned China, what do you see as the meaning of Lukashenka's visit to Beijing?

If we put aside political and military motives (here we can only express certain versions), what is the economic meaning of Belarusian-Chinese relations?

Can they become an alternative and a certain breakthrough from the same Russian orbit?

- Short answer: no.

There is no hope for a sharp increase in Belarusian exports to China.

If economic issues were touched upon during the visit, then, most likely, the conversation was about the re-export of potash fertilizers to China - this could help the Belarusian economy.

I don't see any serious prospects for increasing other export positions to China. We could also discuss Chinese transit through Belarus and China's investment activity in the "Big Stone".

- I think, almost certainly, that this topic arose.

Beijing could hint that Belarus should do everything possible to prevent this from happening.

- It cannot be said that there is a systemic dependence on China.

There is only about a percent of their total transit of goods to Europe.

But China's strategy is that it wants to diversify transit routes as much as possible.

That's why he strives to ensure stability, even by not the most important transit route and sales market, to expand the palette of his capabilities as much as possible.

But it is not necessary to say that the Belarusian issue will become number one for them.

• Vitaly Tsygankov

  Vitaly Tsygankov graduated from the Faculty of Journalism of BSU.

  One of the two founders of the first non-governmental news agency BelaPAN.

  He worked in "Zvyazda" newspapers, was a correspondent in Belarus of the Russian "Nezavisimaya Gazeta", Associated Press, columnist in "Svaboda" newspaper.

  On Belarusian Freedom since 1994.

  Correspondent of Russian Freedom in Belarus.

  
  

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