Further increase of the gas price

Russian gas price for Belarus through the second quarter of 2011 will be USD 244.7 per one thousand cubic meter (against USD 223 in the first quarter of 2011).

Comment

This means further deterioration of the trade balance, increased pressure on the power supply system of the country where gas accounts for 85% of costs (90% of the electricity is produced by burning natural gas). The rising gas prices will inevitably lead to increase of energy tariffs and, accordingly, to inflation and further reduction of competition and purchase power of the population. Increase in wages, as well as liberalization of the pricing policy in the end of 2010 already had an effect on the inflation rate. Given the multiplicity of the exchange rates the annual inflation rate will exceed 30% (as compared with planned 8%).