Belarusian economy ranked as hyperinflationary

Four of the world’s largest auditing companies ranked the Belarusian economy as hyperinflationary. It implies that by international standards of financial accountability the financial state of companies will deteriorate and will also have a negative impact on investment and privatization plans of the authorities.

Four of the world’s largest auditing companies (PricewaterhouseCoopers, Deloitte, Ernst & Young, KPMG) ranked the Belarusian economy as hyperinflationary.

It implies that Belarusian companies and banks that apply IAS rule in their accounting, would have to apply “hyperinflation accounting” according to IAS 29. The adoption of “hyperinflation accounting” will have an impact on their balance sheet where all non-monetary items will have to be one-time inflation adjusted as of their acquisition date, which will lead to an appreciation of assets and equity resulting also in higher depreciation and amortization. Therefore, IAS 29 accounting standard will be used by all banks (31) and 23 larges JSCs (MAZ, BelAZ, Belaruskali, Grodno Azot, Belshina, etc.). Moreover, IAS accounting is a prerequisite in the majority of companies with foreign investments. As a result, financial statements will be changed significantly and the loss-making of the companies will become more obvious, as well as the inefficiency of investment in the country.Therefore the diagnosis of the auditors will impact on the country’s investment attractiveness and privatization plans of the authorities (in favor of foreign investors).