Another ruble devaluation expected in Belarus

During a visit of the IMF mission, experts say the ruble will face new devaluation.

“I think the experts will estimate the development of the crisis in Belarus, how the previous arrangements are being fulfilled,” former head of the National Bank of Belarus Stanislau Bahdankevich told “Belorusski Partizan”.

As the expert says, the Belarusian authorities spend loans only for consumption.

“Gold and foreign currency reserves are wasted,” Stanislau Bahdankevich thinks. “The volume of the gold and foreign currency reserves doesn’t decline, but they are being wasted. All loans (from Russia and Venezuela) were spent to support the rate of the Belarusian ruble that is totally incorrect in my opinion. We spend gold and foreign currency reserves only for consumption. I think the IMF mission will recommend further liberalization.”

According to Stanislau Bahdankevich, the Belarusian authorities will devalue the ruble again.

“I think the Belarusian authorities will take a wilful administrative decision on this issue,” the expert thinks. “It’s difficult to say anything about it. The economy needs further devaluation. I’d only insist on announcement of the new course of the economic policy, based on market economy, on market rules. The first step is reforms, real reforms, not a show; the second step may be devaluation. Reforming should have been launched 15 years ago, not today. Reforming and economy devaluation have been announced today, but in real fact the authorities interfere with economic processes, as we can see in the situation with commercial apartments.”

As it has been reported, at the beginning of the year, the IMF executive board of directors approved granting $2.46bn loan (420 per cent of Belarus’s quota in the IMF) aimed at supporting a 15-month Belarusian reform program (till April 2010). The first $788 million tranche of the credit at LIBOR +0.75% was transferred to Belarus on January 14, and the rest sum is to be transferred taking into account regular quarterly reports of the Belarusian government. The Ministry of Finance of Belarus waits for a new $400 million tranche in April 2009.

The International Monetary Fund and the Belarusian government agreed upon all conditions of the loan on December 31, 2008. The Belarusian authorities applied the IMF for a loan in October 2008.

The program of reforms, agreed upon by the Belarusian government and the IMF, provides liberalization of economy, in particular, formation of pricing, a new regime of formation of currency exchange rates (transfer to pegging the national currency to the currency basket after one-time 20% devaluation), and strong curbing of inner demand, including budget restraint and minimization of state support of banks, declining salaries in non-productive sphere.