23 January 2018, Tuesday, 15:04

Four devaluation scenarios


Belarusians are expecting a New Year's gift from the authorities.

Many people suspect the situation of 2009 (when the ruble was devalued by 20%) may repeat on the first day of the next year.

Salidarnasts published four scenarios of possible developments.

Scenario 1. Devaluation under control

If the stars align, the ruble will probably continue to fall as gradually as in 2013. This scenario is highly unlikely, but it should be mentioned. The gradual decline is possible due to gold and foreign currency reserves, but the state doesn't have enough resources for a long time.

The “unique economic model” needs permanent external aid – loans, or better subsidies – and they should always increase. Even Moscow hardly wants to back Minsk in the volumes it needs. So, only a miracle can save the country from the slump of the Belarusian ruble in the medium term prospects.

Scenario 2. To stay afloat till elections

There's an impression that the country's authorities have a simple aim of surviving until the presidential “elections” without financial shocks. A sudden devaluation shouldn't trigger unrest among people ahead of another political show. After the vote, the repetition of 2009 is possible, but this time the ruble will fall by more than 20%.

Scenario 3. Controlled explosion

The authorities are not sure that can curb the ruble's decline even in the nearest 18 months in the current economic situation. It's possible that the national currency will fall before the “elections”.

In this case, a decision on the devaluation can be taken in the near future, so that people could forget about the slump by the election campaign (a part of the population have a short memory). Under this scenario, the devaluation is possible in the first half of 2014.

Scenario 4. Shock and chaos

In accordance with this variant, the authorities will try to avoid a significant fall of the ruble before the “elections”. But it doesn't always happen that the Belarusian authorities' plans come true: the notorious 2011 is a proof. Neither Moscow nor attempts to take loans from different sources saved the country from the 300% devaluation.

In case of unfavourable conditions for Belarus's economy, the financial dam can be broken at any moment. Even a light wind can be fatal if you are balancing on the brink for a long time. It's hard to imagine how deep the ruble can fall.