Minsk Recalled Devaluation

In Belarus, the ruble is getting cheaper and gasoline is getting more expensive.

Gasoline is getting more expensive by 1 kopeck every week. Experts predict price growth for petroleum products to the European level. At the same time the national currency is losing its value, which, according to experts, is also caused by the lack of oil supplies from Russia, reports Nezavisimaya Gazeta.

Late last week, car fuel at the Belarusian filling stations rose by 1 kopeck. As a result, gasoline 92 RON cost 1.72 Belarusian rubles (€0.72). 95 RON and diesel fuel - Br1.82 (€0.76). This is the eighth and not the last increase in price. Experts expect that Belarusian prices will reach the level of neighbouring European countries. That is, gasoline will cost €1.5-2 per liter.

Concern Belneftekhim has been explaining the rise in gasoline prices by the decline in the national currency. Previously, they referred to the new pricing policy and oil quotations. February 24, the Belarusian ruble broke another record-low and exceeded the psychological mark against the dollar and the euro - 2.2246 and 2.4065 respectively. Belarusian money hasn't been cheap for so long. A forgotten devaluation is in the air again.

Experts consider the lack of Russian oil supplies as one of the reasons for these two problem phenomena. It first resulted in the cessation of oil products exports and, accordingly, in the reduction of foreign currency revenues. Besides, oil costs more than last year. This triggers an outflow of foreign currency earnings. So far, there are no statistical data on oil products deliveries abroad in January. However, the fact that their share makes up 25% of all Belarusian exports leaves no hope for positive dynamics of this indicator. As previously reported, Belarus' GDP fell by 1.9% in January. To be fair, it should be specified that the dollar is strengthening against all other currencies, which, given the deterioration of Belarus' foreign trade, only exacerbates its problems.

Local economists, including independent ones, assure that the population shouldn't be concerned about the devaluation of the Belarusian ruble if one means a sharp and one-step decline in the value of the national currency. However, they admit that if the situation with oil supplies is not resolved, the local money will slowly lose its position.

The suspension of oil products exports is a great but not the only problem caused by the cessation of oil supplies to Belarusian refineries in the same volumes. Both refineries are experiencing problems, as they are losing revenues. The authorities are trying to compensate them at the expense of the population by increasing prices for gasoline and diesel fuel.

Late last week it seemed that the way out of the Russian-Belarusian oil conflict had already been found. On Friday, Lukashenka said that he had received a call from his Russian colleague Vladimir Putin and offered to compensate for losses from the Russian tax manoeuvre. "It was noted that the Russian side was ready to compensate for Belarus' losses from the reduction of customs duties on Russian oil this year (compared to 2019) in the framework of the Russian tax manoeuvre at the expense of the yield (or bonus) of Russian oil companies," said the press service of Aliaksandr Lukashenka. Lukashenka, speaking with Ambassador of Belarus in Moscow Uladzimir Semashka, estimated the losses at $420-430 million. Meanwhile, Belneftekhim reported that two tankers with 80 thousand tons of oil would arrive in Klaipeda, Lithuania, in March.

However, later Russia specified that Putin's proposal was not quite the same. "An approach takes into account the reduction of the export duty, namely the reduction of the bonus by about $2 per ton every year," the press service of the Russian Energy Ministry said, referring to Energy Minister Alexander Novak. Experts have calculated that under this scheme Belarus would only be able to save about $36-48 million this year. The amount of $360 million can be compensated only for the entire period of the tax manoeuvre, that is, until 2024. "No one can impose some unfavourable conditions which did not correspond to the Russian and international price conditions," said spokesman for Russian President Dmitry Peskov, actually denying what Aliaksandr Lukashenka had said.

Last Friday, Lukashenka stressed that Belarus would calculate Vladimir Putin's proposal. However, the general public still does not understand what proposal he meant. Local observers do not rule out that Lukashenka is already ready to agree to any Russian price offers, while Russia's symbolic discount is to be presented as his diplomatic victory. Moreover, according to experts, Russian oil remains 17% cheaper under current conditions. It's economically more profitable than any other supplies. Not to mention the preservation of the situation at its current stage (January supplies amounted to 500 thousand tons) against the expected 2ml tons). Experts offer the authorities to agree to conditions of Moscow and to develop variants of alternative oil supplies.