Lukashenka Is Running Out of Currency

The reserves of Belarus are on the verge of a critical minimum.

The National Bank of Belarus continues to lose gold and foreign exchange reserves amid a new wave of the fall of the Belarusian ruble, which in April broke through the “bottom” of summer protests and set a new historical minimum.

Over the five quarters from January 2020 to April 2021, the volume of gold and foreign exchange reserves of the Republic of Belarus decreased by 25% - from 9.2 to 6.9 billion dollars.

Since the beginning of 2021, the National Bank's reserves have lost $ 310 million due to the repayment of the external public debt and the fall in gold prices.

By the end of the year, only $ 6 billion will remain in the Belarusian gold and foreign exchange reserves, “taking into account the projected receipts and payments,” warned the chairman of the board of the National Bank Pavel Kallaur at a press conference on Thursday.

“This will cover about two months of imports of goods and services,” he said. As a result, the amount available to Minsk will go below the critical minimum, according to the IMF standards, which recommend keeping funds in reserves for at least three months of purchases abroad.

The Belarusian Central Bank has even less real currency, following its statistics. More than half of the reserves are in gold and repo loans, while the reserves of liquid foreign exchange assets are only $ 2.8 billion. Of this amount, 2.1 billion was placed on bank deposits, and the remainder was in foreign securities.

The external debt of Belarus exceeds reserves in foreign currency 15 times and amounts to 42.1 billion dollars (as of January 1).

Slightly more than a third of these liabilities "hang" on enterprises, mainly state-owned ($ 15.4 billion), and 44% are directly public debt ($ 18.5 billion). Moreover, the latter, in contrast to the corporate one, is increasing - by $ 1.4 billion over the past year.

As the reserves are melting, the Belarusian ruble is rolling down, inflation is accelerating, and Lukashenka, who has been "sitting on bayonets," is again looking for currency from traditional creditors. In late February, Lukashenka traveled to Sochi for talks with Putin, where, according to Kommersant, he intended to ask for $ 3 billion from the money previously allocated for the construction of the BelNPP.

In Moscow, according to Kommersant's sources, they were ready to give Minsk up to $ 3.5 billion.

But Lukashenka himself categorically denied the request for money, and there were no significant agreements following the visit.

Putin only agreed to postpone the repayment of the Belarusian debt for two years (this freed the Central Bank of Belarus $ 906 million), and also to reduce the interest rate, which is tantamount to a "gift" of $ 19 million.

This, however, did little to the Central Bank and the Belarusian ruble, which has fallen by 5% since the beginning of the year, and on April 4 set a new absolute minimum of 2.68 per dollar. Inflation, meanwhile, has accelerated to 8.5%, while the central bank's goal is to keep it around 5%.

The problem is that about 45% of goods on the domestic market are "goods of the so-called critical import," Uladzimir Kaltovich, Minister of Antimonopoly Regulation and Trade, said on Thursday.

“Their prices depend on exchange rates and world food prices. World prices are growing, the pace is not decreasing, and the forecasts are not very good on the food market so far,” he stated.

Kaltovich said that due to the acceleration of inflation in Belarus, 55% of consumer prices have been regulated by the state. "This is a temporary order, the purpose of which is to reduce the inflationary surge associated with the introduction of VAT, the rise in world prices for food and raw materials," Koltovich said. “Today, such measures are a recognized necessity that is temporary in nature.”