Squeak of the people

Lukashenko promised to defeat the crisis in two months

President of Belarus Alexander Lukashenko promised to announce a plan to stabilize the foreign exchange market in one and a half to two months by the end of August. For Minsk, this is really the deadline to try to somehow cajole the creditors who demanded reforms and privatization from Belarus, but never received them.

“You know, the people are already squealing, let them excuse me for this, they want a single exchange rate and free access to currency, especially in Minsk. Of course, we have no right not to respond to the mood of the population. You know my policy in this regard. We all should be done for the population, and we will do it,” Alexander Lukashenko said on August 25 at a meeting with the leadership of the government and the National Bank.

“Next week I will personally announce to people how the government and the National Bank will act in this situation. We have one and a half to two months to stabilize the foreign exchange market,” said Lukashenko, whose country has been experiencing a financial crisis since the spring of 2011.

Since March, Belarus has been looking for ways to plug the hole in the balance of payments, because of which the authorities were forced to devalue the ruble. A dollar on the Belarusian stock exchange costs about 5,000 rubles, on the “black” cash market - 8,000 rubles, on the non-cash market - more than 9,000 rubles. In terms of inflation, the country is now almost a world record holder.

The authorities are trying to regulate the currency shortage by administrative methods. On August 24, the National Bank of the country, according to unofficial information, invited large banks not to sell currency through exchange offices, accumulating it for sale to citizens for social needs - payment for treatment and study abroad, leaving the country on the occasion of the death of close relatives. The National Bank, however, denies the existence of a ban .

Minsk promised to publish a plan for unifying exchange rates in August. As this deadline approached, the depreciation of the ruble accelerated amid rumors about the impending tightening of regulation and the freezing of household deposits. Official Minsk, however, denies that deposits will be frozen, and the country's president exhorts voters to be patient.

The virtual absence of free sale of currency in exchange offices since April 2011 allowed the National Bank to state its net sale by the population at $70.7 million in June, against a net purchase of $560.3 million in March of this year.

Lukashenko’s optimism, of course, is commendable, but somehow there are no people willing to lend to the gluttonous, but unyielding and clumsy Minsk in his reception room. In June, Belarus received $800 million in the first tranche of a $3 billion loan from the Russian-controlled EurAsEC anti-crisis fund. It was assumed that in November Minsk would receive the second tranche of a loan of $400 million, but the timing of the allocation of money could be postponed due to Belarus’ failure to comply with the conditions for reforms.

“Now no one can say exactly when the second tranche will be provided... The current fulfillment of obligations by the Belarusian side indicates that no fulfillment has occurred...,” says Dmitry Krasilnikov, managing director for corporate financing of the Eurasian Development Bank. According to him, Minsk “has not unified exchange rates, has not stabilized reserves, and has not restored confidence in the national currency.” However, the Ministry of Finance of the Russian Federation, in order to smooth out the impression from Krasilnikov’s speech, has already asked the EDB not to go ahead of the dad into the hell.

Minsk is also seeking money from the International Monetary Fund (IMF), which may begin preliminary consideration of the Belarusian application as early as next week. In total, Belarus plans to borrow $3.5-8 billion. In addition, Minsk is discussing with the Russian Sberbank and Deutsche Bank a loan of $2 billion secured by 35 percent of Belaruskali.

IMF representative in Belarus Natalia Kolyadina claims that the IMF will begin negotiations with the government of Belarus on issuing another anti-crisis loan only after Minsk provides the public with a plan for overcoming the crisis. According to her, the IMF offered Minsk to prepare a document several months ago, but the program never appeared.

The former head of the country's National Bank, Stanislav Bogdankevich, believes that “currently Belarus has zero chances of receiving new financing from the IMF.” In his opinion, “the authorities do not have a comprehensive program to overcome the growing monetary and financial crisis, reduce credit expansion, or limit galloping inflation.” In this regard, the country's National Bank "is trying to solve complex problems in a simple way, introducing more and more new restrictions on the foreign exchange and financial markets."

Negotiations with Sberbank and Deutsche Bank are also stalled: the management of Belaruskali publicly opposed the pledge of the company's shares. “Under the conditions set by the Russian side, I am sure that our government will not agree to take out a loan. I mean the pledge of 35 percent of the shares of Belaruskali,” said the general director of the 100 percent state-owned enterprise Valery Kiriyenko.

In April, Lukashenko promised that the stabilization of the Belarusian foreign exchange market would occur in the next few days, and in May he said that the country would forget “all currency troubles” in one or two months. At the same time, the President of Belarus noted that the country will continue to go its own way, and it does not need the reforms that the “fifth column” demands.

If Minsk, having fallen out with the US and the EU, continues to pursue its chosen policy, then only Russia can become the lender of last hope for Belarus. Moscow is interested in Belarus, first of all, as a participant in the Customs Union and, in the future, a joint economic space with Russia and Kazakhstan. No wonder Minsk was promised an “integration” discount on fuel . In exchange, Belarus was also offered to sell the remaining part of the country's gas transportation system to Gazprom. But Minsk is in no hurry to privatize its pipe, as are other enterprises.

The chaos in Belarusian economic policy has already led to the fact that the Ministry of Economy, the Ministry of Finance and the National Bank of the country asked the government to postpone the preparation of the forecast for next year from September to a later date. The head of the department of the country's Ministry of Economy, Anton Dolgovechny, explained that the main problem in developing a forecast for the development of the Belarusian economy for 2012 is the persisting plurality of exchange rates. “We really do not have information at what rate transactions are made and cannot estimate the volume of GDP in dollar terms; there are no clear guidelines,” he said.

While Lukashenko decides the fate of exchange rates, the country's residents are having a hard time. The rise in prices, restrained by Minsk, is leading to shortages of some products in the country. Following media reports about a shortage of meat in Belarusian stores (farmers began to sell more meat to resellers from Russia), anonymous craftsmen announced the creation of the “first virtual meat exchanger . ”

Klyuchkin Anton

Squeak of the people

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Lenta.ru: Economics: The Squeak of the People