Belarus officially acknowledges devaluation of its currency
The devaluation of the Russian ruble and some statements made by the Belarusian authorities have led to panic on Belarus’ foreign currency market. In order to mask devaluation, a 30% tax on buying the foreign currency has been introduced until February 1st. However, the National Bank has not waited until February, and instead introduced a unified buying rate for foreign currency. With the help of this new method of price assessment, the National Bank is trying to minimize the losses of gold and forex reserves. This might lead to the Belarusian ruble further devaluing.
December is the month when expectations of devaluation are higher among Belarusians. This year, concerns were boosted by the situation with the Russian ruble. Statements made by the Belarusian authorities on the stability of the Belarusian ruble’s exchange rate had the opposite to intended effect. Due to the steep upsurge in demand for the foreign currency, the general public has purchased more than $180 million on net basis. Another impact factor which influenced the fall in gold and forex reserves was a significant amount of foreign debt repayments in December. The total amount of gold and forex reserves has fallen to the critical point of $5 billion.
In order to mask the devaluation of currency starting from December 19th the Belarusian authorities have introduced a 30% tax on the purchase of foreign currency on the exchange market. This measure has allowed the government to reach the end of 2014 without significantly adjusting the budget. By gradually lowering the tax to 20% by December 30th, to 10% by January 5th, and cancelling the tax on January 8th, and with the official exchange rate of the Belarusian ruble growing, the Belarusian authorities have carried out the devaluation of the national currency. The Belarusian ruble has fallen by 26.4% in respect to the US dollar by January 8th, 2015 in comparison to December 19th, 2014.
Because of the more significant fall of the exchange rate of the Russian ruble to the US dollar, this devaluation is not sufficient. After the change of the rate, trading on the exchange market continues with the many-fold excess of demand for foreign currency over the current supply. At a time when there is a lack of secure income of lending resources, the National Bank has changed its methods for assessing the currency exchange rate. The ratio of foreign currency in the reserves was changed with the share of the Russian ruble growing which might lead to the Belarusian ruble being further anchored to the currency of Belarus’ main export partner. The nonsterilized interventions will be carried out to some extent, without the use of gold and forex reserves. Such an approach allows for larger flexibility of the Belarusian ruble’s exchange rate. However, it also increases the risks of a repeated increase in the national currency’s exchange rate.
In such a manner, Belarus has failed to avoid devaluation because of its dependence on its main trade partners’ currencies. The devaluation which was carried out by the Belarusian authorities is insufficient, and the 2011 scenario of a gradual devaluation could repeat.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.