Belarusians prepare for devaluation
The National Bank’s data suggests that the NB’s efforts to reduce the devaluation expectations among the population have failed – people have started converting their rouble savings into hard currency. Devaluation appears inevitable, even if Belarus receives new loans.
In November, the population changed their views on the Belarusian rouble’s stability. In November the outflow of rouble deposits from the banking system was record-high. People converted their roubles into US Dollars and Euros, which led to record-high net purchases of cash and non-cash foreign currency. The population acquired about USD 325 million in total, which led to Belarusian international reserves depleting in November.
With these actions, the population attempted to secure their savings. The population noted the devaluation in Russia and logically assumed that similar events could happen in Belarus in the short term. The population started converting roubles into US Dollars regardless of the National Bank’s significant efforts to reduce the devaluation expectations. In November, the Belarusian rouble was as stable as ever (rouble devalued only by BYR 90), deposit rates went up to 30% per annum, and there was no shortage of foreign currency in the exchange offices. Nevertheless, the population’s fears have not gone away. The difference between the BYR/USD exchange rate in the exchange offices and the National Bank’s exchange rate demonstrates there is a persistent demand for the international currency in Belarus.
The National Bank might escape devaluation only if Belarus receives new large enabling her to meet the increased demand for foreign currency for a specified period. However, that would not resolve the issue of slumped Belarusian exports to Russia (make up to 42% of total exports). If the current exchange rate policy persists, the negative trends in foreign trade might also increase. A number of industrial enterprises might suspend their activities, social tension might grow and international reserves might reduce to a critical level. Unfortunately, devaluation of the Belarusian rouble (within the margins of the RUR devaluation) would not solve all the problems in the Belarusian economy. The Belarusian economy requires structural reforms, especially in private property, but the Belarusian leadership is not susceptible to such measures.
The population realistically assesses its risks in terms of rouble savings depreciation and seeks to minimize potential losses from future devaluation. New borrowings can only delay the moment when the country’s leadership would be forced to devalue the national currency.
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.