The National Bank of Belarus allows applying contractual exchange rates for repayment of foreign currency loans in rubles
The National Bank of Belarus has de facto recommended banks to accept Belarusian rubles for interest payments and for the current (full) repayment of foreign loans using contractual exchange rates.
In its efforts to prevent the paralysis of the economy and mass bankruptcy under the existing constraints (lack of foreign currency) and tasks (maintaining gold and foreign currency reserve), the National Bank is developing “quasi-market” solutions and provides commercial banks with more flexibility.
Clearly, given the circumstances when the government is not prepared to implement a package of harsh coherent structural reforms, the devaluation becomes virtually meaningless (costs are higher than benefits). Therefore the National Bank solves problems it faces (i.e. conservation of reserves) by means and tools it considers the "lesser evil".
Therefore the multiplicity of currency exchange rates will be maintained in the course of the following 3 to 6 months, while it is likely that the mandatory sale of foreign currency earnings by the companies will be increased up to 30% and all related benefits abolished.
There is already lack of currency received under the mandatory sale of foreign currency earnings rule to pay for the “critical imports” (mainly so-called intermediate imports in the form of raw materials). Large state-owned factories of strategic importance enjoying the governmental protection are mainly exporters, which removes the urgency of the “currency issue” for them.
In the meanwhile it was decided to sacrifice the rest of imports (as well as business associated with it) in the name of saving the existing economic development strategy of the country. Currently, the black market for cash and non cash currency exchange rates is emerging, with US Dollar exchange rate fluctuating between 3500-4500 Belarusian rubles per USD. This policy would inevitably lead to substantial reduction in consumption of imported goods and to closure of a number of private enterprises, as well as to rising prices and declining incomes of the population.
Last week, Belarusian Foreign Minister Makei participated in the foreign ministers’ meeting of the Eastern Partnership and Visegrad Group initiative hosted by Warsaw. The Belarusian FM emphasized Belarus' interest in cooperation in the transport sector, which could be due to Belarus’ desire to export electricity surplus after Belarus finished construction of the nuclear power plant in Ostrovets. Minsk expressed concerns about Warsaw’s stance on the Belarusian NPP, as it refused to buy electricity from Belarus and supported Vilnius’ protest on this issue. Following accusations by the Belarusian leadership and the state media against western states, including Poland, of training "nationalist militants", Minsk did not agree on the visit of the European Parliament deputies from Lithuania and Germany to Belarus and to the NPP construction site near Ostrovets in particular. In addition, the Belarusian authorities have stepped up efforts to enforce education in Russian in Polish-language schools in Grodno and Vaukavysk. Should a rift in Belarusian-Polish relations persist, the Belarusian authorities are likely to step up the pressure on the Polish-speaking minority in Belarus.