The National Bank of Belarus allows applying contractual exchange rates for repayment of foreign currency loans in rubles

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April 22, 2016 17:52

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.

Comment

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.

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.

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