National Bank cannot afford stronger Belarusian ruble

April 22, 2016 17:58

The Belarusian ruble exchange rate is declining and the National Bank does not have sufficient resources to maintain it. The NBB may replenish the gold resources at the expense of the second tranche of the EurAsEc Anti-crisis Fund credit if it was not forced by the EDB to raise the refinance rate up to the level of forecasting inflation rate.

Following the trades in a single session of an open joint stock company “Belarusian Currency and Stock Exchange” on November 4, dollar exchange rate increased by Br100 and reached Br8750. The Belarusian ruble exchange rate has fallen against the dollar by 3.5% (Br300) for four days. Reducing of the national currency cost occurs despite the use of an administrative resource by the National Bank of the Republic of Belarus. In such a way a postponement on payments for gas was received (which significantly reduces the demand for currency at the exchange). In addition, the National Bank gently regulates demand due to the removal (postponement) of key applications to purchase foreign currency as well as conducting “explanatory” work with bankers and management of large enterprises. 

Reducing of the national currency cost occurs despite the use of an administrative resource by the National Bank of the Republic of Belarus.

Comment

The National Bank cannot afford to spend the gold reserves in order to maintain or control the exchange rate. Therefore, it has only the administrative resource at its disposal. It is possible to support the rate with substantial foreign currency earnings, but this is not yet foreseen. Moreover, the Belarusian exports in September reduced, according to preliminary statistics. It is possible to replenish the gold reserves of the National Bank due to the second tranche of EurAsEc Anti-crisis Fund. However, despite all the efforts made by the Belarusian side, the money incoming is being delayed, as the Eurasian Development Bank (EDB) warned national authorities as far back as on October 26, that there would not be any money until the benchmark is executed – the refinancing rate should not be below the projected level of inflation. This means the rate should almost double to a level of 50-60%, which would be a serious blow to the solvency of banks and their customers (and businesses, and the population). Under the circumstances the National Bank prefers an absence of credit.

 

Similar articles

Belarusian authorities attempt to depoliticise education system
August 21, 2017 10:55
Image: TUT.BY

The Belarusian authorities are attempting to strengthen some elements of the ‘Soviet’ education to ensure the ideological loyalty of new generations to the state. Most likely, one of the major tasks of the educational reform is to prevent growing discontent with the existing education system among the population. The educational reform aims to strengthen centralisation and adjust the system to the needs of the public sector.

In Belarus, the Ministry of Labour and Social Protection and the Ministry of Economy would determine the university enrolment figures.

The Belarusian authorities do not seem to have a long-term vision of the educational reform. The education system changes depending on who leads the Education Ministry and has access to President Lukashenka. For instance, former head of pro-government communist party and Education Minister Igor Karpenko reintroduced some "Soviet" elements to the school and strengthened ideological components along with the de-politicisation of the curricula. Current generation of students and youth have not spoken against the authorities, unlike previous generations raised during the Gorbachev thaw and socio-political transformations of the 1990s.

In addition, the Belarusian authorities are attempting to adopt measures aiming to prevent discontent among the population with the Belarusian education system. The authorities are mobilizing those nostalgic for the USSR and propose to return to 5-marks grading system, school uniforms and reduced curriculum. The Belarusian leadership also aims to blur the growing social stratification in society and to relax social tension due to the growing income gap between the richest and poorest.

Should the authorities adopt plans to reduce university enrolment, they would re-certify universities in order to close some of them and would reduce competition from private educational institutions. The Belarusian leadership is attempting to adjust the education system to the needs of the real economy, to reduce pressure on the labour market and to cut government spending on higher education for specialists low in demand by replacing them with graduates of secondary vocational schools requiring less time to train.