National Bank cannot afford stronger Belarusian ruble
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.
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.
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.