BELARUS DEVALUED its rouble currency by about one-fifth yesterday, in the wake of a deal to secure a $2.5 billion (€1.8 billion) credit line from the International Monetary Fund (IMF).
Belarus, a largely Soviet-style economy run by authoritarian president Alexander Lukashenko, has in the last month spent about one-quarter of its gold and foreign exchange reserves on propping up the ailing rouble, as export demand for industrial goods shrank and international credit markets froze up.
Ordinary Belarusians – from whom little public dissent is tolerated – fear the devaluation will make imported goods more expensive and drive up inflation, at a time when the government has just announced a 20 per cent hike in electricity, heating and other utilities bills.
The Belarus Central Bank said the new exchange rates for the rouble would “safeguard the high competitiveness of the Belarusian economy”.
The rouble traded yesterday at 2,650 to the dollar, 3,703 to the euro and 90.6 to the Russian rouble. The central bank also announced that it would raise its key refinancing rate to 14 per cent from 12 per cent from January 8th.
During talks with the IMF, Belarus pledged to make changes to its monetary and fiscal policies.
“The fund-supported programme will help Belarus achieve an orderly adjustment to the external shocks that it is facing and offer protection against its most pressing vulnerabilities,” IMF chief Dominique Strauss-Kahn said. “Measures agreed include a strengthened monetary and exchange rate policy framework, fiscal restraint through cuts in public investment and directed lending by banks, and strict public-sector wage restraint.”
The standby loan – which is still subject to final approval from the IMF’s board – was unusually large, representing about 420 per cent of the Belarus IMF “quota”, the maximum amount an IMF member country pays to finance the institution.
In eastern Europe, Ukraine and Hungary have secured immediate IMF loans, and Serbia has agreed a credit line to alleviate any severe difficulties.
