September 14, 2011 will undoubtedly go down in the history of Belarus as the day when the authorities took a radical measure in an attempt to improve the financial and economic situation of the state - the Belarusian ruble was set adrift on the high seas of a free market.

The first results of the trading - an extra exchange session, which will now be held every day - have shocked the population, to say the least. The dollar rate jumped to 8.6 thousand Belarussian rubles, the Russian ruble, to 305, and the euro, to – 12,100. Previously, the rates in commercial banks could not exceed two percent of the official rate of the National Bank (on September 14 – 5,347 rubles per one US dollar). However, the "black market" rates already then were as high as those now legally established on the exchange on Wednesday.

As the deputy president of the National Bank, Taras Nadolny, told the media, from now on banks will be able to freely establish new exchange rates. He also added that "we will gradually move to the official exchange rate (of 5,347 rubles for a dollar), although, judging by his words, this is still only a hope: "It would be nice to have equalized rates, established at the level of the official one, but we shall wait and see." However, economist Yaroslav Romanchuk says that "according to the laws of the market the Belarusian ruble was to drop, and it will fall to 10,000." One should also remember that since the beginning of 2011 the official rate of the Belarusian ruble against the dollar rose 1.79 times, and the market one, at 2.87 times.

However, all these are macroeconomic developments. And what about the producers and the public? Indeed, as Romanchuk has remarked, "everybody expects a very powerful blow to the industry, because manufacturers cannot buy materials and components at such an exchange rate. Prices will rocket." As for the population, continued Romanchuk, in January through August the ruble’s devaluation reached 300 percent and the average salary of 500 dollars is gone - "now it does not even touch 230 dollars under the new exchange rate policy, and pensions range 80-85 dollars, and this spells that more than a quarter of the population will plunge into poverty." And then there followed yet another rise (on September 14) in the retail prices of motor fuel – by an average of three percent. True, the Ministry of the Economy has set caps on the retail price surcharges for socially sensitive goods.

It should be noted that the free floating of the national currency is precisely what Minsk was urged to do by international financial institutions. As the head of the Belarusian mission of the IMF, Chris Jarvis, said the country needed real exchange rate liberalization to reduce the current balance of payments deficit, which in recent years was a huge problem. True, judging from Jarvis’s statements, the chances the IMF will like Minsk’s consumer prices policies look slim.

The IMF will be able to rate the objective situation in the country very soon - the IMF mission plans to do that on October 5-17. However, Jarvis said that a new program of financial support for Belarus was still not on the agenda. Although Minsk has long requested a new loan program that was discussed during the June visit of the fund’s mission to Belarus. However, as Nadolny said on Wednesday, the National Bank does not exclude the idea of drawing a loan from the IMF may be dropped in view of the new exchange rate situation in the country. It is noteworthy in this regard that at its meeting on September 14 the presidium of the Council of Ministers discussed ways of achieving Belarus’s rise in the leading world rankings.


MOSCOW, September 15