Markets to clear Lukashenko currency gridlock

The IMF has blasted President Aleksandr Lukashenko for weak economic policies that led to the currency crisis now gripping Belarus.

­Critics say Lukashenko triggered the financial turmoil by raising public sector wages by one-third last year in a populist move to ensure his re-election in December.

The Belarus rouble has been in free-fall for months now, sparking massive shortages of food and other goods. Belarusian citizens and enterprises have been desperately hunting down US and European currency for business and personal use, but all foreign currency has disappeared from banks and exchange offices.

On September 15, Minsk allowed the national currency to be freely traded on the stock exchange. This long-awaited step resulted in the Belarusian rouble falling from 5,347 roubles to the dollar to 8,600. Last spring the official exchange rate was 3,000 Belarusian roubles to the dollar, meaning the currency has lost almost two-thirds of its value. 

Belarus cannot overcome the crisis without foreign help, believes political researcher Alex Nice.

“Belarus absolutely needs assistance in credit from abroad. It is unable to solve its problems on its own. The economic situation is extremely serious and worsening. What the government is trying to do is to manage a decrease in the population’s living standards, but there is a limit on how far they can go. The question is whether they will get it from the West or from Russia,” he told RT.

However the country’s leader has no viable alternative to his current policy, claims Dmitry Babich, RIA-Novosti news agency's political analyst.

The IMF and Western institutions in general have been critical of President Lukashenko for the entirety of his 16 years in power, the expert says, but despite some mistakes made by the Belarusian president in relations with the EU and Russia, Minsk has forged its own path in the field of economic development.

Dmitry Babich believes the shock reforms now underway will seriously shake Belarusian society as “no country is ready for a liberalized economy.”

Nobody stands to gain from the collapse of Belarus, believes Babich, so Minsk should put the brakes on political and economic reforms at a time when many citizens have lost over 70% of their savings in just a few months.

“I am not sure that poverty helps economic or political reform,” Dmitry Babich acknowledged.

“Lukashenko is moving further and further away from reality, making more and more outrageous statements. And people in Belarus understand it. The problem is – there is no viable alternative,” argues the political analyst, pointing out that the Western-fed Belarusian opposition could never get more than 15 per cent of the vote in an election.

Dmitry Babich expressed the opinion that the situation in Belarus will stabilize gradually as the value of the free-floating national currency begins to plateau.