Belarus's Foreign Exchange Reserves Enough Only for Monthly Imports

28.03.2011 21:11
Архив Редакция

According to the experts of the British financial services company Royal Bank of Scotland Group Plc (RBS), Belarus's foreign exchange reserves would be enough only to cover monthly imports. After that, according to the Western financiers, the Belarusian authorities will be forced to devalue the ruble. RBS experts estimate that 20-30% devaluation is possible.

RBS Head of research of emerging markets in London, Timothy Ash, said that National Bank of Belarus has lost about 60% of the circulating currency reserves since October 2010. That is, Belarus has been losing $500 million each month.

According to the National Statistics Committee of Belarus, the country’s gold reserves barely exceeded $4 billion at the beginning of March 2011. According to the calculations of the British experts, Belarus has $2.73 billion of liquidity currency at its disposal, which is a worrying sign, the agency Bloomberg.

Timothy Ash, says in his research note that the Belarusian authorities urgently need to find additional sources of funding. Meanwhile, according to the experts, Belarus is hardly able to attract funds from abroad, including from the International Monetary Fund, which gave the country a loan of $3.5 billion in 2009.

RBS Head of research of emerging markets believes that it is related not only to economic factors (including the lowering of long-term counterparty credit rating and financial strength of the Belarusian National Reinsurance Organization), but also to the political situation in the country. According to the experts, in connection with the arrests of political opponents of the current regime in Belarus, the leadership of the European states is likely to limit programs such as the IMF program.

As Telegraf previously reported, foreign currency loans of the National Bank of Belarus have increased by nearly $400 million for the first two months of 2011 and have amounted to the record $4.4 billion on March 1. The volume of foreign exchange reserves, decreased by 20% for the first two months of 2011, was slightly more than $4 billion on March 1. As a result, in March, foreign exchange requirements of commercial banks to the National Bank exceeded the amount of foreign reserves.

International experts recommend devaluation to the Belarusian authorities in order «to solve the problem of unaffordable deficits as a result of overly soft economic policy.» This was stated by the IMF head of the Belarusian mission Chris Jarvis. According to the experts, a regime of austerity, a sharp reduction of budget deficits and rising interest rates would be the alternative.

Nevertheless, the Belarusian authorities declare categorically about no intentions to devalue the ruble. Thus, the chairman of the National Bank of Belarus Petr Prokopovich said in the report to President Alexander Lukashenko on March 17 that while he was on his post, there would be no post-time devaluation (not more than 5%).

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