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Government considering another devaluation, report says

The Belarusian authorities are considering a new devaluation of the Belarusian rubel, from 8,250 to up to 15,000 against the US dollar, news site belaruspartisan.org reported on July 30, with reference to a source at the National Bank of Belarus (NBB), BelaPAN said.

The need for a new devaluation amid the government's plans to bring average monthly pay up to $500 by the end of the year was discussed during a closed-door NBB meeting a few days ago, the report said.

According to the NBB, as much as $11.8 billion will be required this year alone to raise pay by 50 percent. In addition, the demand for foreign cash has been increasing steadily since June.

The worst- and best-case scenario for the Belarusian rubel is that it will fall to 15,000 and 12,000 against the US dollar, respectively.

To justify the devaluation of the national currency, authorities will tell the public that it would allow Belarus to increase the export of goods, achieve a trade surplus and repay external debts, the report said.

A representative of the Presidential Administration suggested blaming the new weakening of the rubel on foreign businesspeople that seek to acquire Belarusian companies on the cheap, the report said.

As early as October, the National Bank may "freeze" bank deposits and restrict withdrawals through cash machines to stay in control of the situation, the report said.

When reached by BelaPAN, Alyaksandr Tsimashenka, spokesman for the National Bank, dismissed the report as "blatant nonsense" and refused to talk about it or the alleged meeting of the NBB.

The rubel lost 17 percent of its value against the US dollar as a result of a currency devaluation in January 2009. The Belarusian rubel was devalued by 36 percent against the dollar in May 2011 and by 34.3 percent in October 2011. Both Alyaksandr Lukashenka and Pyotr Prakapovich, then the head of the National Bank, and the National Bank press office had repeatedly dismissed reports of forthcoming devaluations as completely unfounded.

Under the 2012 Monetary Policy Guidelines, the exchange rate of the Belarusian rubel is expected to be 9,150 against the dollar at the end of the year.

In May, the International Monetary Fund warned that the Belarusian government's ambitious growth and pay targets were inconsistent with stability.

"Stimulating domestic demand would reignite the inflation-depreciation spiral and erode external competitiveness," the IMF said. "Attempts to contain inflation and depreciation by price controls or large-scale intervention would deepen distortions and deplete reserves."