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September 26 – October 2, 2011

The government plans to reach a balanced exchange rate in October

The situation has not changed
The government plans to reach a balanced exchange rate in October

The Government and the National Bank expect to eliminate the multiplicity of exchange rates in October, with a balanced exchange rate at a level between the current official and the market rates. Thereby they hope to resume negotiations with the IMF on a new stabilization loan.

The Government and the National Bank expect that the multiplicity of exchange rates on the Belarusian foreign exchange market will be eliminated in October, with a balanced exchange rate at a level between the current official and the market rates. This will restore the confidence in the Belarusian ruble, which, in turn, should affect the inflow of deposits to the banks and those funds could be used for loans to the state programmes.

The Vice Premier said that the main stumbling block during the discussion of the new program was the lack of user-friendly exchange rate, which prevented Belarus from beginning of full-fledged negotiations. Mr. Rumas assured that with the opening of the supplementary trading session on the BSCE, this problem would be solved and added that the IMF welcomed the measures undertaken to counteract multiple exchange rates.

This was announced at a press conference on 21 September by Deputy Prime Minister Sergei Rumas. In addition, Belarus intends to intensify negotiations with the IMF on a new Stand-by programme. For instance, the government delegation flew to Washington to attend the annual meeting of the IMF and to negotiate the assessment of the macroeconomic situation in the country. The Vice Premier said that the main stumbling block during the discussion of the new program was the lack of user-friendly exchange rate, which prevented Belarus from beginning of full-fledged negotiations. Mr. Rumas assured that with the opening of the supplementary trading session on the BSCE, this problem would be solved and added that the IMF welcomed the measures undertaken to counteract multiple exchange rates.

Comment

The Government needs the IMF loan in order to maintain the gold reserves at an adequate level, and for external guarantees. The loan will bring down the current high rate of the Belarusian Eurobonds, and will help to return deposits into the banking system. Moreover, it could act a “safety cushion” while negotiating with investors the privatization of Belarusian assets on equal terms (currently a number of investors, primarily Russian, have stronger negotiating position).

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