ordered state and private companies to roll back prices to March 1 levels in an effort to repeal by decree the inflation that has accompanied the fall in value of the Belarusan ruble. The ruble began the year at about 45,000 to the dollar. Last week, however, a dollar cost 60,000 rubles.
In line with Lukashenka’s decree, most traders posted a rate of 43,000 rubles to the dollar on March 19, but few if any would actually sell dollars at that price. Items like sugar, eggs, and meat are also disappearing from the shelves in Minsk, as panicked shoppers try to stock up and desperate storekeepers try to avoid sales below cost.
The 33% de facto devaluation is a reaction to the government’s efforts to make up the difference between its revenues and its expenditures by printing money. But President Lukashenka, who fired the president of the National Bank on March 19, blamed "Russian speculators pursuing political aims" — in particular "Russian democrats" in league with forces in the West and with Lukashenka’s opponents in Belarus. The Russian central bank issued a statement that "seeking culprits in Russia for the devaluation of the Belarussian ruble … in our view makes no economic sense whatsoever."
To add to Belarus’ economic problems, Gazprom announced a 30% cut in gas deliveries to Belarus, which has paid only $5.2 million our of $161 million it owes for gas already delivered. Belarus has threatened to cut transit of Russian gas through Belarus to central Europe in retaliation.
The crisis in Belarus is an awkward problem for Russia. The Russian-Belarus Union celebrates, if that is the word, its first anniversary on April 2. Russia cannot afford to watch Belarus sink into economic chaos, but it lacks the resources to bail the country out. The IMF and the World Bank stopped disbursements to Belarus in 1995 and clearly will not resume unless economic policies are completely reversed. The Russia-Belarus Union will be on its own with this one.
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