The Black Tuesday of the Belarusian Economy

This year's devaluation of Belarusian currency was the largest in the world for the past 20 years, according to the World Bank.  Independent media already called the day of official devaluation "the black Tuesday". However, Belarusian state media largely ignore this news focusing on the visit of Alyaksandr Lukashenka to Kazakhstan and the Cannes Festival in France.

Yesterday, the National Bank of Belarus lowered its official exchange rate against the dollar by 36 per cent.  However, it is still impossible to freely convert Belarusian roubles into foreign currency because very few are willing to sell. That suggests that the market is still unhappy about the official exchange rate. Unable to buy foreign currency, Belarusians are trying to get rid of their roubles by buying consumer goods such as refrigerates, furniture and even stocking up on food supplies. That helps Belarusian producers, but lowers the value of the Belarusian currency even further.

In terms of real income salaries in Belarus have dramatically plummeted. Radio Liberty quotes an employee of MAZ, one of the largest Belarusian state-owned automobile plants, saying that in the past their salary was around US$800 and now it was merely US$200-250. In terms of economic prosperity Belarus seems to be moving to the level of Moldova, one of the poorest countries in Europe. The main reason is that the subsidies from Russia are no longer as generous as in the past, which hits hard the Soviet-style Belarusian economy. 

Independent web site recalls the old Soviet saying according to which Belarus can be ruled by the one who can resolve its problems in Moscow. This saying is relevant today even more than before as Lukashenka is courting Russian leaders hoping to get money. "Our independence and sovereignty, unfortunately, hangs on these ill-fated energy supplies and raw materials" said Lukashenka during his recent trip to the oil rich Kazakhstan. He failed to mention, however, that it was his policy which made the unreformed Belarus economy so vulnerable. 

Belarus already started selling its most precious assets. The recent evidence of that is the sale of the state share in International Potash Company, one of the world's largest exporters of potassium-based fertilisers. It is also reported that Belarus negotiates selling a stake in Belaruskali, one of the largest potash producers, to Chinese investors.

Belarusian weekly Nasha Niva writes about the coverage of the economic crises by Belarusian state television channels. Dramatic devaluation of the Belarusian currency was almost unnoticed by state media.  Visit of Lukashenka to Kazakhstan, Icelandic volcano eruption and changes in Ukrainian legislation appeared to be more interesting for Belarusian state television than depreciation of the Belarusian rouble. Not a single senior official gave a press conference on the day of devaluation.  Officials avoid interviews as the government is combating the worst economic crises in Belarus since the collapse of the Soviet Union.

The official Russian-laguage "Belarus Today" devotes its front page to the ongoing visit of Lukashenka to Kazakhstan, the Canes Festival in France and election results in Spain. Devaluation is only mentioned on the second page. The largest Belarusian-language daily Zvyazda follows the same pattern. Apparently, this is the consequence of the government policy not to focus media attention on economic problems.

On the political trials front - following prison sentences to several activists, including the former presidential candidate Andrei Sannikau, other presidential candidates were found guilty but released from arrest for the time being. That was the fate of Uladzimir Neklyaeu, Vitali Rymasheuski and four other opposition activists whose trials ended on May 20. However, more opposition activitists are likely to jailed in the coming weeks as trials aginst those who protested against election fraud in December continue. 


Yarik Kryvoi is the editor-in-chief of Belarus Digest and the founder of the Ostrogorski Centre.


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