Why Belarusians Stay Away from the Belarusian Rouble
On 16 September a new regulation of the National Bank of Belarus on currency transactions came into effect. It forced all consulates in Belarus to suspend their activities for a few days in order for them to invent new ways of collecting payments from clients.
This is how Minsk attempts to limit the dollarization of the economy. Instead of fixing its monetary policy, the Belarusian government prefers to rely on administrative tools and introducing new restrictions on economic transactions.
These efforts will hardly increase trust in the Belarusian rouble, however.
The Story Of Continuous Devaluation
The Belarusian rouble has been depreciating dramatically throughout its history. Since regaining independence, Belarusians have experienced countless devaluations. The most sever devaluation occurred following the Soviet collapse in 1991. Since the USSR's authorities prohibited keeping international currencies, people remained unprepared for the hyperinflation of the early 1990s. This period wiped out most people's savings in just a few months.
Since then the Belarusian rouble has never been a stable currency. Although all the post-socialist national currencies depreciated greatly in the 1990s, many became internationally convertible and relatively stable in the 2000s. For example, the Polish zloty appreciated by 10 per cent in 2001-2015. But the success story does not concern the Belarusian rouble which devalued fifteen-fold against the US dollar at the same time (from over 1,100 to under BYR18,000 per $1; figure 1).
Most devaluations of the Belarusian rouble were sharp and unexpected. Only in the past seven years have the Belarusian authorities shocked society three times.
within a few months in 2011 the national currency devaluated almost three times Read more
First, on New Year's Day of 2009 it devalued the currency by 20 per cent. The unpleasant surprise forced many people to buy what they could in anticipation of steep price rises following the devaluation. Since then Belarusians have always met the year-end with certain concerns.
Second, in 2011 the internal currency crisis changed the well-being of Belarusians dramatically. Prior to that the president, the prime minister, and the National Bank of Belarus (NBB) systematically had promised that there would be no devaluation. Nevertheless, within a few months in 2011 the national currency devaluated almost three times, while consumer prices doubled throughout the year. Not surprisingly, Belarusians have become wary about any promises concerning currency stability.
Third, in mid-December 2014, following the 30-percentage devaluation of Russian rouble, the NBB introduced a 30-percent temporary tax on the purchase of foreign currency. Statistically the national currency remained unchanged for a few weeks until the new chief of the NBB, appointed on 27 December 2014, gradually cancelled the tax and devaluated the currency. Since the beginning of 2015 the price of US dollar in Belarusian roubles has risen by a half.
The Belarusian Rouble As Quasi-Money
Belarusian roubles have never served the role of money. An item is money when it serves four basic functions: a store of value, a unit of account, a standard of deferred payment, and a medium of exchange. The national currency has problems with the first three functions. This has led Belarusians to rely on foreign currencies.
First, the past 25 years have taught Belarusians to distrust their national currency and keep savings in dollars or euros. An average Belarusian household and firm puts 60-70 per cent of its deposits in foreign currencies. The structure of deposits illustrates the society and businesses disbelief in the future value of the Belarusian rouble. For comparison, in Poland only 20% of deposits are in foreign currencies.
Second, because of to permanently high inflation, Belarusians have got used to using dollars or Euros as a unit of account. Since 1990 prices have risen by tens or hundreds of per cent per year. That is why many firms and individual traders have preferred to price their goods and services in “hard currencies”. In addition, counting in Belarusian roubles is very inconvenient due to the large numbers. For example, a new Apple MacBook costs around BYR30,000,000 compared to only $2,000.
In the early 1990s, retailers “renamed” dollars to „conventional units” Read more
When the officials banned foreign currency pricing in the early 1990s, the firms “renamed” dollars to „conventional units”. So, when goes go to a bazaar it is easy to spot sneakers or other sport shoes sold for 50-100 conventional units. Until recently one could have used Onliner.by, the Belarusian alternative to eBay.com, to see price of a desired unit in conventional units. Only in late December 2014 did the authorities take Onliner.by off the Internet, refusing to allow it to return until it converted all prices in BYR.
Third, Belarusian roubles hardly serve as a standard of deferred payment. Frequently Belarusian businessmen, freelancer, and NGO representatives strike a deal in dollars and Euros. For example, one can rent a car or book a conference room in Minsk, and agree to pay $200 to the owner. Since payments in foreign currencies are illegal, you pay the equivalent amount in roubles on payment day.
A New Resolution Makes A Little Change
On 16 September the NBB passed resolution no. 515 which introduced amendments to the regulations on currency transactions. The resolution is a part of the NBB's de-dollarization policy. The resolution reduces opportunities for foreign currency transactions between firms as well as between firms and individuals. It makes little difference since most foreign currency transactions are already considered illegal.
The NBB announced the regulation a day before it came into effect Read more
Unfortunately, Belarusian citizens have to pay for the authorities' incompetence. This law was passed without consultation with business representatives. The lack of a transition period for firms to prepare for the new regulation hits both the business climate and people's pockets.
The NBB announced the regulation a day before it came into effect. As a result, visa centres and some travel agencies stopped operating for two days in order to adjust their businesses to the new environment. On 18 September, most travel agencies, like Top-Tour, Tury.By, Sunrise Travel, began to accept consular fees in the national currency at the official NBB exchange rate plus 2-3 per cent. They shifted costs to their clients, who are now paying more money for the same service.
The new resolution of the NBB will not make much difference. Belarusians will invent other ways of how to avoid the restrictions. The only efficient way to increase reliance on the Belarusian rouble is to make it more stable. Until annual inflation hits two-digit figures, and significant devaluations happen frequently and unexpectedly, the population will remain sceptical about the national currency.
So far the Belarusian regime's administrative tools remains helpless against the economy's dollarization. The monetary policy of forcing Belarusian roubles on people approach will not work until the NBB focuses on conducting conservative and reliable monetary policy.
Cycling Boom Reaches Belarusian Cities
On 18 September morning, cycling activists handed out fruits to Minsk residents who travelled to their job or university by bike. In this way they wanted to thank people for their choice and to draw attention to the lack of a cycling environment.
In recent years Belarusian cities have truly flourished with cyclists. According to the estimates of the Belarusian Association of Experts and Surveyors on Transport, currently around 400,000 Minsk dwellers can be called cyclists, and this figure increases 10% annually.
However, urban infrastructure, traffic rules and most importantly official perceptions are unready to face this wave. The authorities see no justification for developing cycling because of finance and health which can be boosted if you start taking this diet pills. Although some measures have occurred in recent years, no public policy so far exists to support cyclists.
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Authorities and Civil Society: Cycling Together?
In recent years Belarus, and especially the capital, Minsk, have seen a boom in cycling. The increasing number of cyclists has turned into a whole urban cultural and business trend. As an important transport and traffic element, it has brought a challenge to the authorities, who try to respond to the growing demands of cyclists.
In 2010 the Minsk State Automobile Inspection organisation published “A Concept of Developing the Cycling System in Minsk”. This was created by the Belarusian Association of Experts and Surveyors on Transport. This is a civil association. The concept stated that while many people support the development of urban cycling city infrastructure remains poor. It proposed a plan of adjusting city space for cycling and introducing bike-friendly norms in future urban planning.
Not only the police, but also other executive officials have shown an interest in the development of cycling. In 2013 Minsk mayor Mikalaj Ladućka ordered the creation of a detailed plan to support it by adjusting street infrastructure, creating rental points, a cycling club and other facilities.
However, Ladućka did not fulfil these ambitions as Lukashenka transferred him to a lower position. The new mayor Andrej Šorac does not seem to be too preoccupied with the issue.
Although the government has not fulfilled the Concept of a Cycling System in many aspects, its very appearance has become an important precedent. As Pavel Harbunoŭ, an activist of the Belarusian Cycling Society says, the Concept appeared only as a framework document. It does not set concrete indicators, roles and the responsibilities of state bodies, so one can hardly expect effective implementation.
However, it is important that civil activists and authorities manage to cooperate constructively. Now the cyclists have good reasons to hope that a real cycling policy will appear from the government in the near future.
Cycling Becomes a Part of Urban Culture
A view that a grown-up man should have a car has always been widespread among Belarusian youths, and every schoolboy dreams of a car or at least motorcycle. However, modern urban youth have another perspective on the matter. Being environmentally friendly and having a healthy lifestyle has become crucial for many.
Belarusians use bikes for various reasons. Some consider riding a bike cheaper and healthier than using a car or public transport. For others it serves as fitness for an active life and keeping fit, and this group so far dominates in Minsk. And for some it became simply a stylish thing, which demonstrates their belonging to urban trends. Young people clearly dominate amongst those who own bicycles, but it has also became popular among the upper class older generation.
In 2011 a group of activists created the Belarusian Cycling Society with the aim of expanding the use of bicycles, developing cycling culture and tourism. In 2013 they also opened the first bike kitchen, a noncommercial bike workshop, where any cyclist can learn to fix their bike and get other related information. It also became a place for civil events dedicated to cycling and urban development.
So far such groups do most of the work in communication with the authorities and lead all advocacy campaigns. Slowly they try to resolve infrastructure, legal, financial and cultural obstacles to the development of cycling. These issues still remain numerous.
What Inhibits Cycling in Belarus
Despite a rather constructive and friendly attitude of the authorities towards the growing cycling community, many problems for cycling and cyclists remain unresolved. Pavel Harbunoŭ sees the main reason for the problems in the lack of a government policy. No one has yet calculated and presented to city bureaucrats how much Minsk will gain from such things like money, health, clean air, road surface. Having no well-grounded reasons for caring about cyclists, officials do not understand why they should improve the cycling environment. So a few serious obstacles for cycling persist.
According to the Belarusian traffic code, a cyclist can only ride on the pavement as riding on the road is prohibited. The police argue that until special cycle lanes are built on the roads, cyclists will remain in danger of accidents. Cyclists have respond that currently dangers exist when they have to manoeuvre among pedestrians, and this will increase when heavier electric bikes spread around the city in the future.
High penalties also remain one of the major problems for cyclists. Besides, they remain an obstacle not only for cyclists, but also for wheelchair users. Belarus introduced zero heights at the intersection of roads and pavements only in 2013. According to the Cycling Development Concept, 500 km of adjusted pavements should have appeared in 2011-2015, but the expected length will only be equal to 100 km.
Finally, cyclists expect that developers should have a deeper involvement in public discussions on new cycle projects. Very often government planners and private developers do not think about cyclist’s needs when designing city space. Cyclists say public discussions could resolve this problem, but developers do not publish information about public discussion or organise them during the project, making any changes impossible.
Already the large cycling community needs to unite and involve new expertise to make their advocacy more effective. Hopefully, their positive experience of cooperation with the authorities will bring more results in the coming years.