September 11, 2020 admin 0 Comments

Belarus made headlines last year when pro-democracy protests rocked the country and the political crisis also helped fuel a currency crisis.

The Belarusian ruble recovered after Russian President Vladimir Putin pledged on August 27 to guarantee Belarus’s security. Belarus ran a balance of payments deficit and its international foreign exchange reserves fell to $4.3 billion. Its floating exchange rate has plunged by eight per cent this month, and the situation is likely to get worse. So far, according to the International Monetary Fund (IMF), the decline has been bad, but not catastrophic, but Belarus is suffering from balance-of-payments deficits.

It can cover only 1.4 months of imports, with three months being the minimum, according to estimates by the International Monetary Fund (IMF).

Compared to previous Belarusian financial crises, this seems manageable, but a solution is still needed. One possibility is that Russia will bail out Belarus, as it has repeatedly done in the past, with the most recent Russian financial rescue coming in 2011. Moscow, however, would insist on taking over Belarus’s largest state-owned enterprise as the price of saving the country’s economy.

The first option makes it more likely that Russia will seize the state, while the second alternative would liberalize and open up the Belarusian economy. The third alternative is, as the Russians like to say, a combination of the first and second options, with Russia as guarantor and Belarus as creditor. Other alternatives include the creation of a new state-owned company or a joint venture between Russia and the United States.

A normal government that wants to implement market reforms and raise living standards would be able to reach a workable agreement with the IMF. The IMF is quick, but its demands would probably be limited to regulating one-fifth of consumer prices.

In a crisis situation, the funds can be disbursed within one month and the programme can be completed within three months, but not within six months.

The IMF can only reach an agreement with a legitimate government, and President Lukashenko no longer has international legitimacy. The international financial institutions have no confidence in the legitimacy of his government and his government. Under the new agreement, Belarusian President Petro Poroshenko, the European Union and the United Nations are behind him, but not the IMF.

Putin poised to buy Belarus was last modified: September 11th, 2020 by admin

Leave a Reply:

Your email address will not be published. Required fields are marked *