Sharp devaluation shocks Belarusians
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Reuters
Oluşturulma Tarihi: Ocak 10, 2009 00:00
MINSK - A 20 percent devaluation of the Belarusian currency has sent people rushing to shops before prices go up.
The devaluation shocked many in this ex-Soviet state where President Alexander Lukashenko, widely known as "Batka" or "Dad," insulated the population from the turbulence of world markets by keeping much of the economy in state hands.
But the global turmoil has caught up with Belarus and has forced it to seek a $2.5 billion loan from the International Monetary Fund.
The devaluation may have been linked to the loan as freeing up the currency system, cutting social spending to balance budgets and wage controls are common conditions set by the IMF for its loans to help rebalance ailing economies. On Dec. 31 Minsk agreed to the IMF loan and on New Year's Day it devalued the ruble to 2,600/$ from 2,200/$.
Belarusians rushed to the shops the next day to buy what they could in anticipation of steep price rises once the next set of imports hit the shelves.
"I don't remember such queues since the Soviet times," said Marina, a 38-year-old housewife, out shopping in Minsk. "I saw a woman grabbing onto a fridge and shouting that she got it first, while a man was telling her that he had ordered it."
"We sold 10-days worth of stock in three days," said Tatyana, a furniture store assistant. "Today, there were a lot of unhappy people. People couldn't believe that we've sold out."
The average wage, at $400 a month according to the latest data, is now worth $333 after the devaluation.
’Bad move’
Alexander Chubrik, a Minsk economist at the Institute of Privatization and Management, said the central bank should have cushioned the shock by devaluing the currency in stages. "This was a bad move. No one expected this," he said. "The main result is a collapse in confidence in government policies, and possibly in the banking system."
Lukashenko, a former collective farm manager who has been president for 14 years, has maintained popularity through subsidized services such as healthy wage growth.
But the global turmoil has caught up with Belarus and has forced it to seek a $2.5 billion loan from the International Monetary Fund.
The devaluation may have been linked to the loan as freeing up the currency system, cutting social spending to balance budgets and wage controls are common conditions set by the IMF for its loans to help rebalance ailing economies. On Dec. 31 Minsk agreed to the IMF loan and on New Year's Day it devalued the ruble to 2,600/$ from 2,200/$.
Belarusians rushed to the shops the next day to buy what they could in anticipation of steep price rises once the next set of imports hit the shelves.
"I don't remember such queues since the Soviet times," said Marina, a 38-year-old housewife, out shopping in Minsk. "I saw a woman grabbing onto a fridge and shouting that she got it first, while a man was telling her that he had ordered it."
"We sold 10-days worth of stock in three days," said Tatyana, a furniture store assistant. "Today, there were a lot of unhappy people. People couldn't believe that we've sold out."
The average wage, at $400 a month according to the latest data, is now worth $333 after the devaluation.
’Bad move’
Alexander Chubrik, a Minsk economist at the Institute of Privatization and Management, said the central bank should have cushioned the shock by devaluing the currency in stages. "This was a bad move. No one expected this," he said. "The main result is a collapse in confidence in government policies, and possibly in the banking system."
Lukashenko, a former collective farm manager who has been president for 14 years, has maintained popularity through subsidized services such as healthy wage growth.