Zmicier Kruk: A 30% levy on purchasing foreign currency will never bring any effect

Let us recall that a temporary 30% levy on purchasing foreign currency has been enforced in Belarus on December 19. This measure is commonly regarded as a disguised devaluation.

“Taking into account the state of affairs in the economies of the neighboring countries, primarily in Russia, the government and the National Bank have taken a number of measures to put a stop to the development of negative trends on the currency market and the financial market of Belarus in addition to making deposits in Belarusian rubles more attractive”, state-run news agency BelTA reports with a reference to the National Bank of Belarus.

Apart from a 30% levy, As of 19 December the economic operators, which are located in Belarus, are to sell 50% of their foreign currency proceeds. Off-exchange trade in foreign currency by the corporations that reside in Belarus has been temporarily suspended.

“These measures will allow raising the appeal of Belarusian ruble deposits, balancing the currency market against the heightened demand for foreign currency, and preventing an increase in speculation practices,” the National Bank states.

Website prokopovi.ch named after Piotr Prokopovich, notorious ex-Chair to the National bank of Belarus who made sounding promises not to devalue he Belarusian ruble, has resumed its activities, Belsat informs. The website is set to make possible immediate buying and selling of foreign currency without involving banks and paying 30% commission. As a response to people's demand for foreign currency, prokopovi.ch was founded and actively working in 2011, when the domestic currency fell by 60%.

The National bank hopes the temporary levy will be lifted if the Russian ruble gets stronger against euro. Zmicier Kruk, a Belarusian economist, says such optimistic forecast should be brought into question.

“As I see it, a change of exchange-rate regime or a shift to an appropriate exchange rate or even 30% devaluation would be more reasonable. The step they have made today is a halfway decision, it fails to resolve the situation but it is really injecting uncertainty. That is why it will never bring any effect,” he told Belsat.eu.

Mr Kruk also expressed doubt that the National Bank would be able to meet banks' demand for foreign currency even after collecting 30% fee.

Earlier in December speaking about the country's economy Belarus Aliaksandr Lukashenka emphasized he had no intention to “follow Russia”. He said that no devaluation was on the cards stating that the stability on the currency market is the obligation of the banking system led by the National Bank and the Belarusian government. The other things are in the hands of the population, Lukashenka added warning Belarusians against buying up foreign currency. Belarusian President Aliaksandr Lukashenka has ordered his government to switch to U.S. dollars and euros in trading with Russia.

Lukashenka said at the Cabinet's session in Minsk on December 18 that "a task has been defined, which is to switch to dollars in trade with Russia, the way we pay for energy”.

Lukashenka added that Belarus should have already demanded all payments from Russia in dollars and euros only.