Belarus Ruble May Weaken 28% on Trade, Adviser Says

By Yuriy Humber and Emma O'Brien

March 16 (Bloomberg) -- Belarus' ruble may depreciate another 28 percent versus the dollar as the country's major trading partners slide into recession, said Yaroslav Romanchuk, an economist advising the government on the global crisis.

The former Soviet republic, which ex-U.S. Secretary of State Condoleezza Rice dubbed Europe's last dictatorship because of President Alexander Lukashenko's 15-year reign, saw exports tumble more than 45 percent in January, according to the state statistics service. Demand for the country's tractors, trucks and chemicals slumped in its chief markets of Russia and Ukraine as the worst financial crisis since the Great Depression hurts economies worldwide and freezes access to credit.

"The export forecasts are not a scary story for kids, they're the stuff of horror films," Romanchuk, president of Mizes Research Center in Minsk, said in an interview from the Belarus capital on March 11. "The ruble may fall further to 4,000 to the dollar."

The Belarus ruble depreciated 21 percent on Jan. 6, four days after the central bank started to manage it against a basket of dollars, euros and Russian rubles similar to its largest neighbor's dollar-euro peg. Belarus's currency was little changed at 2,876 per dollar by 5:23 p.m. in Minsk today, leaving it down 24 percent this year, according to Bloomberg data.

Belarus, wedged between Russia and the European Union, has a $2.5 billion credit line from the International Monetary Fund designed to help the centrally run economy "adjust to external shocks" from the global slowdown. It is also borrowing $2 billion from Russia and agreed on a $3 billion currency swap with China on March 11. Venezuela has also offered the country a $500 million loan, according to Belarus's state television Web site.

$10 Billion More

The nation will need to borrow as much as $10 billion more to bolster the economy and avert further devaluation, according to Romanchuk, who said he is one of 10 independent experts on the government's economic crisis committee.

The trade deficit more than doubled to $443 million in January, according to government figures. Export revenue may plunge by $14 billion, or 45 percent, this year because of crimped demand in Belarus' trading partner countries, Romanchuk said. Inflation, which was 13.3 percent as of December 2008 based on government data, will quicken to "no less than 20 percent" this year, he said.

Other former Soviet economies have also been devaluing their currencies amid the global meltdown, with Kazakhstan weakening the tenge by 21 percent on Feb. 4, Armenia letting the dram drop 22 percent as it moved toward a free-floating regime, and Russia allowing a 33 percent decline in the ruble versus the dollar since August. Ukraine, which is receiving a $16.4 billion IMF loan, has struggled to manage the hryvnia's 42 percent slump over the past six months.

To contact the reporters on this story: Yuriy Humber in Minsk via the Moscow newsroom



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