Country Report Belarus December 1998 Main report

Economic policy: Foreign-exchange restrictions remain in place --

Although the government suggests the possibility of moving towards a single exchange rate for the Belarusian rouble next year, it has ruled out any progress this year and instead has tightened existing restrictions on currency trading. Currently, the distorted official rate coexists with interbank market rates and black-market rates, which are both considerably more representative of market-clearing rates. Belarusian companies have only been permitted to trade Belarusian roubles at the official rate, which at the end of October stood at less than one-third of the black- market rate. The Council of Ministers' decree of October 20th requires all payments for imports to be in foreign currency, thus in effect withdrawing the Belarusian rouble from foreign trade and further reducing demand for it.

-- although exporters earn a reprieve

In addition, the government has required Belarusian enterprises to sell 40% of foreign-currency proceeds to the state at the official exchange rate. The authorities have recently announced a suspension of this policy for 1999 under the decision by the Council of Ministers on November 16th "on stimulating the return of currency revenue from the export of goods". Until now, Belarus's mandatory surrender requirements have acted as a considerable de facto tax on exporting enterprises. Two enterprises in particular, the Belarusian metallurgical plant in Zhlobin and the potassium fertiliser concern in Soligorsk, have between them accounted for 60% of the foreign-currency supply on the official currency market. It appears possible that the authorities will reinstate the surrender requirements earlier than planned if they do not appear to be achieving the desired results, given the government's dire shortage of foreign- currency reserves. A central bank statement on November 27th reveals the extent of this shortage, as it allows for purchases of foreign currency by authorised banks at a rate close to that currently prevailing on the black market. According to press reports, under this new policy banks will sell 95% of the currency received directly to the central bank. The new policy will remain in place at least until early January.

© 1998 The Economist lntelligence Unit Ltd. All rights reserved
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