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Belarus ‘Can’t Avoid’ Devaluing Ruble, Sberbank’s Gref Says

Sberbank’s Chief Executive Officer German Gref
Sberbank’s Chief Executive Officer German Gref. Photographer: Andrey Rudakov/Bloomberg

Belarus will be forced to devalue the ruble because of the country’s widening current-account gap and its falling gold and currency reserves, according to OAO Sberbank, Russia’s biggest lender.

“The government won’t be able to avoid a devaluation of the currency, though this will be very good for the economy,” German Gref, Sberbank’s chief executive officer, said in an interview. Moscow-based Sberbank owns BPS Bank, Belarus’s third-biggest lender by assets.

Local banks in Belarus can sell foreign currencies at a rate that deviates as much as 10 percent from the official rate after the central bank relaxed its controls on the ruble on March 30. That’s up from 2 percent. The former Soviet republic may reduce the ruble’s value by as much as 30 percent, Herbert Stepic, chief executive officer of Vienna-based Raiffeisen Bank International AG, said on April 11.

President Aleksandr Lukashenko pledged on April 16 to take steps to help “balance” the domestic currency market, the state-run news service Belta reported. “Realigning” the exchange rate is a ‘matter of a few days, perhaps a week,’’ Lukashenko was cited by Belta as saying.

Dispensing Currency

Belarusbank, the country’s largest lender, is no longer dispensing foreign currency to local customers and has imposed a limit on withdrawals abroad amid concern the ruble will be depreciated.

The central bank last week dropped sales of precious metals in the national currency, offering gold, silver and platinum only in dollars. The bank is continuing to accept rubles on its purchases of precious metals.

The order to suspend currency sales was made to avoid “fleecing” the country, Lukashenko said, according to Belta.

Belarus’s gold and foreign-currency reserves fell 6.5 percent in March as the government tried to close a current-account gap that was equivalent to 15.6 percent of gross domestic product last year. The trade deficit more than quadrupled to almost $2 billion in the first two months of the year from $468 million a year earlier, according to data from the National Committee for Statistics.

‘Additional Risks’

“Depleting gold and currency reserves creates risks” in terms of the willingness of banks to lend money, Gref, 47, said in the interview at Sberbank’s headquarters on April 15.

While Sberbank is satisfied with BPS’s performance since buying the bank in December 2009 and will seek to expand its presence in the country, “macroeconomic risks remain high,” Gref said.

Russia may increase its influence over the former Soviet republic by “taking over valuable assets,” Stepic said. Belarus is seeking a $3 billion bailout loan from Russia and former Soviet partners.

Raiffeisen has an 88 percent stake in Priorbank, Belarus’s fifth-biggest bank by assets.

Russia plans to complete talks with Belarus within a month on the terms and conditions under which it would agree to extend aid, Finance Minister Alexei Kudrin said April 18 in Washington.

The loan, which may be released in installments over a period of two years, will be provided from the $10 billion anti-crisis Eurasian Cooperation Fund set up by governments including Russia and Kazakhstan, Kudrin said.

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