Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Lukashenko May Survive Currency Plunge, Opposition Says

Don't Miss Out —
Follow us on:

June 1 (Bloomberg) -- Belarusians whose family members and colleagues have been sent to prison for protesting last year’s presidential elections said the country’s economic crisis may not herald the end of President Alexander Lukashenko’s regime.

“If the economy crashed, Lukashenko wouldn’t have to turn to the West,” Andrey Dmitriev, who was chief of staff for presidential candidate Vladimir Neklyaev in the run-up to the Dec. 19 elections, said May 30 in an interview in Warsaw. “He could turn toward Russia instead.”

Lukashenko, who has ruled Belarus since 1994, gained a fourth term after a Dec. 19 election that the Organization for Security and Cooperation in Europe said wasn’t free or fair. His regime, dubbed the “last dictatorship in Europe” by the administration of former President George W. Bush, has asked the International Monetary Fund for a new loan program as the ruble’s value slumps amid a spiraling current-account deficit.

Belarusian authorities began talks with the International Monetary Fund today, the government said in a statement on its website. Belarus expects to receive $3.5 billion to $8 billion over three to five years under a new IMF program, state news agency Belta said, citing Prime Minister Mikhail Myasnikovich. The IMF mission will continue until June 14, Belta reported.

Russia and partners from the former Soviet Union agreed last month to loan Belarus as much as $3.5 billion over three years. Russian Finance Minister Alexei Kudrin has said Belarus should sell $7.5 billion of state assets to spur its recovery.

Russian Conditions

Lukashenko may have turned to the IMF because he didn’t like the conditions Russia sought to impose, said Timothy Ash, head of emerging-market research at Royal Bank of Scotland Plc. It may be more difficult than some people assume to get a loan from the IMF, he said.

“Our understanding is that the U.S. and EU would be loathe to sign up to new IMF loans to Belarus unless they received clear commitments from the Lukashenko regime that basic political rights/freedoms will be respected,” Ash said today in an e-mailed note. “The Lukashenko regime shows little willingness to deliver on this agenda.”

Belarus raised its key interest rates twice last month in an effort to stem outflows and buoy the ruble, which Belarus devalued by 36 percent against the dollar on May 23. The former Soviet republic’s refinancing rate rose 2 percentage points to 16 percent beginning today.

Not Much Change

“Circumstances will force Lukashenko to reform the economy to a certain extent, but not much,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said in a telephone interview. “My basic bet is that he’s still going to be around five years from now, and that things aren’t going to change that much.”

The Washington-based IMF agreed to loan Belarus about $3.6 billion in 2009 to help the centrally run economy “adjust to external shocks.”

“We thought President Lukashenko knew the scale of his economic challenge this year,” Polish Foreign Minister Radoslaw Sikorski said in an interview. “But the bill for mismanaging his economy has just arrived, and he’ll need to be rescued by those who endorsed him.”

There is a 60 percent probability that Belarus “fails to follow through with sustainable policies to implement substantial cuts in quasi-fiscal lending, or starts a credible privatization program and loosens business regulations,” Ivan Tchakarov and Anastasiya Golovach, economists at Renaissance Capital in Moscow, said yesterday in an e-mailed research note.

Deficit Soars

The IMF has said Belarus must curtail spending, raise interest rates and liberalize its managed exchange-rate system after foreign reserves plummeted and the current-account deficit soared to 16 percent of gross domestic product.

Lukashenko, in an April 21 speech, said there were “efforts to spur panic buying in the foreign exchange and consumer markets, with the assistance of domestic and foreign analysts.”

“It’s obvious that someone is eager to destabilize the country and sow chaos and distrust of the government, and after that the problems that ensue could strangle our country and our independence,” Lukashenko said.

The Belarusian economy is “on the brink of a serious recession,” according to Maxim Oreshkin, chief strategist for Russia and the former Soviet Union at Credit Agricole CIB. GDP may shrink by 10 percent this year, he said.

“We expect the Belarusian authorities very soon to make populist decisions on wages and the indexation of social payments, fuelling a wage-inflation spiral and opening the way to hyperinflation,” Oreshkin said today in an e-mailed note.

New U.S. Sanctions

U.S. President Barack Obama said last week that Belarus, a country of 10 million wedged between Russia and European Union member Poland, was “backsliding” as political repression intensifies, potentially harming other countries in the region.

The U.S. will pursue new sanctions against some Belarusian state-owned enterprises, in addition to travel restrictions and asset freezes already in place, after opposition presidential candidates were sentenced to prison, Obama said during a trip to Poland.

“Lukashenko has to understand there can only be dialogue when the prisoners are released,” Daria Korsak, whose husband Alexander Atroshchenko was sentenced to four years in a labor camp after the elections, said May 30 at a news conference in Warsaw.

More than 700 opposition activists were arrested after a rally in Minsk following the Dec. 19 elections. Forty-five people, including five opposition candidates, have been sentenced in connection with the post-election protests, the Solidarity with Democratic Belarus office in Warsaw said.

No Guarantees

Even if Lukashenko were forced to step down, there are no guarantees Belarus would become a democratic country, Dmitriev said. Neighboring Ukraine, whose 2004 Orange Revolution was hailed as a milestone on the path to democracy, has since been mired in corruption allegations and parliamentary brawls.

The Belarusian regime’s elite is “pretty strong” and would be “quick to buy and take over the running of currently state-owned enterprises” if Lukashenko were to lose power, Dmitriev said. “They’d call themselves by a new name, but nothing would really change.”

To contact the reporter on this story: Katya Andrusz in Warsaw at

To contact the editor responsible for this story: Willy Morris at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.