{"id":11393,"date":"2022-04-12T19:21:43","date_gmt":"2022-04-12T16:21:43","guid":{"rendered":"https:\/\/api.pozirk.online\/longreads\/belarus-may-be-hit-by-severe-crisis-reminiscent-of-1990s\/"},"modified":"2026-02-24T20:29:13","modified_gmt":"2026-02-24T20:29:13","slug":"belarus-may-be-hit-by-severe-crisis-reminiscent-of-1990s","status":"publish","type":"longreads","link":"https:\/\/pozirk.online\/en\/longreads\/11393\/","title":{"rendered":"Belarus may be hit by severe crisis reminiscent of 1990s"},"content":{"rendered":"

\n By Vo\u013aha Tama\u0161e\u016dskaja<\/span>\n<\/p>\n

\n The disruption of foreign economic ties as a result of Western sanctions against Belarus over its role in Russia\u2019s invasion of Ukraine is a major challenge for Belarus, an open economy. Economists doubt that the country can prosper as a closed economy.<\/b>\n<\/p>\n

Minsk defaults on its debts<\/span> <\/h2>\n

\n\t Minsk\u2019s decision to repay its foreign-currency debts to some creditors in Belarusian rubels was tantamount to a default.\n<\/p>\n

\n\t Belarus felt the pain of the default before it occurred.\n<\/p>\n

\n\t \u201cToday we can talk of a foreign-currency liquidity crisis and a significant deterioration of assets,\u201d D\u017amitry Kruk, of the Belarusian Economic Research and Outreach Center (BEROC), told the Viewer last month. \u201cMany banks can become insolvent in the next few months or even weeks.\u201d\n<\/p>\n

\n\t The default has limited Belarus\u2019 fund-raising opportunities. It had few creditors it could turn to long before Russia invaded Ukraine. After Aliaskandr Luka\u0161enka\u2019s disputed re-election in 2020, Minsk has relied on Moscow and Moscow-controlled financial institutions for financial assistance.\n<\/p>\n

\n\t \u201cIn any case, Belarus was already left with the only source of funding — Russia\u2019s good or bad will,\u201d said Kaciaryna Barnukova, of BEROC. \u201cIn terms of funding, the default does not matter.\u201d\n<\/p>\n

\n\t But she added that the default may reflect on government bond yields. \u201cThe National Bank may ignore international ratings of government bonds and will continue to consider them sound.\u201d\n<\/p>\n

\n\t \u201cBanks may be facing the same reality as it was before the default. But it was grim anyway with an outflow of deposits and other signs of a banking crisis,\u201d Barnukova said.\n<\/p>\n

Rubel recovery<\/span> <\/h2>\n

\n\t Meanwhile, the Belarusian rubel has somewhat recovered after sharp depreciation in late February. Barnukova linked the trend to a decrease in imports, although no official data has been released to confirm her theory.\n<\/p>\n

\n\t \u201cWe see massive logistical problems affecting imports,\u201d she said. \u201cThey are linked to the unavailability of sea routes for transportation via Ukraine. Imported goods that were delivered via the EU have been stopped for examination to prevent trafficking in goods targeted by sanctions.\u201d\n<\/p>\n

\n\t The EU\u2019s recent entry ban for Belarusian and Russian haulers will also affect imports.\n<\/p>\n

\n\t Imports of crude oil from Russia are likely to decrease soon because Belarus can no longer sell fuel to Ukraine and the EU, Barnukova added. \u201cThis means that exports will also shrink, but with a bit of a lag. Before it happens, the rubel can continue to appreciate.\u201d\n<\/p>\n

\n\t She noted that both Minsk and Moscow have introduced restrictions in a bid to keep demand for foreign currencies in check.\n<\/p>\n

\n\t \u201cAn ordinary Russian cannot buy U.S. dollars today. There are a number of restrictions for banks and companies. Russia de facto doesn\u2019t have a foreign exchange market. Restrictions on currency purchase and sale have been introduced in Belarus to reduce demand for foreign currencies. The rubel liquidity has been withheld to prevent it from spilling over into the foreign exchange market. This also absorbs part of the demand.\u201d\n<\/p>\n

\n\t \u201cWe usually watch for depreciation as the first sign of a crisis. But this is not necessarily so. A stronger rubel does not mean there will be no problems,\u201d she told The Viewer.\n<\/p>\n

Economy to shrink without investment<\/span> <\/h2>\n

\n\t Belarus faces restrictions on access to financial and commodity markets. An open economy, Belarus has heavily relied on foreign trade for many years. Now that ties have been disrupted, can Belarus be an effective closed economy?\n<\/p>\n

\n\t \u201cTheoretically, it is possible,\u201d Barnukova said, noting that Belarus may see its exports fall by half, which is equivalent to about 30% of GDP.\n<\/p>\n

\n\t \u201cBelarus used to produce petroleum products for Europe. Now it could try to use the equipment to produce plastic for Russia. But the petrochemical plants need upgrades. Where cash and technologies can come from is a big question,\u201d she went on to say.\n<\/p>\n

\n\t Belarus may experience a shock similar to the crisis of the 1990s. It will take time and investment to recover, but it is unclear where investment can come from, she noted.\n<\/p>\n

\n\t \u201cWe will soon find out that the millstones of history are turning slowly but steadily. The economy never dies, but its fall will be very painful,\u201d Barnukova said.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Vo\u013aha Tama\u0161e\u016dskaja The disruption of foreign economic ties as a result of Western sanctions against Belarus over its role in Russia\u2019s invasion of Ukraine is a major challenge for Belarus, an open economy. Economists doubt that the country can prosper as a closed economy. Minsk defaults on its debts Minsk\u2019s decision to repay its […]<\/p>\n","protected":false},"author":75,"featured_media":0,"template":"","rubric":[22],"class_list":["post-11393","longreads","type-longreads","status-publish","hentry","rubric-theviewer"],"acf":[],"yoast_head":"\nBelarus may be hit by severe crisis reminiscent of 1990s | Pozirk<\/title>\n<meta name=\"description\" content=\"By Vo\u013aha Tama\u0161e\u016dskaja The disruption of foreign economic ties as a result of Western sanctions against Belarus over its role in Russia\u2019s invasion of\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/pozirk.online\/en\/longreads\/11393\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Belarus may be hit by severe crisis reminiscent of 1990s | Pozirk\" \/>\n<meta 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