A Minsk Moment Update: Belarus Hyperinflation Prompts Government To Freeze Food Prices
So we move from one probably hyperinflation to another, quite factual one. As we disclosed last week, following its massive and surprising currency devaluation, Belarus has promptly plunged into hyperinflationary hell. The government, scrambling to avoid public unrest, which would likely promptly devolve into revolution and civil war, has just now decided to take reactive price freezing "measures" which will do absolutely nothing but accelerate the immediate destocking of anything and everything still available for purchase. From The Moscow Times: "Belarus on Tuesday froze prices on a number of foodstuffs as analysts warned that the former Soviet republic could descend into economic chaos and an IMF mission headed to Minsk to assess the situation." Ah, good old price controls. Failure is imminent, following which Belarus will introduce a mandatory coupon-based purchasing system now that the currency is for all intents and purposes worthless. Incidentally, those who still hold precious metals have the upper hand in determining what these are exchanged for and at what conversion ratios.
A government decree said prices for fish, tea, coffee, certain types of sausages, cheese and a number of fruits and vegetables — some of which have doubled in the last two months — cannot be raised further until July 1.
Belarus devalued its ruble by 36 percent to 4,977 per dollar last week in an attempt to reduce a current account deficit largely caused by generous public spending in the run-up to Alexander Lukashenko's re-election as president last December. But the unofficial black market rate for rubles is still about 6,000 per dollar.
Russia and several other ex-Soviet nations are to decide on that bailout package on June 4.
The International Monetary Fund said Tuesday that a mission would visit Belarus on June 1-13 for regular post-program monitoring. Minsk has not applied for IMF funding so far.
Caesar would be proud.
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