BELARUS NEWS AND ANALYSIS

DATE:

06/06/2009

Kudrin doubts Russia, Belarus should create single currency

ST. PETERSBURG, June 6 (Itar-Tass) -- Vice Prime Minister and Finance Minister Alexei Kudrin said he doubted that Russia and Belarus should create a single currency.

"The position of the Finance Ministry is that we should take a serious look and see weather it would be advisable to switch over to a single currency due to uncertainty created by some actions of the Belarusian government," Kudrin told journalists on Saturday.

It would not be rational to consider introducing a single monetary unit in Russia and Belarus during the current financial crisis, Kudrin said earlier.

"The problem [of introduction of a single monetary unit in the Russia-Belarus Union State] hasn't been removed, but no active steps are being taken in that area," he said.

"I'd rather treat this issue cautiously enough, as we are dealing with big changes in the balance of payments and in the size of foreign exchange and gold reserves at the moment," he added.

"A changeover to a single currency requires more stable conditions," Kudrin said.

He said however there are weighty reasons that could generate an extra need for a single currency and all of them should be assessed scrupulously.

Earlier, Belarusian National Bank head Pyotr Prokopovich said the introduction of a single currency in Belarus and Russia had been delayed indefinitely.

"The introduction of a single currency will be unrealistic and impossible until a single economic and customs space is built and until equal conditions for the population and economic entities of the two countries are created," he said.

In his words, the introduction of a single currency should be a result of long work of both sides, "the final stage of our economic integration".

According to estimates made several years ago, the introduction of a single currency, with equal economic conditions in Belarus and Russia, could have increased the growth of Belarusian GDP by an additional 7-9 percent a year.

At the same time, the introduction of a single currency for the sake of introduction may cause an economic recession in Belarus, Prokopenko said.

However, Deputy State Secretary of the Union of Russia and Belarus Vasily Khrol believes that the transition to a single currency would benefit both Moscow and Minsk from the political and economical points of view.

"When we really create a common economic space, when all types of control are taken beyond the external borders of the union state and the tax and currency legislations are unified, the introduction of a single currency will become the quintessence of the union state's unifying process," he said.

The official stressed that it is advantageous for the two countries to conduct trade operations in Russian roubles.

"In the conditions when the dollar and euro are jumping, it is very useful to make the rouble swap as Belarus did with China," Khrol said.

Transition to the Russian rouble in trade operations "is the first step to the introduction of a single currency on the territory of the union state," he said.

The official stressed that there is a plan to introduce a single currency. However, the countries have certain discrepancies over the size of compensation to cover "monetary gaps" during the transition to the Russian rouble in Belarus. Moreover, there is no unanimous opinion on the role of each country in a single emission centre of the union state.

At the same time, Belarus and Kazakhstan welcome as positive the idea of creating a regional reserve currency with Russia.

"Our counterparts hail this idea as a positive move," First Vice Prime Minister Igor Shuvalov said earlier.

Source:

http://www.itar-tass.com/eng/level2.html?NewsID=14023784&PageNum=0

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