By Richard Giedroyc
Circulating coins will be part of the latest Belarus currency reform, but the coins will be dated 2009!
This will be the third currency reform the Eastern European dictatorship has gone through since Belarus became an independent nation following the collapse of the Soviet Union in 1991. It will be the first reform that will involve coins as well as bank notes. Coins have not been used in what is now Belarus since Soviet times.
The revaluation will involve exchanging old rubles for new at a ratio of 10,000 to one. The old rubles will circulate simultaneously alongside the new currency until the end of 2016. Coins were being released July 1 in denominations of 1, 2, 5, 10, 20 and 50 kapeykas or kopeks, and 1 and 2 rubles. The new National Bank of the Republic of Belarus bank notes are in denominations of 5, 10, 20, 50, 100, 200 and 500 rubles. What this means is that the new bank notes will lob four zeroes off each existing denomination.
The new bank notes were produced by the security printing company De La Rue in the United Kingdom. The coins are being struck by the Lithuanian Mint in Lithuania and by the Kremnica Mint in the Czech Republic. The coins and notes are dated 2009 since that is the date when this currency reform was initially anticipated to take place prior to the latest Belarus financial crisis.
The coins consist of copper-plated steel 1, 2 and 5 kopeks; brass-plated steel 10, 20 and 50 kopeks; a nickel-plated steel 1 ruble, and a ringed bimetal nickel-brass ring with nickel-plated steel center plug 2 ruble.
Belarus has suffered from rampant double-digit inflation since it became an independent nation. At first Belarus used Commonwealth of Independent State rubles, then began issuing its own money.
Belarus has attempted unsuccessfully to integrate its currency to that of the Russian Federation. A unified currency was first suggested through the Treaty of Creation of the Union State of Russia and Belarus in 1999. In 2008, cooperation between Russia and Belarus came to a halt, with Belarus countering Russia’s oil and gas export price increases by declaring the Belarus ruble to be tied to the U.S. dollar.
The new currency is being received with skepticism. None of the Belarus economic problems that caused inflation are being addressed. The nation remains dependent on Russia for energy subsidies and low-interest loans. The state dominates the economy, resulting in a “brain drain” to other nations.
Yaraslau Ramanchuk is a financial advisor with the Mizas Foundation in Minsk. On June 27 he told Radio Free Europe, “With the existing inflation rate kopeks will lose their sense very quickly. It’s an operation to distract people’s attention, saying, ‘Okay, we have our kopeks back. Let’s be proud of our kopeks and later we will probably create another symbol in two years.’”
There is propaganda alluding to “the good old days” of the Soviet era on these new coins and bank notes. The state seal including a red star will appear on the obverse of all kopek coins. Belarus has re-adopted the flag and state seal from when it was the Soviet Belarussian Republic.
Chris Weafer is a financial advisor with Macro Advisory in Moscow. He said, “You can have a sentimental effect that can lead to some positive changes in terms of spending and investment and how people perceive the economy, but [Belarus] has bigger issues to deal with before we can start talking about any return to sustainable growth or any increase in foreign investment.”
Belarus President Alyaksandr Lukashenka tried to put a positive spin on the currency reform. Lukashenka said, “People are waiting for this re-denomination,” adding the new currency will “contribute to the efficiency of the national economy.”
Efficiency is in question. Perspektiva is a nationwide association of private vendors headed by Anatol Shumchanka of Minsk. Shumchanka said replacing what will be obsolete cash registers due to the currency reform will likely cost about $100 per machine or about $2 million overall. Current Belarus cash registers have no place for coins.
According to Shumchanka, “That will require additional expenses. We will have to re-license [the cash registers], prepare documents, in other words start everything from the very beginning.”
Let’s see if the coins will circulate or if continuing inflation will quickly make them obsolete.
This article was originally printed in World Coin News.
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