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. Last Updated: 07/27/2016

Belarus Orders Stores to Reduce Prices

Officials in Belarus said Thursday that all state and private companies had cut their prices on government orders in a draconian move to combat a currency collapse.

The government press service said all prices had been cut to their March 1 levels. It said a deputy trade minister and the head of the Economic Ministry's prices department had been sacked for overshooting inflation targets.

"Yesterday and the day before, all shops conducted readjustments and prices were wound back to March 1 levels in line with a telegram from the government," Trade Minister Pyotr Kozlov said at a news conference. Directors of state companies that refused to comply would be sacked, and private firms would have their trading licenses confiscated.

Prices in the former Soviet republic have leapt since the Belarussian ruble collapsed from 58,000 to 60,000 to the dollar last week, from about 45,000 at the start of the year. The Central Bank's official rate is 33,310 per dollar.

In line with the order by authoritarian Belarussian President Alexander Lukashenko to restore the exchange rate to March 1 levels, currency booths in Minsk were quoting the national currency at about 42,000 to the dollar Thursday, compared with more than 50,000 last week.

People stood in lines with the hope of buying dollars, but dealers refused to sell.

Lukashenko and Prime Minister Sergei Ling have blamed the currency's fall on "Russian speculators pursuing political aims."

"The opponents of the Belarus-Russia Union, defeated on the political battlefield, have switched to the economic field," Ling said. "But they will be defeated here, too."

The Russian Central Bank moved quickly Thursday to counter the accusation. Belarus had provoked the crisis by printing too much money, Russian officials said, adding that money supply had grown twice as fast as planned last year.

"Seeking culprits in Russia for the devaluation of the Belarussian ruble ... makes, from our point of view, no economic sense whatsoever," the bank said.

Likewise, Russian First Deputy Prime Minister Anatoly Chubais, who Lukashenko accused of playing a role in the crisis, said he hoped Belarus would "search for constructive, professional decisions'' to stabilize its currency, rather than "look for foes.''

The Moscow Interbank Currency Exchange said it had suspended trading in the Belarussian ruble.

Panic buying has stripped shop shelves in the capital, Minsk, that now are almost as bare as during Soviet-era shortages. Sugar, mayonnaise, eggs and meat are all hard to come by, except in supermarkets selling expensive imported goods.

Some Minsk residents said they supported the government's drastic move.

"Lukashenko's right -- these speculators are shipping all our goods out of the country and ramping up the dollar, and we'll have to suffer the consequences," one elderly woman said.

Belarus, a nation of 10 million people, has made glacially slow progress on post-Soviet economic reform, and loans from the World Bank and International Monetary Fund have been frozen since 1995.

In another blow to the country, Russian gas monopoly Gazprom announced Thursday that it would cut supplies to Minsk because the government has not paid its bills.

Belarus authorities immediately threatened retaliatory action, blaming Gazprom for its demands that gas payments be made in cash instead of bartered goods.