MINSK, 18 January (BelTA) – The refinancing rate of the National Bank of the Republic of Belarus (NBRB) was reduced from 18% to 17% per annum on 18 January, BelTA learned from the NBRB Information and PR Office.
Apart from that, the interest rate on standing and bilateral operations designed to keep up the current liquidity of Belarusian banks was reduced from 23% to 22% per annum.
The NBRB representatives explained that the decisions had been prompted by a number of primary factors. In November 2016 the annual inflation slowed down to 11.4%. The increase in consumer prices in 2016 is estimated to be below the forecast (12%) and is expected to reach some 11%. The growth rate of money supply remains moderate. In November 2016 the average broad money supply grew by 4.4% in comparison with the same period of 2015 (39.2% the year before). Interest rates on deposits and loans remain positive despite the gradual decrease in their nominal values. The foreign economic stability is gradually rising. The current account of the balance of payments improved from minus 0.3% of the GDP in Q3 2015 to 1.7% of the GDP in Q3 2016. The surplus of the foreign trade in merchandise and services improved from 1.6% of the GDP to 4.4% of the GDP.
“In Q4 2016 individuals and corporations continued selling more foreign currency than buying on the domestic currency market of Belarus. The contribution of the exchange rate to the intensity of inflation processes remains insignificant. On the whole, the emerging monetary conditions are expected to secure further slowdown of annual inflation. Annual inflation is expected to reach one-digit figures in Q1 2017,” the central bank said, adding that interest rates may be further reduced depending on how steadily the growth rate of consumer prices continues declining, on whether the dynamics matches the forecasts, and on the state of Belarus' balance of payments.
The amount of money Belarusian banks and non-banking credit and finance institutions are supposed to put aside as mandatory reserves will be changed as from 1 February: from 7.5% to 4% of the borrowed funds in national currency and from 7.5% to 11% of the borrowed funds in foreign currency.
Apart from that, as from 1 July 2017 the approaches to classifying and forming the special reserves to cover possible losses on foreign currency loans without secured foreign currency proceeds will be changed. Belarusian banks will have to replenish the special reserves for foreign currency loans of the second risk group variety step by step from 1 July 2017 through 1 July 2020.
Representatives of Belarus' central bank made it clear that the decisions had been made as part of the overall strategy aimed at de-dollarizing the national economy. The decisions are also meant to make ruble deposits more appealing in comparison with foreign currency deposits in addition to limiting the credit risks of Belarusian banks.
