MINSK, 27 March (BelTA) – The National Bank of the Republic of Belarus has drafted proposals on giving it more powers to maintain price stability, Deputy Chairman of the Board of the National Bank Sergei Kalechits said as he addressed members of the House of Representatives on 27 March, BelTA has learned.
“The National Bank has drafted proposals regarding the country's monetary policy. These proposals are now undergoing scrutiny by government agencies. These proposals are designed to ensure the necessary conditions for implementing the inflation targeting regime,” Sergei Kalechits said.
In particular, one of the proposals suggests setting a price stability target for a three-year period every year in the form of fluctuation limits. In this case, every year by 1 October the National Bank and the government shall submit this price stability target for approval to the president. “More than that, in the long run it makes sense to switch to three-year plans for social and economic development targets and the country's budget,” Sergei Kalechits noted.
Another proposal deals with the way the Main Monetary Policy Guidelines should be adopted. As of now, the document setting forth the Main Monetary Policy Guidelines does not provide for spelling out what the National Bank is going to do to fulfill its functions. There is a proposal to legislate the right of the National Bank's Board to independently pass the Main Monetary Policy Guidelines based on the price stability target approved by the head of state for a three-year period.
According to the National Bank's estimates, getting more powers in the field of forecasting is the necessary precondition for implementing the inflation targeting regime that is based on managing inflation expectations. “In order to make sure this regime functions well, the National Bank should have an opportunity to independently do economic forecasting,” Sergei Kalechits noted.
At the same time, this will not undermine close collaboration with the Economy Ministry, the Finance Ministry and other government agencies while developing social and economic projections for the coming year. This practice will remain in place. “However, in order to be able to substantiate its decisions and thus build trust in its policy, the National Bank should have an opportunity to inform economic agents about its own forecasts. In this regard, the National Bank suggests legally formalizing its right to analyze and project trends not only in the monetary policy but also in the economy in general,” Sergei Kalechits said.
Apart from having broader authorities, the proposals suggest toughening punishment for the chairman and members of the Board of the National Bank for failure to fulfill the major objective of the monetary policy, which is price stability.
“These proposals take stock of practices of the countries that succeeded in curbing inflation using the inflation targeting regime. I hope that these proposals will be forwarded to the Belarusian parliament soon after they are agreed on with all stakeholders,” Sergei Kalechits noted.
