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09 August 2022, 14:53

Belarusian PM calls to reduce interest rates to stimulate consumption

MINSK, 9 August (BelTA) – To stimulate consumption, we need to significantly reduce interest rates on loans in the economy, Belarus' Prime Minister Roman Golovchenko said at the meeting of the Council of Ministers hosted by Belarusian President Aleksandr Lukashenko on 9 August to discuss the functioning of the country's economy under sanctions and measures to overcome them, BelTA has learned.

The government sees three main factors to stimulate the economic growth: export, investments and consumption. As for the latter, Roman Golovchenko believes it is important to stimulate domestic consumption. Taking into account the excess liquidity in the banking system, the government intends to encourage the state-owned banks to increase lending for consumer, investment purposes, and also to finance the current operations of enterprises. I believe that it is time to set the interest rates in the economy at an effective level. The shock has already passed, and high interest rates have played a role. High rates, as we are well aware, cannot be part of the long-term monetary policy. At the same time, the behavior of individuals has changed. In H1 the population was a stable seller of currency,” Roman Golovchenko noted. “Moreover, the population began to save more. Since the beginning of the year, fixed-term ruble deposits of individuals have grown by more than 10%."

This data, according to the prime minister, shows that these patterns contribute to macroeconomic stability. “Therefore, we need to significantly reduce interest rates in the economy. The interest rate should be commensurate with the midterm inflation projection. Without affordable loans there will be no investment, no consumption, no growth,” Roman Golovchenko said.

Touching on the issue of rising prices, the head of government said that the energy and food crises had led to higher inflation in some countries and could lead to a recession in the world's biggest economies, a drop in people's incomes and increasing poverty. In Belarus there is a price increase, but it is not critical, the prime minister is convinced. According to him, activity in the consumer market has not changed significantly. “Inflationary processes have been contained within a reasonable corridor, primarily due to the rigid administrative management, and we can see a slowdown in inflation today,” Roman Golovchenko said.

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