Tightening of the monetary policy

The National Bank of Belarus stopped providing resources to commercial banks in the Belarusian rubles in exchange for foreign currency (in swap transactions, exchange deposits, etc).

At the same time the National Bank restricted issuing of loans by the state banks and increased their costs significantly in order to reduce pressure on the currency market.

The government ruled not to raise the base wage rate (effective as of 1 November 2010 and amounting to Br 118,000) before the end of the year. However wages will be adjusted in accordance with the inflation rate. In addition, the government intends to make a one-time payment to low-income retirees.

Comment

These solutions aim to reduce the supply of money and obligations to the Anti-Crisis Fund of the EurAsEc. These actions of the Government and the National Bank will certainly have a desired effect however they will not provide with a sharp reduction of money supply and will not save budget from the deficit. Another unpleasant decision the authorities should make in the very near future is to raise tariffs for housing utilities.