Tightening of monetary policy

The National Bank of Belarus on 1 June 2011 raised the refinancing rate by 2 % to 16% per annum.

Moreover, the government decided to stop granting preferential loans for the acquisition of Belarusian goods. Preferential loans for the purchase of Belarusian goods are issued by JSC “Belarusbank”, Belinvestbank, JSC “BPS-Bank”, Belagroprombank for up to three years at an annual rate of 10%.

Comment

While tightening the monetary policy, as well as bearing in mind the rising prices, the NBoB consistently raises interest rates, including the deposit IRs. However, restoring confidence in the banking system and stemming the outflow of deposits is only feasible after the stabilization of the situation on the foreign currency exchange market. Currently, the situation remains tense, although not critical for the banking system.

The Government should continue reducing the gross domestic demand via suspension of various schemes of concessional lending to enterprises and population, while the National Bank should continue raising interest rates.