Belarusian National Bank will lower interest rates to reduce industry costs

After lowering the discount rate to 24% per annum as of April 1^st, the National Bank is set to consider further possibilities to reduce corporate loan costs in May 2016. On the financial market, the cost of short-term loans (up to 7 days) has reduced to 20-25% per annum, most corporate loans in the industry are tied to the discount rate. Provided, that the discount rate would be reduced further, the upper limit on national currency loans should be maximum 30% per annum. As a result, service costs for industrial enterprises’ previous loans should reduce and the demand for national currency loans in the economy would increase while reducing the volume of debt in foreign currency. Overall, the growth rate of overdue loans in the banking system should slowdown. The main risk is that the external economic environment for export goods manufactured in Belarus may deteriorate, which could delay the reduction in interest rates.