Industry lobby wants cheap money.
First Deputy Prime Minister of Belarus Uladzimir Siamashka has suggested analyzing the availability of resources in the country's banking system to dramatically reduce the refinancing rate in the second quarter of this year. The appropriate instructions were given to the Ministries of Economy and Finance, as well as the National Bank of Belarus at the meeting of the Council of Ministers on May 11.
Uladzimir Siamashka considers it appropriate to reduce the refinancing rate by the end of 2012 in line with inflation that is no higher than 22-25%, BelTA informs.
To accomplish this task, in the light of the budget proficit, the Ministry of Finance jointly with the executive committees will provide additional resources to the state and local budgets, which could be directed to compensate for a possible part of the interest on bank loans. According to Uladzimir Siamashka, such a move would stimulate the investment process in Belarus.
First Deputy Prime Minister argued the need to adopt similar solutions by the direct relation between the dynamics of business activity and the state of the macroeconomic environment. Thus, according to him, rates on loans for the development and expansion of current activities make additional financing virtually inaccessible to the business. This, in turn, significantly reduces the demand for loans.
The National Bank once again lowers refinancing rate — from 36% to 34% per annum on May 16. This will be the fourth refinancing rate reduction this year. The rate has dropped by 11% YTD.
Simultaneously with the decrease in the refinancing rate, interest rates on constantly available operations to support liquidity (overnight loans and swaps) and bilateral operations (lombard credit, swap transactions) are also going down from May 16 - from 60% to 55% per annum, while the rates on permanent affordable operations to withdraw liquidity (overnight deposits) - from 23% to 20% per annum.
Head of the IMF mission Chris Jarvis said, summing up the regular mission in Belarus on March 5, that it was premature of the Belarusian authorities to have decided on the refinancing rate reduction.
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