New restrictions on foreign currency lending would reduce potential budget costs on refinancing enterprises’ foreign currency loans

February 13, 2017 10:51

The National Bank has decided to toughen the credit risks classification on foreign currency loans to enterprises, which will lead to a revision of the requirements to corporate customers and will make such loans less available to enterprises with insufficient foreign currency earnings. As of January 1st, 2017, the debt of public and private enterprises to the banking system on foreign currency loans totalled USD 9.7 billion of which USD 0.5 billion was bad debt. Currency lending is likely to reduce amid some slight increase in rouble loans. The differentiation of rates depending on the customer reliability is likely to increase. The growth rate of problem assets on the banks’ balance sheets is likely to reduce and interest rates on foreign currency deposits to the population are likely to reduce, too. When crucial for the Belarusian economy enterprises had problems with repaying their currency loans, their debt was refinanced from the budget. By tightening loan requirements, the banks will mitigate risks of bad loans and reduce budgetary costs for these purposes.

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Belarusian authorities hope to narrow application of Decree on ‘social parasites’
February 27, 2017 12:35
Фото: TUT.BY

Yet the Belarusian authorities have not taken any action to prevent massive protests against the decree on ‘social parasites’. On February 26th, 2017, multiple protests against the decree were held in three Belarusian regions in Vitebsk, Baranovichi, Brest and Bobruisk (more than 4 000 people participated in total). Very likely, the authorities, on the one hand, anticipate that the decree will be abolished, and other hand, do not want to take responsibility for decisions either on the decree or on the protests.

It should be noted, that the mass street protests on February 17th, 19th, and 26th, were held in the absence of the president in the country. There are reasons to believe that the authorities did not expect such a massive action. The state propaganda responded tangentially, insisting that protests were unjustified, because ‘the state did not require a lot’, despite the fact, that the protesters primarily complained about the lack of jobs in the country. In addition, the protesters pointed to the unfairness of the requirement to pay the tax for being unemployed as the state could not provide job and money making opportunities, while people were humiliated by the need to prove to the state they were unable to pay the tax.

In the past ten days, there were several protests against the decree, which were characterised by the following: the protesters easily picked up anti-Lukashenka slogans; they eagerly shared their outrage with journalists; many protesters said it was their first time when they took to the streets; protesters were ‘common people’, i.e. not political activists; there were fewer white-red-white flags during these protests than during conventional oppositional actions; politicians, who organised protests (eg on February 26th, by the centre-right coalition and the independent trade union) did not attempt to take the lead, especially in the regions. All this gives a picture of truly popular protests.

While refraining from interfering with the meetings and protest marches, the militia on February 26th attempted to put pressure on the protest organisers in the regions by handing out reports on administrative violations after the events. Other than that, it appears that the local and central authorities are unable to respond to the massive protests against the Decree No 3, including crowded street speeches, numerous signatories of petitions (over 80 000), multiple collective and personal appeals to the authorities, and mass meetings.

That said, the authorities are unable to enforce the Decree No 3 as they do not have sufficient resources to trial some 400 000 people for non-compliance. In addition, the authorities do not have sufficient institutional capacity to exempt all those not liable for the tax from the mailing lists of the Tax authorities. The Belarusian Bar Association will provide free legal consultations on March 1st, 2017 for those wishing be exempt from the tax imposed by the Decree No 3, however, this would only slightly east the tension in society.

In addition, despite concerns expressed by some experts and the leader of the protest in Minsk on February 17th Mikola Statkevich, there were only scarce reports in the Russian media about the protests in Belarus.