Affordable corporate loans may put pressure on financial market
The National Bank led other banks to an agreement about a single level of interest rates on corporate deposits. The ultimate goal of this agreement is to ensure affordable loans in the economy. However, such drastic measures may have an unpredictable impact on the currency market.
Belarusian banks signed a memorandum envisaging reduction of corporate interest rates on rouble deposits to 35% per annum. The National Bank denied its influence on this agreement.
Deposit interest rates for individuals are higher than corporate ones due to greater flexibility of individuals’ investment assets.
With interest rates reduced, companies have several options. Firstly, to accept the reduced interest rate on deposits due to overall economic slowdown. Secondly, to hedge devaluation risks by purchasing foreign currency in order to buy raw materials abroad or inside Belarus.
If companies agree with lower interest rates, money will remain in the banking system and may be used to issue loans at lower interest rates to companies, which experience an acute shortage of working capital. In other cases, in order to replenish the banking system liquidity, the National Bank will have to switch on money print to issue loans.
If commercial banks gain constant access to the National Banks’ liquidity, they will no longer need to use high interest rates on rouble deposits to attract money from the population and will start lowering them. In response, the population’s demand for foreign currency will increase sharply. In addition, the situation may be exacerbated by a possible increase in demand for currency by legal entities.
In addition to devaluation expectations, the main suppliers of raw materials from Russia will resume operations only by mid-January 2014, which means that Belarusian producers will have to stock up with raw materials and products to ensure uninterrupted operations in early January. This also means producers will have greater demand for foreign currency. It is worth mentioning that substantial external debt repayments are also due in December 2013 and January 2014.
Belarus, however, has not announced that additional foreign exchange resources will become available in the immediate future. Its international reserves have fallen below $6.5bln. As a result, Belarusians should anticipate various restrictions on purchase of foreign currency and depreciation of Belarusian rouble.
The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.
In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.
The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.
There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.
That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.