Belarusian banks to see a decrease in private deposits in all currencies

Category status:
April 17, 2017 12:47

Private deposits in the Belarusian banking system have decreased. In 2016, Belarusians earned more than USD 600 million on interest from keeping funds in the Belarusian banks. Given the interest of the National Bank and enterprises in cheaper resource base, interest rates on the deposit market will continue to decrease, leading to the reduced interest of the population in deposits, hence, further decreasing deposits in all currencies in banks.

According to the National Bank, in March 2017, household deposits in national currency decreased BYN 8.3 million and deposits in foreign currency by USD 47.1 million. The decrease in deposits came amid a decrease in interest rates on deposits. In March, average interest rates on time deposits in foreign currency were 1.8% per annum and 10.0% per annum in BYN. Over the past three months, the yield on deposits in the national currency has decreased by 3.4 percentage points, and by 1.6 percentage points on currency deposits.

In previous years, household deposits constituted a significant source of income. In 2016, the population earned at least USD 600 million by placing deposits in the banking system. Taking into account private net currency sales in 2016, totalling USD 1.9 billion, savings outside the banking system have reduced less rapidly due to spending of interest on deposits for current consumption. Amid the absence of reliable borrowers and a lack of new projects from legal entities, banks invested currency funds of citizens in the National Bank bonds, which allowed refinancing external and internal government liabilities, albeit increased the debt burden on the budget due to interest payments on liabilities.

The National Bank carries out a consistent policy aimed at reducing interest rates on deposits. This made it possible to reduce the public debt servicing costs, the debt burden on enterprises, and people’s yield on interest, some of which then appeared on the foreign exchange market. Due to the underdeveloped stock market, Belarusians have a limited choice of investment instruments, while bonds of legal entities do not guarantee the return of funds, unlike deposits. The current yield on currency deposits is insufficient to retain people’s interest in deposits in the banking system, and the rates on rouble deposits are close to the projected annual inflation rate and do not ensure real protection for savings.

That said, household deposits in all currencies are likely to decrease. The National Bank is not concerned about rouble deposits outflow due to excess liquidity in the banking system. If currency deposits decrease significantly in the banking system, banks would increase interest rates on currency deposits. By allowing private persons to purchase government currency liabilities, the banking system would lose some revenue, while the National Bank would reduce public debt servicing costs.

Overall, the population responded to a decrease in yield on savings deposits, with decreased household deposits in banks. Amid the National Bank’s and enterprises’ interest in lowering the resource base costs, the population would use deposits as an alternative option for preserving funds, choosing short-term deposits; that said, overall deposits would decrease.

Similar articles

President ensures continuity of state administration with young middle-level personnel
October 02, 2017 12:08
Image: BRSM.BY

President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

Recent trends

cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china cheap nba jerseys from china wholesale nba jerseys from china discount nba jerseys from china