Cheap national currency loans for the economy
On February 21st, Prime Minister Myasnikovich announced implementation of a step-by-step strategy regarding loans interest rates reduction.
High interest rates on loans hamper modernization, which has been declared an economy’s priority in the coming years. With the means available the National Bank lowered rates on the interbank market, which is a prerequisite for reducing the loans’ costs. Deposit investments profitability will be reduced, and the bankers will be asked to share revenues in the name of “the economic needs”.
The average rate on overnight loans in the interbank market in the national currency in January 2013 was 35.4% for loans to residents. Enterprises could obtain loans at 40% p/a and higher, which, taking into account the declining profitability of sales in the economy up to 7% in December, is a prohibitive rate. Slight increase in lending to some public enterprises in the national currency is linked to the ‘subsidies for modernization programme’ practices. This mechanism is used, because such subsidies relate to industrial subsidies and do not reduce GDP by their amount. Private enterprises do not have access to these practices and reduce the amount of debts to the banks.
Using credit auctions, the National Bank marked the desired level of interest rates in the interbank market at 35% p/a. The liquidity problem for the backbone state-owned banks remains unresolved, which hinders reduction of rates in the interbank market. In the second half of February, the National Bank was able to solve the problem and the rates fell below the refinancing rate standard (30% p/a). The recommendation to limit the margin on loans issued by banks with lower interest rates will reduce the cost of credits.
The problem of high interest rates on loans reached the highest state level. To compensate for the ban on mortgages in foreign currency, the National Bank has decided to issue loans with substantially reduced rates to poor people, who cannot benefit from preferential programmes. As of February 25th, this social group can borrow at a reduced rate – 16% p/a – which will strengthen the housing construction industry. Statement by the Prime Minister and the President indicate, that possibly, banks will be offered to lower rates for special categories of borrowers, “for modernization purposes”, for enterprises that cannot benefit from public programmes.
Thus, the reduction of interest rates on loans has been declared a national task, and conventional donors, the banking sector and individuals, who have placed deposits in the banking system, will be forced to share partially their incomes through lower pays for borrowed funds. If banks practically have no other choice, individuals may transfer their savings from national currency deposits to foreign currency deposits with depreciation sentiments increasing.
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.