Consumer lending is unlikely to improve until incomes start growing
According to the National Bank, as of January 1st, 2017, consumer debt of Belarusians totalled BYN 1.7 billion and increased by BYN 59 million over the year. Provided the average interest rate on consumer loans in 2016 at 24.4% per annum, interest payments on loans could exceed BYN 400 million. People preferred to repay old loans rather than taking new ones. Financial health of banks mainly working with consumer lending is likely to deteriorate, layoffs in the banking system are likely to persist, and interest rates on loans are likely to decrease, while banks will preserve tough requirements for borrowers to prevent growth in bad loans. Unless people’s wages start growing, they are likely to constrain consumer spending, and in order to boost sales, enterprises are likely to use instalment schemes and calculate some costs as own costs.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.