Credit portfolio of commercial banks deteriorated
Decree № 306 provides for the reimbursement of costs to agro and processing enterprises for purchasing crops in 2011 in the total amount of Br 2.8 trillion.
The share of “troubled” loans in the credit portfolio of the Belarusian banks increased up to 1.18% by 1 June 2011 as compared with 0.94% of 1 June 2010, the overall amount increased in January-May 2011 by 2.5 times, up to Br 1.714 trillion. The part of overdue debt was 52.8% on June 1, against 25.1% at the beginning of 2011.
In January-May 2011 the Belarusian banks increased their credit portfolio by 36.4%, up to Br 145.814 trillion.
Economic and monetary crisis has only started affecting commercial banks. Due to the state’s policy of shifting of financial burden partially on concessional financing and subsidizing of the Belarusian economy by commercial banks, as well as its unwillingness to cease concessional financing of agriculture and housing, the financial state of commercial banks will continue deteriorating gradually. A lot will depend on population’s confidence in the existing policies. If the trend with withdrawal of foreign currency deposits continues, it is possible that by autumn-winter a large-scale banking crisis will unfold. The largest state owned banks: Belarusbank and Belagroprombank are at highest risk in this regard.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.