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.
Last week, Belarusian Foreign Minister Makei participated in the foreign ministers’ meeting of the Eastern Partnership and Visegrad Group initiative hosted by Warsaw. The Belarusian FM emphasized Belarus' interest in cooperation in the transport sector, which could be due to Belarus’ desire to export electricity surplus after Belarus finished construction of the nuclear power plant in Ostrovets. Minsk expressed concerns about Warsaw’s stance on the Belarusian NPP, as it refused to buy electricity from Belarus and supported Vilnius’ protest on this issue. Following accusations by the Belarusian leadership and the state media against western states, including Poland, of training "nationalist militants", Minsk did not agree on the visit of the European Parliament deputies from Lithuania and Germany to Belarus and to the NPP construction site near Ostrovets in particular. In addition, the Belarusian authorities have stepped up efforts to enforce education in Russian in Polish-language schools in Grodno and Vaukavysk. Should a rift in Belarusian-Polish relations persist, the Belarusian authorities are likely to step up the pressure on the Polish-speaking minority in Belarus.