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 country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.