High interest rates halted consumer loans
On April 7th, the National Bank published data on individuals’ debt on consumer loans.
In 2012, amid rising real incomes, consumer lending in Belarus increased significantly. Interest rate under some credit agreements was over 100%, but a number of tricks were used to mask it. The government’s ban on hidden fees and commissions and the demand to show full interest rate resulted in slowdown in consumer lending.
In 2012, the volume of outstanding consumer loans in the national currency, grew from BYR 7.6 trillion to BYR 10 trillion or by one-third. Consumer loans in foreign currency were banned in Belarus since mid-2009. Strong growth in consumer lending is associated with increased incomes, aggressive advertisements of consumer loans by both, traders and banks, as well as not always proper actions of some banks, which were attracting consumers with extremely low rates while masking the real picture with high bank fees and additional payments.
On January 22nd, 2013 amendments to the Banking Code enforced a ban on the collection of additional fees and other payments under consumer loan agreements, other than the interest rate. The amendments proved to be effective. Since early 2013 consumer debt grew by 2.2% only, or BYR 218 billion. On April 1st, household debts on consumer loans was BYR 10.2 billion. The 80-90% annual interest rate on consumer loans, against the background of relative stability in the foreign exchange market stopped potential borrowers and forced them to review the feasibility of borrowing at high interest rates.
Thus, a number of banks, which have used tricks to mislead consumers, were unable to manipulate the interest rate, and consumers have become more financially aware. It is anticipated, that the consumer credit market will be reformed in favor of larger and, above all, state-owned banks. Banks, providing consumer loans services will have to revise their approaches in working with the population and seek for new operational opportunities to maintain the profitability.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.