National Bank managed to overcome population’s devaluation expectations

April 22, 2016 18:23

The National Bank’s arrangements to encourage national currency savings by private and legal persons have proved to be effective. However, substantial foreign debt payments and a potential reduction in the international reserves in 2013, against the background of Belarus’ troubled international trade, could result in a rapid conversion of private and business BYR deposits into foreign currency.

On December 14th, money supply data was published. 

In August through October, international trade deficit in goods, according to the National Statistics Committee, was USD 1 130.8 million. Legal persons (residents and non-residents) were net buyers of foreign currency. Private individuals, due to wage increases, have become active foreign-currency buyers, increasing foreign currency deposits in the banking system. Devaluation expectations increased and affected the transition of ruble savings into foreign-currency savings.

Fearing the building up banking system risks, the National Bank has undertaken preventive actions to curb the growth of economy’s foreign currency debt, and has restricted support to the banking system’s liquidity. As a result, interest rates on foreign currency deposits decreased and increased on ruble deposits simultaneously, both for the population and businesses. Against the background of support to the national currency, a substantial gap in yield has developed between national and foreign currency deposits.

November financial data showed that the population and legal entities appreciated the short-term investment opportunities in national currency for their high and relatively guaranteed proceeds. In foreign currency, the positive effects will be achieved after the reverse conversion of BYR deposits. Term deposits in the national currency increased by BYR 2.9 trillion in November, which is an absolute record in several years. However, the current state of affairs should not be regarded as having long-term effects due to the deteriorating financial situation of the SOEs and the growth of receivables and payables.

Thus, the success of the National Bank’s arrangements in overcoming the devaluation expectations in the short term is noteworthy. However, substantial foreign debt payments and a potential reduction in the international reserves in 2013, against the background of Belarus’ troubled international trade, could result in a rapid conversion of private and business BYR deposits into foreign currency.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.