National Bank manages to maintain reserves at USD 8 billion

April 22, 2016 18:32

According to preliminary data, on June 1st, 2013 foreign exchange reserves were USD 8,041 million.

In May, the foreign exchange market experienced the shift from net supply to net demand for foreign currency by individuals and businesses. Until autumn, no guaranteed inflows of foreign currency are anticipated. The National Bank needs to ensure foreign currency inflow in order maintain the reserves at USD 8 billion.

In May foreign currency market situation shifted from net supply to net currency demand by individuals and businesses. The net currency demand on the domestic market was USD 138.5 million. Traditionally, during the summer period currency demand by individuals is increasing due to summer holiday season. An additional negative trend for the National Bank will be the transfer from ruble deposits to currency deposits due to lower discount (23.5% per annum) and the subsequent reduction of the ruble deposits yield for individuals. Businesses will increase pressure on the foreign exchange market due to the foreign trade situation worsening and the growing negative foreign trade in goods.

Belarus received the fifth tranche from Russia. The sixth tranche issue will be considered in the autumn. Russia’s ambassador to Belarus said that Russia will not provide funds for the modernization of Belarusian enterprises. Joint Russo-Belarusian projects, which could be funded by Russian loans, are stalled. The Finance Ministry has abandoned plans to place bonds on foreign markets for the summer period.

Potential placement of bonds on the domestic market will not be enough to meet the foreign currency demand. The only possible sources to cover the National Bank’s currency needs to service international and domestic debts would be loans from international banks to Belarusian banks.

The National Bank needs at least USD 800 million to repay the country’s public debt in the summer. The National Bank has some resources, which are not calculated in the reserves. If the foreign exchange market will manage to keep the foreign currency demand at low volumes, the National Bank will have enough financial resources to maintain the reserves at their current level without significant external borrowings. However, it is more likely that the currency demand will exceed the National Bank’s capabilities. The National Bank either has to find circa USD 300 million, or come to terms with the need to reduce the reserves from USD 8 billion, which is undesirable.

Thus, the favourable foreign currency market situation, which allowed the National Bank to buy foreign currency, is over. The National Bank needs to ensure additional foreign currency inflow in order maintain the reserves at USD 8 billion.

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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.