National Bank triggers deposit outflow from banks
On December 1 2013, the population lowered volumes of term foreign currency deposits in the banking system for the first time this year. The National Bank has taken relatively risky measures to reduce BYR deposit rates in the banking system. Such actions can result in a very quick response from the public who may withdraw both BYR and foreign currency deposits, also in light of the apparent lack of income of foreign loans and cause problems on the foreign exchange market.
In November, the population split into two groups regarding savings. The first group kept its savings in ruble deposits at 50-55% per annum. The second group converted rubles into foreign currency and kept its savings at home. The second group bought $156.4m net, and did not make any deposits in the banking system.
In December, the National Bank implemented some measures which might have a significant impact on the banking system and people’s savings. The NB put restrictions on corporate and private foreign currency loans. Meanwhile, interest rates on private ruble deposits were reduced to 45% per annum. Restrictions on consumer loans were also introduced.
These measures might lead to mass outflow of cash from the banks. Simultaneously, the demand for foreign currency might increase considerably. In addition, in December 2013 Belarus has to repay circa $1bln in foreign and domestic debt. Therefore, by the year-end the National Bank might be on the precipice of seeing its gold reserves reduce dramatically..
Thus, the National Bank’s actions aiming at regulating interest rates in banking are rather risky. If people’s reaction to reduced saving proceeds slips out of control, the National Bank might introduce restrictions on foreign currency purchases on the domestic market.
Following crackdown and arrests of participants in the spring protests, the authorities resumed arrests as punishment for participating in street protests in addition to fines, which for some time were the only punishment for political activity. On September 22nd, 2017, the riot police detained the Belarusian National Congress leader Nikolai Statkevich, the opposition politician was placed in detention centre on Akrestin street. On the same day, after serving seven days of arrest, another BNC leader, Vladimir Neklyaev, was released. He was sentenced for organising a street protest on September 8th against the West-2017 exercises. Other participants in the protest have been fined too. The authorities are likely to continue to use fines and arrests against political activists to punish for their protest activity.