National Bank’s discount rate reduced
The National Bank of Belarus reduced the discount rate to 38% per annum from 43% per annum on 1 March 2012.
This is good news for borrowers, as the existing rates are in effect prohibitive. At the same time, interest rates on loans are not reduced as fast and on average constitute 50-55% per annum. At the same time, gradual and substantial reduction of the discount rate threatens the stability of the banking system and the foreign exchange market: there is danger that the population of the country will start withdrawing money from ruble deposits (interest rate is linked to the discount rate) and exchange into foreign currency (at the moment the population only sells foreign currency).
Last week, Belarusian Foreign Minister Makei participated in the foreign ministers’ meeting of the Eastern Partnership and Visegrad Group initiative hosted by Warsaw. The Belarusian FM emphasized Belarus' interest in cooperation in the transport sector, which could be due to Belarus’ desire to export electricity surplus after Belarus finished construction of the nuclear power plant in Ostrovets. Minsk expressed concerns about Warsaw’s stance on the Belarusian NPP, as it refused to buy electricity from Belarus and supported Vilnius’ protest on this issue. Following accusations by the Belarusian leadership and the state media against western states, including Poland, of training "nationalist militants", Minsk did not agree on the visit of the European Parliament deputies from Lithuania and Germany to Belarus and to the NPP construction site near Ostrovets in particular. In addition, the Belarusian authorities have stepped up efforts to enforce education in Russian in Polish-language schools in Grodno and Vaukavysk. Should a rift in Belarusian-Polish relations persist, the Belarusian authorities are likely to step up the pressure on the Polish-speaking minority in Belarus.