New restrictions on foreign currency lending would reduce potential budget costs on refinancing enterprises’ foreign currency loans
The National Bank has decided to toughen the credit risks classification on foreign currency loans to enterprises, which will lead to a revision of the requirements to corporate customers and will make such loans less available to enterprises with insufficient foreign currency earnings. As of January 1st, 2017, the debt of public and private enterprises to the banking system on foreign currency loans totalled USD 9.7 billion of which USD 0.5 billion was bad debt. Currency lending is likely to reduce amid some slight increase in rouble loans. The differentiation of rates depending on the customer reliability is likely to increase. The growth rate of problem assets on the banks’ balance sheets is likely to reduce and interest rates on foreign currency deposits to the population are likely to reduce, too. When crucial for the Belarusian economy enterprises had problems with repaying their currency loans, their debt was refinanced from the budget. By tightening loan requirements, the banks will mitigate risks of bad loans and reduce budgetary costs for these purposes.
According to Decree No. 221 of June 23rd, 2017, deadlines for the completion of foreign trade operations have been extended from 90 to 180 days for exports and from 60 to 90 days for imports. Delayed payments entailed a fine up to 2% of the transaction cost for each day of the delay, but could not exceed the total cost of the transaction. Most companies, when working with new counterparties, require a deferred payment for a period of three to six months. Due to the new regulation, violations are likely to reduce in number, so as the fines. Trade enterprises are likely to expand the assortment list due to the supply of new products in small lots, and the assortment list of exported Belarusian goods could expand, too. The new terms for completing foreign trade transactions would enable medium and small companies on the foreign trade market, exporters and importers are likely to grow in number and the geography of export-import operations could expand.