Savings are more profitable than commercial activity
Interbank market credits rates hold steadily at 60%. Sales cost-effectiveness in the economy fell to 9% in August 2012. Profitability from BYR savings accounts exceeds profitability from many types of commercial activity. Long-term conservation of this situation would affect business activity. This imbalance bears high risks for the banking system stability and encourages banks to devalue the national currency.
Last week the banks raised interest rates on savings accounts, both for individuals and for businesses.
Most banks increased interest rates on ruble deposits by 5-10 % last week. Interest rates on BYR savings accounts for the population reached 49% per annum. For legal persons, short-term BYR deposits (10 days) were available at 50% and higher. Individual clients were offered special deposit terms for their free cash.
Simultaneously, the return on sales in the economy fell from 11% in July 2012 to 9% in August. 90.4% of the enterprises remain profitable, of which 40.5% have profitability margin 0% to 5%.
However, placing deposits and business production or trading activity are incomparable in terms of risks and costs. Production or trade requires numerous employees, office and warehouse premises, accounting, etc. Placing deposits and receiving profit from interest rates involves minimal costs and better guaranteed results, if national currency devaluation pace does not increase. There were no bankruptcies among Belarusian banks for a while. And the absence of checks by tax and other controlling authorities implies a guaranteed outcome when placing money on deposit.
Thus, with these interest rates, business activity in Belarus only makes sense for a small number of highly profitable enterprises. These include, for instance, potash production and sales, pipeline transport, and some other. In other cases, bigger profits can be made without any activity by placing funds on savings accounts. These rates in the credit market drag liquidity away from the currency market, but economic activity becomes unreasonable.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.