Belarus' key interest rate down to 24% as from 1 April

The National Bank of the Republic of Belarus

MINSK, 16 March (BelTA) – The refinancing rate in Belarus will be reduced by one percentage point as from 1 April to 24% per annum, the press service of the National Bank of the Republic of Belarus told BelTA.

In a bid to reduce the size of the risk premium in the cost of loans and after analyzing the available risks the Board of the National Bank of the Republic of Belarus has decided to reduce the NBRB's refinancing rate by one percentage point to 24% per annum as from 1 April, BelTA has been told.

At the same time the required reserves norm will be reduced by 0.5 percentage points to 7.5%.

The press service stressed that stricter procedures will be introduced for commercial banks to form reserves for covering possible losses in special portfolios of homogeneous loans in case the interest rate on Belarusian-ruble loans granted to corporations exceeds the standard level set by the regulator.

As from 1 April this level will be reduced from 1.2 to 1.1 of the National Bank's overnight loan rate. “It will change the upper level of interest rates on ruble loans available to corporations from 36% to 33% per annum. Commercial banks will not have to go an extra mile to reduce risks,” specialists explained.

At the same time for the sake of minimizing risks to financial stability the National Bank's executive order No. 242 of 22 April 2015 “On limiting interest rates on the deposit market by adjusting the reserve requirements” will be amended. The reserve requirements will be raised if banks set interest rates on new fixed-term Belarusian-ruble loans (deposits) for corporations above 0.9 of the National Bank's overnight loan rate.

In H1 2016 the National Bank of the Republic of Belarus will continue the policy aimed at reducing the size of the risk premium in the cost of ruble loans. Further concrete measures in this area will be taken after analyzing the emerging macroeconomic risks and the economic impact of the decisions that have been made already.

According to the National Statistics Committee of Belarus, in February 2016 consumer prices rose by 12.8% in annual terms in comparison with February 2015. Their increase is attributed to higher tariffs on housing and utility services. Trendy inflation was not involved.

Slowing down inflation processes has been named number one goal of the monetary policy in 2016. Representatives of the National Bank noted that the average interest rate on new ruble loans in commercial banks stood at 33.1% per annum in nominal terms in February 2016 and was close to 20% per annum in real terms taking into account the expected inflation.

The key interest rate was previously changed in Belarus on 9 January 2015. Back then it was raised by five percentage points.

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