National Bank managed to overcome population’s devaluation expectations
The National Bank’s arrangements to encourage national currency savings by private and legal persons have proved to be effective. However, substantial foreign debt payments and a potential reduction in the international reserves in 2013, against the background of Belarus’ troubled international trade, could result in a rapid conversion of private and business BYR deposits into foreign currency.
On December 14th, money supply data was published.
In August through October, international trade deficit in goods, according to the National Statistics Committee, was USD 1 130.8 million. Legal persons (residents and non-residents) were net buyers of foreign currency. Private individuals, due to wage increases, have become active foreign-currency buyers, increasing foreign currency deposits in the banking system. Devaluation expectations increased and affected the transition of ruble savings into foreign-currency savings.
Fearing the building up banking system risks, the National Bank has undertaken preventive actions to curb the growth of economy’s foreign currency debt, and has restricted support to the banking system’s liquidity. As a result, interest rates on foreign currency deposits decreased and increased on ruble deposits simultaneously, both for the population and businesses. Against the background of support to the national currency, a substantial gap in yield has developed between national and foreign currency deposits.
November financial data showed that the population and legal entities appreciated the short-term investment opportunities in national currency for their high and relatively guaranteed proceeds. In foreign currency, the positive effects will be achieved after the reverse conversion of BYR deposits. Term deposits in the national currency increased by BYR 2.9 trillion in November, which is an absolute record in several years. However, the current state of affairs should not be regarded as having long-term effects due to the deteriorating financial situation of the SOEs and the growth of receivables and payables.
Thus, the success of the National Bank’s arrangements in overcoming the devaluation expectations in the short term is noteworthy. However, substantial foreign debt payments and a potential reduction in the international reserves in 2013, against the background of Belarus’ troubled international trade, could result in a rapid conversion of private and business BYR deposits into foreign currency.
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.