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).
President Lukashenka has met with the head of Chechnya Ramzan Kadyrov, who visited Minsk and the Minsk Automobile Plant. Minsk has always sought to have independent links with Russian regional elites, partially, to compensate for the Kremlin's diminishing interest in Belarus. In recent years, Belarus’ contacts with the Russian regions have been extremely intense. However, with some leaders of Russian regions, primarily heads of large republics, communication was more difficult to build. As many analysts in Minsk suggested, Minsk could regard contacts between President Lukashenka and the head of Chechnya as an additional communication channel for relieving tension in relations with the Kremlin. However, most likely, a trusting relationship with Kadyrov is a value for Minsk as such, provided Kadyrov’s broad business and political interests, and a high degree of autonomy for the Chechen leader from the Kremlin.