Consumer Loans Of Belarusians Could Lead To Economic Collapse

People will have to return much more to banks than was indicated in the contracts.

$ 1 billion. The debts of Belarusians to banks have grown by as much during a year. The total amount of consumer loans now exceeds $ 4.5 billion. Experts see the main reason for the rapid increase in the reduction of inflation, Belsat reports.

"Not everyone agrees with this, maybe not everyone's pocket feels it, but the fact is that we are now witnessing, especially in the last month, the lowest inflation for the entire time of the existence of independent Belarus. And under such conditions, a decrease in interest rates on loans is a natural phenomenon,"– economist Vadzim Iosub states.

Loan rates began to decline in April last year

It was at this time when there was a boom in consumer lending after a decade of decline. Not only the more favorable conditions of banks influenced the situation, but also the albeit small, but the growth of salaries.

"The population appeared to have a little more money, and this allowed people to borrow more. And finally, another important factor is that there have been changes in the crediting process itself. Namely - banks were given the right to give loans without salary certificates," – Iosub explains.

Worst case scenario

According to the National Bank, most of the borrowed money – a bit over 6 billion BYN – were borrowed to purchase real estate. The rest – almost 6 billion BYN – for purchasing and payment for services.

The economist Leanid Zlotnikau believes that the increase in salaries is unreasonable considering the industrial indicators. And in combination with the rapid growth of loans, the economy simply won't be able to provide an appropriate supply of goods, which will cause inflation. In this case, citizens will have to return much more money, as banks have secured themselves with floating rates depending on the dollar rate. It can be even worse with changes in external factors.

"If now something suddenly happens to the economy, the return of loans will be in a hang state. And the banks will go out of business... After all, the debt of the population in all countries, including China, the USA, Belarus, has significantly increased. It is higher than the one of 2007, which caused a big economic crisis in the world," – Zlotnikau says.

The Eurasian Stabilization and Development Fund also cautions about the consequences of lending for the economy and financial system of our country. It suggested that Belarus should reduce its credit resources. However, there have been no official statements from the National Bank about the readiness to take such measures, so far.