Belarusians Go Hard Currency Hunting

The outflow of money from deposits deprived the banks of the opportunity to finance the "zombie economy".

National Bank of Belarus published reports of subordinates of Pavel Kallaur - deputy chairmen Siarhei and Dzmitry Kalechyts, banki24.by informs.

Siarhei Kalechyts notes the "relative equilibrium" in the fx market. However, it is not clear what he was comparing it with. If compared to August, then there is an improvement. But if one looks at December, the Belarusians have once again gone hard currency hunting.

The transition to the inflation targeting regime has been postponed indefinitely "for various objective reasons."

We can specify that the main objective reason is the preservation of directed lending until 2023. It is impossible to have a positive effect on inflation when one pours money into zombie enterprises.

Ban permanently available instruments of issuing liquidity will continue. They have become permanently unavailable to banks. We may speculate why it happens, but the disparity of rates on the deposit and credit markets hints: if you give loose reins, it will be worse, much worse.

The National Bank boasted that it had prevented "an excessive depreciation of the Belarusian ruble". However, it spent nearly $1 bn in March and approximately $1.3 bn in August.

The gold reserves aimed primarily at saving those very zombie companies. Otherwise, they would have turned from zombies into corpses.

Last year, we repaid $3.9 billion of foreign currency debts. This year we have to pay $3.3 billion. There is no money in the budget for this. External creditors are negatively shaking their heads in response to requests for new loans. So we will spend the reserves. By the end of the year, there will be only $6 billion left.

Banks' margins have fallen to their lowest in 13 years. Even during the crises of 2009, 2011, and 2014-2016, it was better. But the National Bank considers it a good result, as the real sector received support: read state-owned enterprises.

The authorities urgently need the population's money back on deposits. The reason is as follows: the NBRB and the Ministry of Finance had to compensate the money withdrawn by Belarusians to the banks.

The increase in lending to enterprises was a record high for the last five years. For 2020, banks poured an additional 24.4% into companies. Taking into consideration the tripled non-market lending, the efficiency of such loans is increasingly doubtful.

Dzmitry Kalechyts shared a curious statistic. If in the fourth quarter of 2019 none of the shareholders considered the country risk of doing business in Belarus as important, then there were already three such shareholders in the fourth quarter of 2020.

Officials explain why the indicator of toxic assets according to the methodology of the National Bank can barely meet reality. In 2020, so much regulatory relief on loans was introduced that comparing the levels of 2019 and 2020 is like choosing between digging a virgin land with a shovel or a flower bed with a tractor near a summer cottage.

Dzmitry Kalechyts was concerned about the growth of the ratio of loans to deposits in favour of the first. The last time such rapid growth occurred in 2013-2014. Every Belarusian knows how it ended.