Belarus' Government Reluctant to Sacrifice Macroeconomic Stability
OREANDA-NEWS. The Government of Belarus will not sacrifice macroeconomic stability by cutting credit interest rates for the sake of providing support to industrial enterprises.
Belarus’ Finance Minister Andrei Kharkovets make a statement to this effect at a meeting of Belarusbank shareholders.
“The government shares the point of view that credit interest rates for the real economy are overly high and do not stimulate industrial development. However, if we have to make a choice between short-term or medium-term macroeconomic stability and financial support of industries, the government will give the first priority to macroeconomic stability, which is a principle matter,” Kharkovets said.
The government is now supposed to upgrade domestic industries, which would be impossible with expensive loans, the minister said. Therefore, the government and the National Bank will work to reduce interest rates. But they will not be reduced overnight, as inflation growth still remains high, Kharkovets said.
Belarus will not reduce credit interest rates before putting the brake on inflation growth, the Finance Minister assured.
Belarus’ government plans to keep inflation growth within 12% in 2013. According to Kharkovets, 12% is still a high level of inflation, which means the government should world hard to make sure inflation growth is reduced to a one-digit dimension (i.e. below 10% per year). “Unfortunately, we will not be able to do it this year, but I believe we will make it next year,” Kharkovets said.
At the same time, the Finance Minister admitted that the government needs to be careful about cutting credit interest rates, which means cutting deposit interest rates into the bargain. A move like that may provoke a large-scale campaign to convert ruble deposits into hard-currency deposits and upset the balance for foreign currency reserves, the minister said.
In his words, the government has special instruments to make credits affordable for entities: the government reimburses loan interest payments for borrowers.