OREANDA-NEWS. The latest moves by the National Bank of Belarus to reduce the refinancing rate is an alarming trend, which may trigger an exodus of ruble deposits and cause private households to give up on the ruble.

Belgazprombank Board member Vladimir Sazhim made a statement to this effect at an economic conference organized by the Kunyavsky Business Union of Entrepreneurs and Employers.

“The 2013 inflation forecast stands at 12%, the result of Q1 is 5.4%, which is almost half of the annual rate. How can one hope for a decline in inflation growth?” the expert said. In his opinion, it was irresponsible to set this year’s inflation target at 12%. Sazhin believes the figure will be around 20%.

Although the refinancing rate has lost three percentage points (down to 27% per annum), it still remains above inflation growth. The decline has made households less enthusiastic about ruble deposits with banks: a 3% decline in the refinance rate caused a 4.5% decline in ruble deposits. The total value of private deposits with banks now stands at Br87 trillion (USD 10 billion). Ruble deposits account for Br20 trillion (USD 2.5 billion). As soon as we show an intention to further reduce the refinancing rate, private households will react by converting their deposits into hard currency, the expert said.

The relative stability in the banking sector is fragile, the expert warned. Any move by the authorities to get cheap money will trigger the 2011 scenario, Sazhin said.