OREANDA-NEWS. The International Monetary Fund (IMF) recommends that the National Bank of Belarus should refrain from reducing interest rates.

IMF mission leader David Hofman made a statement to this effect at a press-conference.

Mr Hofman visited Belarus to hold the 2014 Article IV Consultation discussions with the authorities.

IMF experts can perfectly see why Belarus is eager to reduce interest rates, but the time is not right for that at the moment, as inflation is still too high, Hofman said.

The IMF suggests the NBB should keep its monetary policy tight until inflation growth goes down. Another reason why the NBB should refrain from cutting interest rates is that high interest rates help support the exchange rate and reduce the pressure on reserves, Hofman said.

Belarus still practises a discriminatory approach, when it comes to credit interest rates: some borrowers enjoy soft loans, while other borrowers pay the difference. Around 45% of Belarus' total credit portfolio is soft loans, which makes it hard for the National Bank to implement a straight interest rate policy. The IMF recommends Belarus' government to solve the problem and further cut directed lending, Hofman said.