OREANDA-NEWS. The key rate of Belarus' central bank may go down to 20% per annum by the end of the year, while the average credit interest rate will reduce to 29% per annum.

The Board of the National Bank of Belarus (NBB) made a statement to this effect on July 12 during an on-site session in the village of Krupenino (Beshenkovichi District, Vitebsk Region). The session focused on the bottlenecks in cooperation between banks and the real economy sector, the NBB Public Relations Department said in a release.

As long as inflationary processes slow down, the National Bank will continue gradually reduce interest rates in the economy to make credits more affordable, while preserving the investment appeal of ruble deposits, which will traditionally yield a higher level of income than FX deposits. In this context, the NBB refinancing rate will go down by 1 percentage point down to 20.5% per annum on July 16.

The participants in the meeting emphasized that given the tough monetary policy the financing of government programmes and activities should be carried out within the available means. “Banks need to stimulate the implementation of high-yield projects, to prevent the growth of overdue loans, increase their resource base, continually work with enterprises to reduce external receivables. The competitiveness of the economy as a whole should be ensured through increasing the competitive advantage of producers of goods and services, but not at the expense of the exchange rate policy,” said the National Bank.

In this context, the National Bank has chosen to pursue the policy of slow devaluation in 2014. On the one hand, the policy will not interfere with market trends and prevent gold and FX reserves from overspending. On the other hand, the slow devaluation policy will Belarusian exports remain competitive in price terms, preserve stability on the FX market and the market of bank deposits, and restrain inflation growth.

In December 2014 the exchange rate of the Belarusian ruble to the US dollar will stand at Br10,800/USD 1. Further behaviour of the exchange rate will depend on the performance of Belarus' economy, foreign trade balance, and effective macroeconomic management.

The participants in the meeting pointed out that efforts to increase cashless transactions (including card payments) will one of the most effective tools for banks to grow their resource base. By January 1, 2015 the share of cashless transactions is expected to reach at least 50% in both sectors. As of April 1, 2014, the figure stood at 17.7% and 12.3% respectively.