National Bank panicking

The authorities treat the refinancing rate without due responsibility.

Stanislau Bahdankevich, a former chief of Belarus's National Bank, spoke to charter97.org about keeping the refinancing rate on the level of 23.5% per annum.

“It was caused by a number of factors. One of them is that we must avoid too high devaluation of the national currency. It's necessary to keep deposits in banks, so a high deposit interest rate is needed. The second factor is inflation -- prices continue to go up. According to official data, the growth was very low in June, but it was 1% in July. It is much higher in reality. These factors made the National Bank stop decreasing the refinancing rate,” Stanislau Bahdankevich is confident.

The expert adds that the National Bank cannot raise the refinancing rate without losing face.

“It [the bank] has been assuring that the refinancing rate will be falling, but now it needs to raise it. I think they shouldn't have cut it. We may say that the National Bank finally saw the problems and began to panic. People converted ruble deposits into dollars. The Bank was scared,” the economist said.

The National Bank ex-chief underlines the refinancing rate needs a serious attitude.

“Belarus's economy needs cheaper credit resources. This is reality. But the fight against devaluation doesn't allow decreasing the refinancing rate. I think the National Bank should stop and wait for developments and stop giving loans for ineffective and loss-making projects,” Stanislau Bahdankevich said.

The Board of the National Bank announced its decision yesterday to keep the refinancing rate on the level of 23.5% per annum.