Authorities will dump free money on rural settlements

Belarusian authorities are ready to take the decision, which will have unpredictable pressure on the foreign currency market.

With the 6.6% inflation in the first 4 months (about 20% a year) the government insists on cardinal interest rate reduction on loans for rural settlements down to the unthinkable at the current resources costs level, AFN reports.

“When we speak of the state’s participation in rural economy recovery, one of the issues in question is the loan policy for agricultural sector. For units, included in state programs, the interest rate should be completely reimbursed (from the budget)… As to the current activities, loans should also be provided at minimal interest rates. We suggest them in the framework from 2 to 5%”, - the Prime Minister Mikhail Miasnikovich claimed yesterday as quoted in official sources.

It follows that this statement is not simply on workings on the issue for the same of studying the reaction of different groups (population, experts, executives etc.), but actually an announcement of a fact to-be-implemented.

“If this regulation is adopted – the respective draft decree has been prepared, practically all the harmonization procedures have been completed – we assume this will allow to significantly improve the rural economy, since the technological cycle is very prolonged in agriculture, and fund need to be borrowed, loans taken, in order to work until harvesting”, - the Prime Minster said.

It remains to be reminded, where Miasnikovich can get such cheap resources at the 0-5% interest rate – at the premises where the National Bank’s printing machine is stationed. To all appearances, the National Bank is no longer protesting.

Apart from emission, another problem may soon emerge – the absence of the point to produce agricultural products. At current deposit rates of about 40%, one can get a loan at 5%, put the money to a bank deposit and live pretty well up until the next summer.