Meeting on measures to support real sector and banks held in Palace of Independence

19 июня 2020
The meeting with the President has brought together almost the entire economic section of the Government and the National Bank. Under conditions of closed foreign markets, it is the internal banking resources and the decency of financiers that can and should support both people and enterprises. Now is not the time to think about bank profits, it is the time of sustainable economy, a softer monetary policy, meeting the interests of both people and enterprises. 

The task of the banking sector is to support economic recovery with liberalized monetary policy, but tight control over shadow financial flows. The country's main bank and the banking sector in general operate within this framework today. It means that loans will become cheaper, and debtors who find themselves in a difficult situation due to the almost global economic closure will be helped. The National Bank calls it a "moderate" impetus. On the other hand, the movement of funds, the income of banks and bankers, the cleanliness of transactions will be strictly controlled.  

Do banks understand the responsibility of the moment in history? Yes, especially those that are of the same age as the Belarusian sovereignty. They have gone from allied branches to national development institutes. So if due to the global lock-down, the closure of borders and export flows the manufacturers are affected, banks lend money to them. Their profit decreased by 15% on average, as compared to last year. But today it’s not enough just to lend at a slightly lower percentage, it is necessary to concentrate resources in the main areas, and this is the support of people and exporters. This, by the way, is also the world practice.

According to the head of the National Bank, companies ask for installment payment of loans. It does not mean that the money will not be returned, it is a pause until the opening of foreign markets and revenue flows. And the President’s decision significantly enhances the state guarantees of return.

Pavel Kallaur, Chairman of the Board of the National Bank of Belarus: “Most often, enterprises apply for debt restructuring or lending to pay salaries. A special group led by Deputy Head Presidential Administration Dmitry Krutoy has been created to assist them in resolving these issues. Problems, of course, arise. They are related to the fact that there are enterprises with an unstable financial position. But according to the decision of the President, a limit of state guarantees of Br1.2 billion was allocated. Under these guarantees, the problems of insolvent enterprises are solved."

The banking system is not a private treasury, but a development tool. The main thing that worries the President in supporting enterprises is the efficiency of loans and their size. It is simply unacceptable to put thousands of people at risk for the sake of bank reporting and annual premiums of financiers.

There is of course an objective difficulty - the external lenders. Some of them are waiting for the outcome of the election. And, the same calm, sovereign and solvent country is a guarantee, which is as good as the bank guarantee.

The foreign exchange reserves allow softening the credit conditions.

Alexey Avdonin, analyst at the Belarusian Institute for Strategic Studies: "It is important that the banks reconsidered their policies, made concessions, made  profits - and the economy will more actively overcome the crisis."

This does not mean that they will start giving money for nothing, without purpose or under questionable schemes. This is not about Belarus, and it is precisely this transparency and decency that the creditors value.

Pavel Kallaur, Chairman of the Board of the National Bank of Belarus: “In the main areas of monetary policy, we have a gold and foreign currency index of $ 7.3 billion at the end of the year. Our estimates show that this value will be slightly higher. Considering that the Ministry of Finance has successfully placed the Eurobonds (funds should be received on June 24), the task of preserving the foreign exchange reserves is quite real."

Another assessment of the banking system is made by its customers, ordinary Belarusians. People are unsatisfied with rates for cashless payments or “acquiring” that are much higher than in Europe.

The Latvian ABLV Bank is at the center of the scandal today. The entire leadership is under suspicion and no one is talking about politics. In world practice, tax evasion is a serious crime, with no less severe punishment.

Yuri Terekh, head of a business company, publicist: “As it became known, Belgazprombank spent about half a billion dollars in gray or black schemes. The cases of credit trading and bribes were revealed as well. According to the data released today, Babaryko’s share in this was from 25 to 50%. I don’t even know how to comment on this, why a person needs so much money, what to do with it in such amount. Details are not obvious and, I guess they will be further exposed."

The Head of State asks a simple question at the meeting: at whose expense do the bank earn?  This is enterprises and people.

According to the National Bank, banks have no problems with current liquidity. While some withdraw money to offshore companies, most banks work to attract currency to the country. This is also an indicator of confidence in the banking system and state guarantees. They don’t invest money in a country that they don’t trust.

Pavel Kallaur, Chairman of the Board of the National Bank of Belarus: “We have no problems with current liquidity. We are ready to open additional credit lines if necessary. In addition, banks have to do a lot of work to raise funds from non-residents. They successfully cope with this work. The funds of non-residents have increased by $ 300 million since the beginning of the year. There are some achievements, and I think that the figure will be increased by the end of the year. Now it amounts to $ 6 billion (together with the funds of the Development Bank), and it is likely to grow by $ 200-300 million, which will allow keeping lending to the economy in foreign currency."

Revitalization of the economy after the pandemic is the concern of not only the Government but also of the public sector, private business and local authorities. The President insists that in the modern economy you need to work as a team, and you can’t do without the country's main bank.

Lower refinancing rate means more affordable loans. All decisions in the banking sector have already been made, and if the metaphor of finance as a circulatory system of the economy is true, then the real sector will confidently recover after the pandemics, especially if both systems will work in the same rhythm.