Lukashenko intends to strengthen control over National Bank of Belarus

MINSK. March 28 (Interfax) - The Belarusian presidential administration and State Control Committee will strengthen control over the National Bank of Belarus, Belarusian President Alexander Lukashenko said.

"As you know, Pavel Vladimirovich [Kallaur, Chairman of the Management Board of the National Bank], the National Bank cannot be outside the control. Control is exercised by the president, and you have probably already assumed that the appointment of new people in the financial and economic bloc means tougher control," the state BelTA news agency quoted Lukashenko as saying at a meeting on the banking system and measures to support foreign trade.

In this regard, he mentioned the recently appointed deputy head of the presidential administration, Alexander Yegorov, who previously worked in the banking sector. "And it will be easier for the Administration to discuss things with the National Bank and its specialists, because we will be on the same page. We studied at the same universities. We also want the State Control Committee to join in," Lukashenko said.

"This does not mean anyone will interfere with the National Bank's work. It's fulfilling its tasks, by and large," he said. "Economic performance in the past year suggests that the economy is holding out pretty well in the difficult situation brought about by pressure from unfriendly Western states. This means that the government and the National Bank are accomplishing their tasks. Yet, this does not mean that we have no problems. We will discuss all the existing problems in an open and honest manner, without putting the blame on others," he said.

Price control will stay in place in Belarus, he said. "Not only the National Bank is responsible for inflation and rising prices in Belarus, but also the government, which bears some of the burden. On my instruction, the government has taken certain measures to take control of the pricing system in the country. I see that we manage to regulate prices and restrain them to a certain extent," he said.

"We will not deviate from this practice. The system of control over pricing and this entire complex will only become stronger," Lukashenko said.

He said businesses should be helped when making settlements with foreign partners amid tough western sanctions. "Sanctions are sanctions. We seem to be dealing with sanctions well. Everything seems to be fine. But, as Russia has recognized as well, we still feel the pressure from the United States in the first place. This pressure concerns settlements. I have said many times to you [the National Bank leadership] and the government that we need to help businesses [...] I would like to know - this is a question for both the government and the Presidential Administration - whether these functions are being performed. I also wonder if the Ministry of Foreign Affairs and the National Bank are involved in these matters," he said.

The National Bank of Belarus has announced plans to transition from monetary targeting to inflation targeting, which implies total independence for the central bank and abandoning price regulation. In September 2021, the Bank of Russia and the National Bank of Belarus discussed the harmonization of monetary policies on the assumption that in time the National Bank of Belarus would move to inflation targeting.

"We are discussing the harmonization of monetary policy with the National Bank of Belarus. We are looking to see what areas of monetary policy can be harmonized, and we work on the assumption that the NBB will in time make the transition to targeting inflation," Central Bank Governor Elvira Nabiullina said at the time.

She said Russia and Belarus had different monetary policy regimes. "They [in Belarus] now have a different regime. This is not yet an inflation targeting regime; they act through monetary aggregates rather than through the interest rate. So the first thing is not so much to identify but the monetary policy approaches themselves," she said.

Russia and Belarus have agreed to synchronize strategic management in terms of macroeconomic policy, as well as the harmonization of monetary policy and macro-prudential regulation. The Guidelines for Implementing the Union State Treaty in 2021-2023, approved by the Union State's Council of Ministers, included plans for an agreement between the Central Bank of Russia and National Bank of Belarus on the principles and mechanisms of harmonization of monetary policy by December 2022. The agreement will be aimed at achieving comparable and sustainably low inflation, and creating similar financial conditions for businesses in both countries.

Nabiullina said the Central Bank of Russia did not plan to change its own monetary policy.