Belarusian central bank aims to keep reserves at $8 bln without privatization proceeds
MINSK. June 5 (Interfax) - The National Bank of Belarus plans to maintain its gold and forex reserves at $8 billion in the second quarter of 2012 if there are no current proceeds from privatizations planned by the government for this year.
"The National Bank is faced with the challenge of maintaining gold and foreign exchange reserves [in the second quarter - ed.] at no less than the level at the start of the year, that is, about $8 billion, even taking into account the fulfilment of all obligations," without privatization proceeds, the deputy chairman of the central bank's management board, Taras Nadolny said at an expanded meeting of the bank's management board. The transcript of his remarks at the meeting was published in the NBB's bulletin.
Nadolny said that changes in the reserves in the second quarter will be determined not only by the NBB's and the government's fulfilment of external and domestic obligations in foreign currency, but also the "achievement of the government's planned goal of earning $2.5 billion from privatization in 2012."
Depending on the economic viability and situation on the forex market, the NBB does not rule out the possibility of meeting its foreign currency obligations to commercial banks in the amount of $1 billion in the second quarter ahead of schedule, he said. It was reported earlier that in April the NBB met $400 million in obligations ahead of schedule, and as of May 1 commercial banks' foreign currency claims against the NBB decreased to $4.157 billion from $4.538 billion on January 1, 2012.
Nadolny also said that the "need for foreign borrowing has decreased substantially" this year, and "stability of the debt burden on the economy" has been achieved. If nothing changes in the development of the economy, the current account deficit could be 3-5% of GDP, and the foreign trade surplus could exceed the forecast of $1.3 billion, he said.
"According to forecast figures, banks' claims on the economy will increase by about 10%, or Br15 trillion by the end of the second quarter from the beginning of 2012," Nadolny said.
Banks' loan portfolio grew by 4.6%, or the equivalent of Br7.3 trillion in the first quarter of 2012, as loans in rubles rose 2.6% and loans in foreign currency grew by 11.5% ($858.4 million). The overall rate of growth in lending is less than half what it was a year earlier, and is equivalent to the GDP growth rate. "The main factor in this slowdown was the high level of interest rates on ruble loans," Nadolny said.
The growth in foreign currency lending "carries potential currency risks both for businesses and for banks themselves,' he said.
The overall slowdown in bank lending amid inflows of short-term capital resulted in excess liquidity that the NBB was forced to mop up in order to constrain the money supply, Nadolny said. However, the central bank "increased purchases of foreign currency on the domestic market" in order to prevent a dramatic strengthening of the Belarusian ruble, he added.
Nadolny urged banks to take a "more active position on the issue of supporting the real sector of the economy and direct available liquidity primarily into export-oriented projects" that would pay for themselves in foreign currency, as well as "import-substitution projects, rather than concentrate resources in National Bank instruments."
Banks' claims against the economy grew by 6.7% in the first four months of 2012. The NBB forecasts that banks' claims on the economy will grow by 17-23% in 2012.
The International Monetary Fund is forecasting that Belarus' gold and forex reserves will shrink to $5.5 billion by the end of 2012 due to fulfilment of external and domestic obligations in foreign currency and the absence of privatization as a means of bolstering the reserves.
The official exchange rate for June 4 was Br8,380/$1.