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National Bank declares temporary moratorium on additional foreign exchange restrictions

The Board of the National Bank of Belarus (NBB) has decided to introduce a temporary moratorium on new restrictions and other regulations targeting the foreign exchange market that will be effective until the country obtains a $1-billion loan from Russia, a spokesman told BelaPAN on Thursday.

Belarus is expected to get the loan before the end of the next month.

"It means that we will not implement new decisions in the specified period, but at the same time we will not revoke those made previously," the spokesman said. "The situation that is currently in place will remain unchanged for quite a while."

The spokesman reiterated that the NBB had no intention to devalue the rubel further, considering the measure ineffective. "Moreover, the recent expansion of the foreign currency trading band in the interbank market by 10 percent should be viewed as a temporary measure as well," he said.

Earlier this year, the National Bank introduced several restrictions in the foreign exchange market due to soaring demand for foreign currency.

The spokesman linked the high demand to a coming increase in Belarus` rates of import duties on automobiles that are to rise for individuals to Russia`s level on July 1 within the framework of the two countries’ Customs Union with Kazakhstan.

"According to updated data, 43,000 foreign cars were imported into Belarus in January, which was a twofold increase compared with usual levels," the spokesman said. "In March, individuals are estimated to have imported some 100,000 cars. The situation is seriously affecting demand for foreign cash, and the demand is expected to remain at high levels until the fever is over."

The spokesman suggested that the situation could change "drastically" in the summer. "Some part of the imported cars will be certainly sold, which means that foreign cash will return to banks and their exchange outlets," he added.

Russian Finance Minister Aleksei Kudrin revealed in mid-March that Belarus had requested the $1-billion loan from the Russian government.

"Favorable decisions on the loan requests will depend on compliance with a series of conditions concerning structural reforms," Mr. Kudrin said, noting that Russia`s conditions for providing loans were similar to those of the International Monetary Fund.

Last week Russian Ambassador Aleksandr Surikov told reporters that Minsk had to draw up a plan of specific economic reforms within 10 to 12 days before it could begin negotiations with Moscow about the possibility of loans for Belarus.

He said that an agreement to that effect had been reached during talks held by the finance ministers of Belarus and Russia in Moscow earlier that week.

Belarusian Minister Andrey Kharkavets and his Russian counterpart discussed what the Belarusian government could do to reform the economy, including budget spending cuts and steps to stabilize the monetary sphere, Mr. Surikov said.