OREANDA-NEWS. April 21, 2011. The Government and the National Bank have identified the ways out of the difficult monetary situation, the First Deputy Chairman of the Board of the National Bank, Nikolai Luzgin, told a press conference at the House of Government.

Nikolai Luzgin noted that “the situation on the currency market is difficult due to the objective and subjective reasons.”

In order to conduct a coherent monetary policy and ensure the stable functioning of the national economy, the Government and the National Bank will ensure that the amount of credits to the economy in 2011 does not exceed the parameters envisaged in the monetary policy guidelines for 2011. A moratorium will be imposed on the adoption of new state programs without ensuring non-emission sources of their funding. It is assumed that the 2011 consolidated budget expenditures will be optimized, with the deficit not exceeding 1.5% of GDP. The consolidated budgets of the oblasts and Minsk will be executed, with the expenditures not exceeding the parameters set for 2011.

After achieving the equal rate of the Belarusian ruble in transactions with foreign currency between banks and business entities, further measures will be taken to stabilize the situation on the domestic market. The goal is to reach the single Belarusian ruble exchange rate in all market segments.

Restrictions have been lifted from Belarus’ over-the-counter currency market, First Deputy Chairman of the Board of the National Bank said.

According to Nikolai Luzgin, as of 19 April the exchange rate of the Belarusian ruble is no longer restricted for purchase and sales transactions between banks and economic operators.

The official pointed out that the Government and the NBRB had been working hard to regulate the domestic currency market in order to stem the skyrocketing demand for foreign currency and keep the country’s gold and foreign exchange reserves intact. Nikolai Luzgin made it clear the task had been accomplished. “As of 22 March we virtually don’t intervene in the domestic currency market,” he said. The official added that in order to gradually restore the full-fledged operation of the domestic currency market, to ensure its liquidity, to expand the exchange rate of transaction participants, to slow down the growth of the exchange rate, to improve the transparency of the exchange rate formation, the NBRB had rescinded its letter that allowed the exchange rate for purchase and sale transactions on the interbank currency market to deviate from the official exchange rate by at most 10%.

“The decision is also supposed to overcome the existing uncertainty of market participants regarding future development of the situation on the domestic market. It is also aimed at making a gradual transition towards a unified exchange rate in various segments of the currency market,” Nikolai Luzgin said.

In turn, Deputy Prime Minister of Belarus Sergei Rumas noted that reducing public expenditure will not affect social spending.
 
The official stressed that “necessary cuts will apply to the national budget, not local budgets”.

First of all, it will apply to the state investment program. Its financing will be slashed by more than 30%. According to the Vice Premier, there is a need to freeze some projects currently in the pipeline. These are the projects regarding the construction of new facilities as well as the projects which design estimates are in progress. All budget appropriations will be channeled into the facilities to be commissioned in 2011.

Capital expenditure of the state-financed organizations will be reduced down to approximately 80% of the actual expenditure in 2010. This will be achieved through reducing the import of equipment and limiting repair of buildings of state-financed organizations. Budget expenses associated with the current activities of budgetary organizations will be limited. They will remain at the level of 2010, Sergei Rumas said.

Government programs should be funded on a non-emission basis in Belarus, Vice Premier of Belarus said.

Sergei Rumas underlined that the Council of Ministers had passed resolution No 490 to optimize government programs. In particular, the program meant to finance the purchases of machines for state agricultural enterprises has been halved, with this year’s funding at B2.2 trillion instead of Br4.35 trillion.

Sergei Rumas said that the housing construction program will be curtailed, with the housing to be commissioned expected to be under 220,000 square meters. The volume will be substituted by the export of civil engineering services, added the Vice Premier.

In his words, the financing of the programs for building pig-breeding complexes and dairy farms by state-run banks will be reduced as well as the poultry farming development program. There are also plans to attract more foreign investors and use foreign credit facilities.

All in all, the goal is to enable the financing of government programs on a non-emission basis, said Sergei Rumas. The Government is intent on fulfilling the task in 2011.