OREANDA-NEWS. November 17, 2011. President of Belarus Alexander Lukashenko held a working meeting with chairperson of the Board of the National Bank of the Republic of Belarus (NBRB) Nadezhda Yermakova.

“I know that the situation on the currency market is normal. I would like to hear your view on the inflation and the situation on the consumer market,” Alexander Lukashenko said.

He also asked Nadezhda Yermakova to share her evaluation of the situation in banking sector in general and the system of commercial banks. “How are things in the banking sector, what the situation is? I see that in connection with certain policies of the West there are some attempts to pressure our banks through various ratings and the like. We must bear this in mind, and we must do everything possible to support our banks, commercial banks, which finance programs, provide lending to our enterprises.”

The head of state was also interested in the problems that emerge as the country tries to stabilize its currency market.

“With regard to inflation, the increase in the exchange rate also did its part on this process. Naturally, there are a number of other things which emerged in the economy due to the lack of foreign currency resources, panicking demand for currencies and commodities. All this, of course, triggered the inflation growth. Today, the exchange rate remains at the same level. We believe that there will be no sharp fluctuations of the exchange rate in the short term,” the head of the National Bank said.

The inflation was, to some extent, triggered by inflated prices. Other contributors were the price regulation within the single customs area, the rising cost of energy resources.

“What we still need to do is to adjust the prices for public utilities. If nothing changes then the inflation growth should stop. The 19% inflation which we forecast for the following year is probably feasible, if we work efficiently and if we do not inflate the money supply,” Nadezhda Yermakova believes.

The President’s main requirement is to make sure the national economy operates efficiently. He stressed that the measures taken in the monetary policy should promote the economic growth. The major objective today is to curb the inflation.

“We will not do without loans. All this will be needed, yet within reasonable limits so as not to affect the foreign currency reserves and not to contribute to the inflation. Thus, there should be no additional issue,” believes Nadezhda Yermakova.

In general, she praised the situation on the foreign exchange market. "People understood that currency will be available at exchange offices. Since 14 September population sold USD 460 million to banks. Of this amount banks already sold more than USD 350 million on the stock exchange. This suggests that the people calmed down. Indeed, the exchange rate has changed. Today it remains at the level of Br8,600-8,700.

The situation on the credit market is normal, too. “We are squeezing the money supply, increased the refinancing rate. Naturally, the rates on loans for corporate clients increased as well. This is done with a view of reducing the money supply so that enterprises use their own funds more effectively. These are the monetary tools to control inflation. In addition, following the increase in the refinancing rate, banks increased interest rates on household deposits. This has made deposits more attractive.”

The gap following the outflow of funds from deposits in Belarusian rubles at the beginning of the year has been filled up; the growth has already made up Br1.158 trillion. There is a gradual influx of foreign currency deposits.

As regard the exchange rate, the National Bank has to make interventions at time. Starting from 20 October, the NBRB has made USD 23 million worth of interventions. “We may sell foreign currency today and buy it tomorrow in order to prevent big exchange rate fluctuations,” Nadezhda Yermakova explained.

There are some other positive factors on the foreign exchange market. Thus, after the introduction of the single trading session the volume of compulsory foreign currency sales increased by almost 25%, accounts receivable are on the decline.

In general the President has approved the policy of the National Bank and ordered to take measures to raise the efficiency of the economy.