Belarus – Bankers and analysts expect interest rates on BYR deposits and loans to remain very high until government steps back from tight-money policy

On 29 October the Belarusian newssite Naviny.by published a report on the recent surge in interest rates being offered by major banks in Belarus for short-term time deposits in Belarusian rubles (BYR).  Over the preceding week a number of major banks had raised rates on BYR deposits above 40% per annum – even as high as 49% -- but only on shorter-term deposits, typically of 3 months’ maturity.  Bankers and analysts interviewed by Naviny explained that the rise in rates is due to 1) high demand for loans due to reduced liquidity in the system, even in interbank loans, and 2) the central bank’s recent hike of the reserve rate for foreign-currency deposits from 10% to 12%.

The analysts interviewed expect that rates will remain high as long as the government continues to pursue a tight-money policy, but if the government concludes that its target of 5.5% GDP growth for 2012 is not being met then looser monetary policy is expected by the end of the year, which would bring down interest rates on BYR-denominated deposits.

Source: Банки вновь предлагают вкладчикам золотые горы (2012-10-29 09:51)

N.B.: The highest interest rates currently available in Belarus for 12-month time deposits of € 1,000 or equivalent are as follows:

EUR: 7.0%

USD: 7.0%

RUB: 9.5%

BYR: for maturities above 6 months banks are quoting rates with reference to the refinancing rate of the National Bank of the Republic of Belarus, which since 12 September has been set at 30.0% per annum.

Mark Pleas

Eastern Europe Banking & Deposits Consultant

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