Tendencies in the monetary sphere of the Republic of Belarus

Tendencies in the monetary sphere of the Republic of Belarus
(January – April 2006)

 

In January – April 2006 the monetary sphere development was characterized by the following phenomena:

 

- the money-market situation was influenced by global money-markets environment and balance of payments;

 

- the dynamics of the Belarusian ruble official exchange rate was strongly affected by nominal strengthening of the Russian ruble rate against US dollar;

 

- money offer parameters were determined by keeping relatively high business and investment activity in the economy in comparison with January – April 2005 when tendency of money velocity to decrease is constant;

 

- savings of the population in banks kept increasing, growth rate of crediting was outpacing the GDP growth;

 

- the bank system was characterized by growth of total authorized fund, equity capital and banks resources base;

 

- effectiveness, reliability and safety of interbank payment system was guaranteed by the payment system.

 

1. Money market

1.1. According to the payment balance data in January – March 2006 export and import of goods and services grew by 25.6 and 48.6 % respectively (see the table) against the same period last year and made 4 964.8 and 4 869.4 mln USD. It resulted in positive balance of foreign trade operations at the rate of 95.4 mln USD, the balance of trade deficit and surplus on operations with services made 127.6 mln USD and 223 mln USD respectively.

 

In January – April 2006 money market situation was the following.

Internal money market turnover increased by 11.1% and made 12.5 bln USD against the same period last year. Off-exchange market turnover remained the same and made 7.6 bln USD.

Money market operations were the following:

 

             

Table

 

Belarus foreign trade

in January – March 2006

million USD

 

January – March

2006

January – March

2005

January – March

2006 г.

against January – March 2005,

%%

January – March

2005

 against January – March

2004,

%% 

goods and services balance

95,4

675,4

14,1

*

trade balance

-127,6

454,3

*

*

export of goods

4 482,1

3 507,9

127,8

120,6

import of goods

4 609,7

3 053,6

151,0

102,5

balance of services

223,0

221,1

100,9

140,3

export of services

482,7

444,2

108,7

119,6

Import of services

259,7

223,1

116,4

104,2

 

 

Economic agents – residents of the Republic of Belarus have realized over 3.380 million US dollars of foreign currency (2.641.5 million US dollars in January- April 2005). From this amount about 1.829.3 million US dollars were represented by obligatory sales of currency billing, which is 30 per cent more than that during the equivalent period of 2005. The demand of economic agents for foreign currency reached 3.011.2 million US dollars, which is 44.5 per cent more in comparison to January – April 2005. Thus, net sales of foreign currency by economic agents in January-April 2006 under the circumstances of obvious dynamics in the foreign trade reached 369.3 million US dollars (against 557.4 million US dollars last year), which means that it lowered 33.7per cent. The main reason for the lowering of net sales of foreign currency in January – April 2005 is lowering of the demand for foreign currency of economic agents at the beginning of 2005 after import purchases in December 2004, significantly going beyond seasonal volumes.

 

The volume of the foreign currency offer by non-residents of the Republic of Belarus in January – April 2006 made 1.365.5 million US dollars, 29.1 per cent lower in comparison to the same period in 2005. The volume of the gross demand reached 1.602.2 million US dollars (77.5per cent of the relevant period of 2005). The net demand for foreign currency of the current group of the currency market agents increased and reached 297.1 million US dollars (against 221.4 million US dollars in January – April of 2005). Operations of non-residents were affected by the same factors as for operations of economic agents.

 

Banks-residents of the Republic of Belarus realized 74.1 million US dollars on the net basis against 44.2 million US dollars in January – April 2005.

Public operations at the local currency market in January – April 2006 were characterized by the following figures: the volume of the foreign currency offer – 911.7 million US dollars (11.2per cent advances), the demand for foreign currency – 1.156.2 million US dollars (31.3per cent advances). Priority rates of the growth of the demand for foreign currency against the offer led to net purchases of 244.5 million US dollars of foreign currency by the population (against 61.1 million US dollars in January – April of 2005). The increase in the net public demand for foreign currency is primarily caused by high rates of the increase in the effective yield of the population.

 

1.3 As of May, 1, 2006 the official exchange-rate of Belarusian ruble to Russian ruble reached 78.54 ruble to 1 Russian ruble and dropped by 4.9 per cent against early 2006. The average official exchange rate of Belarusian ruble to Russian ruble in January – April 2006 reached 76.78 ruble to 1 Russian ruble, 1.1per cent higher than that period of 2005.

The official exchange rate of the Belarusian ruble to the US dollar as of May 1 2006 reached 2149 ruble for 1 US dollar, 0.1per cent higher than that at the beginning of 2006. The average exchange rate in January – April 2006 reached 2150.2 ruble foe 1 US dollar, 0.5per cent higher than that at the relevant period of 2005.

 

The formation of Belarusian ruble exchange rates during the accounting period was mainly affected by the significant exchange adjustment of Russian ruble against US dollar (3.6per cent) as well as the above mentioned situation at the foreign sector.

 

The index of the real exchange rate of Belarusian ruble against Russian ruble, calculated in accordance with the consumer prices index, in January – April of 2006 was 1.6 per cent lower than that at the equivalent period of 2005 and 6.8per cent lower against the level of December of 2005. That was the basic reaction of the rate policy to processes in the foreign trade and the currency market. This step lets form additional positive price conditions for the foreign trade.

 

The real effective exchange rate in January – April 2006 was 5.6 per cent higher against the same period 2005[1]. An essential part of this figure growth was due to the reconsidering of the currency basket with the purpose of its calculation. Substantial contribution to the exchange adjustment of the real effective rate was made by the significant exchange adjustment of Belarusian ruble against EURO. At the same time the above mentioned exchange adjustment did not affect the export development significantly. 80 per cent of the Belarusian export volume to the EU countries was represented by raw materials, price conditions of which are directed by the world market environment, regardless of the dynamics of the Belarusian ruble real exchange rate against EURO. The real effective exchange rate in April 2006 was 1.4per cent lower in comparison to December 2005.

 

2. Monetary review.

 

2.1. Parameters of the money offer in Belarusian rubles in January – April 2006 were formed under the circumstances of relatively high business and investment activity in the economy in comparison with the relevant period 2005

 

As of May 1 2006 the global money supply reached 13.9 trillion rubles and increased by 10.2per cent in January – April 2006, 1.3 trillion ruble (9.4per cent during the equivalent period of 2005). The average global money supply in real terms in January – April 2006 increased by 27.8 per cent [2] in comparison with the relevant period of 2005 (real growth of the gross domestic product in January – April of 2006 was 10.3 per cent).

 

This change in the money offer in January – April 2006 was accompanied by continuation of positive tendencies for the lowering of the money circulation rate and increase in the demand of the economy for money. The global money supply circulation rate in the mid-year calculation lowered by 11.9 per cent from May 1 2005 till May 1 2006 (from May 1 2004 till May 1 2005 – 7.6per cent). The ruble money circulation in the mid-year calculation lowered 20.1per cent from May 1 2005 till May 1 2006 (from May 1 2004 till May 1 2005 – 16.5per cent).

 

The ruble money supply fraction among the whole volume of the global money supply in January – April 2006 was constant and on May, 1 2006 reached 68.4 per cent (in January – April 2005 – 1.6 per cent points and growth, 62.6per cent).

 

The ruble money supply volume reached on May,1 2006 9.5 trillion rubles and grew by 0.9 trillion rubles (10.1per cent (really – 7.4per cent)) in comparison with early 2006. In January – April 2005 the ruble money supply increased by  12.2per cent.

The money offer in Belarusian rubles was formed under the influence of the operations of the National bank and the deposit-credit activity of banks. The growth of the ruble money supply in January – April 2006 was due to 5.1per cent shortening of the ruble money basis and 16 per cent increase in the ruble money multiplier.

 

198 billion rubles shortening of the ruble money basis since the beginning of the current year led to 436 billion rubles shortening of the ruble money offer; this has been largely compensated by the ruble money multiplier activity. The growth of the ruble money multiplier from 2.2 (January, 1 2006) to 2.55 (May, 1 2006) led to 1305 billion rubles growth in the ruble money supply in January – April 2006. The growth of the ruble money multiplier is mainly due to 52.7 per cent shortening of the correlation of odd ruble reserves to ruble deposits (from 0.16 by January, 1 2006 to 0.08 by May, 1 2006), as well as the shortening of ruble obligatory reserves to ruble deposits. The increase in the correlation of cash to ruble deposits led to the shortening of the ruble money multiplier. In its turn, the shortening of odd reserves is mainly due to 393.1 billion rubles lowering of bank deposits at the National bank and 183.8 billion rubles lowering of capital issues.

 

Changes in the ruble money supply at the beginning of 2006 occurred due to 12.8 per cent increase in cash in circulation, 21.4 per cent increase in urgent deposits of legal bodies and individuals with 3.6 per cent shortening of transfer deposits of legal bodies and individuals, 28.1per cent shortening of the volume of bank capital issues (out of bank circulation). January – April 2005 – respectively by constituents – 15.2; 15.8; 4.3 and 31per cent.

 

In the result the fraction of urgent deposits in the whole volume of the ruble money supply in January – April of 2006 increased by 4.2 percentage points, cash in circulation – 0.6 percentage points with 4.3 percentage points shortening of the fraction of transmission deposits, bank capital issues (out of bank circulation) – by 0.5 percentage points (January – April 2005 increase respectively by constituents – 1.3; 0.6; -2.3 and 0.3 percentage points). On the whole the current tendencies in the structure of the ruble money supply are positive, displaying the increase in the demand for Belarusian rubles.

Ruble deposits in January – April 2006 increased by 647.7 billion rubles or 10 per cent (really – 7.3per cent), with their increase by 420.6 billion rubles or 10.7per cent in January – April 2005 (really – 7.3per cent). These dynamics were due to changes in legal bodies’ and individuals’ deposits.

 

Ruble deposits of individuals increased in January – April 2006 by 627 billion rubles or 17.1per cent (January - April 2005 – 461.4 billion rubles or 19.7 per cent), their share in the structure of ruble deposits increased by 3.7 per cent points against the level of the beginning of 2006. The slowdown of the rates of the growth of individuals’ deposits in January – April 2006 against the same period of 2005 was due in a certain extend to the fast growth of consumers expenses of private households in connection with changes in their structures.

Ruble deposits of legal bodies increased in January – April 2006 by 0.7 per cent or 20.7 billion rubles (January - April 2005 – lowered by 2.5 per cent) with lowering of transfer deposits by 14per cent or 278.7 billion rubles (January - April 2006 – 6.3 per cent) which is due to the season shortening of business and deposit activities in the economy in January - February 2006 (in comparison with December).

 

Urgent ruble deposits of legal bodies and individuals reached 4.274.2 billion rubles by May, 1 2006, 754.2 billion rubles higher in comparison to early 2006, which made 86.8 per cent increase in the ruble money supply and the whole increase in ruble deposits (with shortening of transfer deposits by 106.5 billion rubles).

 

The increase rates of urgent ruble deposits of legal bodies outrun in January – April 2006 the increase rates of urgent deposits of individuals. Urgent deposits of legal bodies increased by 299.4 billion rubles or 37.5 per cent (really – 34.1per cent), individuals – 454.8 billion rubles or 16.7per cent (really – 13.9per cent). In the result the share of urgent ruble deposits of individuals among the whole volume of urgent ruble deposits dropped by 3 percentage points (from 77.3per cent on January, 1 2006 to 74.3per cent as of May, 1 2006). In January – April 2005 urgent ruble deposits of legal bodies increased by 10.3 per cent (really – 6.9 per cent), individuals – by 17 per cent (really – 13.4 per cent).

 

The currency constituent of the global money supply in January – April 2006 increased by 10.6 per cent or 194.7 million US dollars (January - April 2005 – 6.1per cent).

 

Deposits in foreign currency increased by 10.3 per cent or 189.6 million US dollars with the growth of deposits of individuals by 7.9 per cent or 67.9 million US dollars, deposits of legal bodies – by 12.5 per cent or 121.8 million US dollars (January – April 2005 – 6.4; 7.7 per cent respectively).

 

2.2 The Balance factors of the increase in the global money supply in January – April 2006 by 1.282.5 billion rubles and shares, not included in the global money supply[3], by 1.2 billion rubles: increase in the net foreign assets of the banking system (NFABS) by 362.7 billion ruble and the net inner assets of the banking system (NIABS) – by 921 billion ruble.

 

2.2.1 The NIABS as of May, 1 2006 reached 10.8 trillion rubles and in January – April 2006 increased by 9.3 per cent. This change of the NIABS was caused by the increase in the net inner credit by 1.5 trillion rubles or 10.7 per cent, which occurred with lowering of the net credit allowed to state power bodies by 129.7 billion rubles or 41.1per cent and 1.601.6 billion rubles or 11.9 per cent increase in the demand for the economy.

 

In January – April 2006 the banking system fully complied with demands of the economy for credits. Demands of banks to the economy [4] formed on the basis of enterprises’ claims for loan financing of their current and capital expenses, in January – April 2006 increased by 1.5 trillion rubles or 11.4 per cent including  1.2 trillion rubles or 15.2per cent in Belarusian rubles and 127.4 million US dollars or 5.5 per cent in foreign currency.

 

 

 

 

 

 

In January – April 2006 the increase rate of credit essentially outpaced the GDP growth rate. Thus, the increase of banking claims on economy in Belarusian rubles and foreign currency in real terms in January-April, 2006 amounted to 21.3 per cent [5] (in Belarusian rubles – 34.4 per cent) as against January-April 2005, the real GDP rose by 10.3 per cent in January–April, 2006.

The long-term credit share of the total volume of bank credit to economy increased by 1.5 percentage points and reached 52.9 per cent in May, 2006. The volume of long-term credits rose by 14.6 per cent in January-April 2006, or 937.3 bln rubles, including in Belarusian rubles – 17.5 per cent, or 725.1 bln rubles (January-April, 2005 – by 8.3 per cent and 15.1 per cent respectively).

Gross bank credit granting to economy in Belarusian and foreign currency in January-April 2006 equaled to 8.6 trln and jumped by 38.1 per cent as against the similar period during the year 2005, or by 2.4 trillion, including gross long-term (investment) credit grants – 1.5 trillion rubles, 70.8 per cent and 614.2 billion rubles respectively. The share of long-term credit granting, in the total volume of given ones to economy in January-April 2006, rose up to 17.2 per cent against 13.9 per cent at the same period last year.

In comparable prices, as compared with January-April, 2005 gross long-term (investment) credit grants to economy increased by 71.5 per cent [6] (the growth of investment to capital assets from all sources rose by 37.2 per cent) in January-April 2006.

 

2.2.2 From January to April 2006 net foreign assets of the banking system increased by 13.8 per cent, or by 170.5 mln USD, and in May, 2006 came to 1404 mln USD. It was stipulated by the growth of gross foreign assets by 8.4 per cent, or by 175.3 mln USD, and gross foreign liabilities – 0.6 per cent, or 4.8 mln USD.   

 

The change in net foreign assets of the banking system occurred at the expense of net foreign assets growth of monetary authorities by 117.2 USD and net foreign assets of banks – by 53.2 mln USD.

 

In January-April, 2006 the increase of net foreign bank assets by 35.4 per cent was coursed by net foreign assets growth by 8.6 per cent or by 59.2 mln USD and gross foreign liabilities – by 0.7 per cent, or by 6 mln USD. As of May 1, 2006 net foreign bank assets made minus 97 mln USD.

 

The increase of net foreign bank assets of monetary authorities by 8.5 per cent in January-April, 2006 was stipulated by the growth of their net foreign assets by 8.3 per cent, or by 116 mln USD, and gross foreign liabilities decrease by 8.2 per cent, or 1.2 mln USD. As of May 1, 2006 net foreign assets of monetary authorities made 1501 mln USD.

 

As of May 1, 2006 the international reverse assets of the Republic of Belarus quoting SDDS of IMF (The Special Data Dissemination Standard of International Monetary Fund) made 1 261.6 mln USD and decreased by 34.9 mln USD, or by 2.7 per cent early 2006. As of May 1, 2006 the international reverse assets of the Republic of Belarus (gold-value reserves) made 1 606.5 mln USD and jumped by 21.6 mln USD, or by 1,4 per cent in January-April, 2006.

 

2.3 As of January-April, 2006 the monetary base in Belarusian rubles and foreign currency dropped by 9, per cent, by 378.3 mln rubles (as compared with January-April, 2005 – by 0.5 per cent). Balance factors of the monetary base changes in Belarusian rubles and foreign currency was the growth of net foreign assets of monetary authorities by 247.9 and decrease of net domestic assets of monetary authorities by 626.2 mln rubles.

 

In January-April, 2006 the ruble monetary base share of the total volume of the monetary base in Belarusian rubles and foreign currency increased by 4.1 percentage points, while the share of the monetary base in foreign currency decreased respectively (January-April, 2005 – by 4.3 percentage points).

 

During January-April, 2006 the volume of the ruble monetary base dropped by 5.1 per cent, or by 198 bln rubles (in January-April, 2005 decreased by 4.1 per cent), that allowed to reduce the inflation rate and provide the real sector of economy with the needed credit support due to  the regulation of the excessive money supply. The increase of the deposits made by the extended government of the Republic of Belarus (including the funds of state-financed organizations) to the National Bank’s accounts by 352.7 bln rubles and foreign currency sale by the National bank for the sum of 321.4 bln rubles, or 102.9 mln USD (in the framework of rate policy implementation) coursed the ruble monetary base fall at the beginning of the year. The growth of the ruble monetary base by 225.8 mln rubles was initiated by the rise of demands to the economy (bank refinancing).

 

As of January-April, 2006 the cash ratio in the total volume of the monetary base gained 9.7 percentage points, required reserves – 2.8 percentage points, surplus reserves dropped by 12.6 percentage points. In January-April, 2006 the currency component of the monetary base fell by 70.5 per cent, or by 83.7 mln USD (January-April, 2005 by 91.9 per cent). It was reached by limitation of currency fixed term deposits of banks of the Republic of Belarus at the National Bank.

 

 

3. Interest rate

 

3.1. In January-April, 2006 the refinancing rate, based on actual and expected inflation (first of all, seasonal acceleration of the rate in winter), situation in the currency market and others, remained the same and reached 11 per cent per annum during the four months of the year 2006. In addition, the real refinance rate was made positive and reached 3.5 per cent per annum in January-April, 2006 what is lower by 3.2 percentage points then during the same period last year. This complies with the total dynamics of the macroeconomic stabilization. During January-April, 2006 the National Bank rates on non-auction instruments of banks’ liquidity maintenance and attraction didn’t decrease as well (the refinancing rate remained the same): overnight and Lombard loans at fixed rate made 16 per cent, deposit acceptance on various terms – 3-4 per cent per annum.

The National Bank’s auction operations in sufficient liquidity conditions were aimed at liquidity withdrawal and are mainly introduced by placement of short-term bonds. As of April, 2006 the average daily balance of the bank in short-term bonds reached 208.1 bln rubles, having fallen by 38 mln rubles as against December, 2005. In April, 2006 the average instrument yield amounted to 9.4 per cent per annum, having fallen by 0.5 percentage point as against December, 2005.

 

3.2 In April, 2006 the average overnight interbank credit rate made 7.4 per cent per annum and increased by 1.8 percentage point as compared with December, 2005. The sufficient bank liquidity stipulates the lower rates in the interbank credits market as against the refinancing rate. It is proved by the average daily balance of the National Bank, which reached 12.6 bln rubles in April, 2006 and the amount of finance, placed in the National Bank’s short-term bonds. 

 

3.3 The rates of deposit market. In April, 2006 the interest rate on new fixed-term deposits in the national currency reached 9.4 per cent per annum, having increased by 0.6 percentage point as against December, 2005. The real interest rate on new fixed-term deposits gained 1.3 per cent per annum in January-April, 2006, what is lower by 4.7 percentage points as compared with January-April, 2006. The interest rate on new fixed-term ruble deposits of individuals made 12 per cent per annum in April, 2006, having increased by 0.4 percentage point as against December, 2005. As of January-April, 2006 the above mentioned real rate was made positive and reached 4.1 per cent per annum, what is 2.9 percentage points lower than in January-April, 2005. The growth of the nominal value of the interest rates and their real positive values encouraged savings in the national currency by individuals and enterprises.

The interest rate on new fixed-term deposits in freely convertible currency made 6.4 per cent per annum in April, 2006, having increased by 0.2 percentage point as against December, 2005. The yield of new fixed-term deposits of individuals in freely convertible currency made 6.9 per cent per annum in April, 2006, having decreased by 0.5 percentage point as against December, 2005.

 

3.4 The credit market rates. During April, 2006 the average interest rate on new bank loans [7] in the national currency amounted to 13.5 per cent per annum, having increased by 0.1 percentage point as against December, 2005. Meanwhile, in January-April, 2006 the average interest rate on new bank loans in Belarusian rubles was 6 percentage points lower than in the same period last year. In January-April, 2006 the real rate level dropped and made 6.1 per cent per annum against 10 per cent per annum the same period last year.

The average interest rate on new bank loans in freely convertible currency made 10.9 per cent per annum in April, 2006, having increased by 0.3 percentage point as against December, 2005.

 

4. The government securities market and financial market development.

In January-April, 2006 the government bonds for the sum of 451.5 bln rubles were placed  on the primary market what is 5 per cent more as against January-April, 2005 (430.4 bln rubles). At the same time, the state short-term and long-term bonds were redeemed for the sum of 360.7 bln rubles. Thus, as of May 1, 2006 the volume of the state short-term and long-term bonds in circulation decreased by 81.5 bln rubles (3.8 per cent) and made 2 233.4 bln rubles at par.

 

As of May 1, 2006 the state bonds in freely convertible currency for the sum of 15 mln euros and 38.7 mln USD (at the National Bank’s rate – more than 123 bln rubles) are in circulation as well. In January-April, the state bonds in freely convertible currency for the sum of 5 mln USD were redeemed by the Ministry of Finance of the Republic of Belarus (at the National Bank’s rate at the moment of money-transfer – 10.8 bln rubles).

 

Thus, as of May 1, 2006 state budget financing provided by government issues (state short-term, long-term and long-term foreign currency bonds amounted to 80 bln rubles.

 

The yield of the primary market of ruble government stocks made 10 per cent per annum in April, 2006 the same as in March and February (in December, 2005 – 10.2 per cent per annum). During January-April, 2006 the average yield reached 10 per cent per annum.

The real average yield of ruble government stocks made 2.5 per cent per annum. As of the previous year, the nominal yield lost 5.8 percentage points, and the real yield – 3.6 percentage points.

 

Government stocks duration (the average circulation time of stocks) on the primary market in Belarusian ruble made 285 days in April (in December, 2005 – 300 days). In general, the duration reached 314 days (January-April, 2005 346 days).

 

The total volume of government bond auctions on the government securities market (state short-term and long-term bonds) was equal to 1 524.6 bln rubles in January-April, 2006, what is 54 per cent lower as against the last year. It was affected by the decline in interest in transactions upon REPO terms, decrease in extreme fluctuations in marketable bond parameters.

 

Profitability of the secondary government bond market on “till repayment” terms dropped in April 2006 by 0.3 percentage points against March 2005 and accounted for 10.3 per cent per annum (12.2 per cent per annum in December 2005). In January-April 2006 average profitability declined 6.2 percentage points and made 10.7 per cent per annum against the same period last year.

 

Duration of transactions in the secondary government securities market (government long-term and short-term bonds) on “till repayment” terms made 173 days in January-April 2006 against 170 days in January-April 2005.

 

However, despite the fact that quite a large number of short-term bonds of the National bank were floated, they could not compete with government securities neither by circulation period nor profitability. Average short-term bond yield made 9.4 per cent per annum in April 2006 what is lower in comparison with state securities yield making 10 per cent per annum. The average weighted period of bond issue made less than three weeks and average period of government short-term bonds issue made more that 9 months. As of May, 1 2006 short-term bonds volume decreased by 183.8 bln BYR and made 143.1 bln BYR against January, 1. Thus, the National bank bonds added to the government securities market and enabled investors to allocate the funds that could not be invested into state securities. This measure enables the National bank to improve the control over banking system liquidity and stimulates the Belarusian ruble’s exchange rate stability and banks interest-rate risks mitigation. Moreover, short-term bonds issue of the National bank contributed to the equal distribution of banks liquidity within this period.

 

5. Banking system

 

As of May, 1 2006 the banking system of the Republic of Belarus comprises 30 banks with 431 subsidiary banks, among them are 26 banks with foreign capital including 9 banks where foreign capital accounts for 100 per cent. 6 banks are the residents of Belarus Free Economic Zones. In January-April 2006 the number of banks did not change, however, as for subsidiary banks their number decreased by 9.

 

There are 12 bank representative offices of Russia, Lithuania, Latvia, Germany, Poland and Kazakhstan as well as the Interstate bank representative office on the territory of the Republic of Belarus.

 

The banking system operation is positively characterized by gradual strengthening of some points against the GDP. In January 2005 ratio of bank resource base to the GDP made 24.1 per cent, in January 2006 this ratio amounted to 25.9 per cent, in April 2006 – 26.7 per cent. The corresponding ratios for authorized fund accounted for 3.28; 3.58 and 3.7 per cent, for equity capital – 4.75; 5.03 and 5.18 per cent respectively [9].

 

As of May, 1 2006 total bank authorized fund rose in January-April 2006 by 15,7 bln BYR and amounted to 2957,1 bln BYR. State share in bank authorized funds made 65.9 per cent, foreign capital share – 9.3 per cent (including Russian capital – 2.9 per cent), authorized fund concentration in authorized banks made 88.3 per cent.

 

Banks equity capital gained 1.7 per cent or 68,9 bln BYR and made 4 093,5 bln BYR. As of May, 1 2006 main banks equity capital of the banking system (86.5 per cent) was concentrated in authorized banks.

 

As of May, 1 2006 the share of indebtedness under credits of customers and banks made 1.49 per cent (1.9 per cent - as of January, 1 2006).

 

Banks assets (liabilities) in BYR and foreign currency rose by 3.8 per cent or 786.3 bln BYR in January-April 2006 against 4.0 per cent or 576.5 bln BYR in  January-April 2005 and made 21 306,1 bln BYR in May 2006. In real terms banks assets grew by 1.3 per cent against 0.7 per cent in January-April 2005.

 

January-April 2006 was characterized by the trend of gaining funds formed by means of Belarusian rubles in banks liabilities. In January 2005 their share amounted to 57.2 per cent, as of January, 1 2006 it reached 62.9 per cent, as of May, 1 2006 – 64.8 per cent. Along with nominal and real growth of resource base and its components it proves consolidation of trust to Belarusian currency.

 

The major part of the resource base is formed by means of the funds attracted by authorized banks. Their share accounted for 87.9 per cent against 86.3 per cent in January 2006 what proves high concentration of banking system liabilities in these banks. 

In January-April 2006 increase of banks resource base was possible due to the residents’ funds (by 5.5 per cent) and non-residents’ funds (0.6 per cent), other liabilities are characterized by insignificant reduction. Thus, as of May, 1 2006 70.2 per cent of banks liabilities are formed by borrowed funds of Belarus residents, 8.5 per cent - by borrowed funds of Belarus non-residents, 21.3 per cent – by other liabilities [10].

The increase of banks resource base in January-April 2006 was caused by the growth of the following components:

 

Savings of population (by 770.0 bln BYR or by 14.0 per cent);

 

Assets of legal entities, residents of the Republic of Belarus (by 280.6 bln BYR or by 5.7 per cent);

 

The National bank’s assets (by223.2 bln BYR or by 30.3 per cent);

 

Assets on accounts of non-residents (by 10.4 bln BYR or by 0.6 per cent).

 

The decrease in dynamics of resource base in January-April 2006 was mainly influenced by the reduction of assets on the National Government accounts (by 327.1 bln BYR or by 18.9 per cent). It should be noted that this situation was due to the fast growth of assets on the National Government accounts in December 2005 (yearend effect) that was smoothed within January 2006. Thus, in February-May 2006 assets on the National Government accounts grew by 179.8 bln BYR or 14.7 per cent.

 

6. Payment system

 

The implementation of monetary policy depends to a large extend on reliable and well-functioning payment system.

In January-April 2006 14.8 mln payments to the amount of 127.1 trln BYR were carried out by means of the Automated System of Interbank Settlements (ASIS) what is by 12.1 and 33.7 per cent respectively higher than the same indicators in January-April 2005. In January-April 2006 average daily turnover made 1.5 trln BYR or 176.6 thousand payments having increased by 32.1 and 10.7 per cent respectively against the same period last year.

 

Program and technical facilities of ASIS comply with management directives and standards of the Republic of Belarus stipulating the procedure of interbank settlements. There are no cases of unauthorized access to the payment system on record. In late April the availability of ASIS for the customers made 100 per cent of a working day (the standard – not lower than 99.5 per cent). Development of cashless settlement system based on using of bank plastic cards was characterized by the following figures in January-March 2006:

 

Emission of plastic cards grew 1.5-fold. As of April, 1 2006 3.5 mln plastic cards of international and internal payment systems are in circulation.

The number of cash machines increased 1.3-fold and made 1.2 thousand as of April, 1 2006.

The number of trade and service enterprises accepting plastic cards payments grew 1.4-fold and made 4.4 thousand.

 

In general the trends in the monetary sphere in January-April 2006 were influenced by macroeconomic conditions.

 

Monetary Policy & Economic Analysis Directorate,

Economic Analysis and Forecasting Department

of the National Bank of the Republic of Belarus

 

 

[1] Real effective exchange rate in January-March grew by 6.1 per cent against the same period last year.

[2] Settlement is made using the GDP deflator – 112.3 per cent.

[3] Liabilities, not included in broad money supply (long-term subordinate loans received from customers for additional bank capital forming), made 1.2 bln BYR in May 2006.

[4] Bank’s requirements cover credit, leasing, factoring, executed warranties, bill business, securities (except shares), shares, other requirements.

[5] Settlement is made using the GDP deflator – 112.3 per cent.

[6] Growth rate is adjusted to the capital investment deflator – 99.6 per cent.

[7] Exclusive of the credits made by means of the corresponding credits of the National Bank of the Republic of Belarus, state administration bodies, as well as the preferential credits paid from the state budget.

[8] When calculating in 2005 auction profitability and duration of state bonds a number of special issues of non-marketable state long-tern bonds floated in accordance with the following Presidential Decrees were not taken into account: Presidential Decree №257 dated June, 7 2005 “On takeover of JSCB „MinskComplexBank” by OJSC „Stock-savings bank „Belarusbank“ and on specification of certain budgetary indicators of the Republic of Belarus in 2005”; Presidential Decree №482 dated October, 17 2005 “On accomplishment of investment bank duties by OJSC “Belinvestbank”  and on specification of certain budgetary indicators of the Republic of Belarus in 2005”; Presidential Decree №506 dated October, 27 2005 “On state support provided to OJSC “Mogilevtransmash” and to the Production Republican Unitary Enterprise "Minsk Automobile Plant" and on specification of certain budgetary indicators of the Republic of Belarus in 2005”; Presidential Decree №537 dated November,22 2005 “On specification of certain budgetary indicators of the Republic of Belarus in 2005 and on changes and additions to Presidential Edict №43 dated January,20 2005”.

[9] The calculation is based on the resource base average and the GDP during 12 months.

[10] Bank capital, adjustment foreign currency accounts, interbank and interbranch accounts, other liabilities.

 

 

 

© 2019 RUE «NATIONAL CENTRE FOR MARKETING AND PRICE STUDY»
Ministry of Foreign Affairs of the Republic of Belarus