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Belarus government in favor of reducing commercial lending rates to 24-27% by year end

MINSK (BelTA) – Plans have been made to reduce interest rates on commercial loans to 24-27% by the end of 2016. Prime Minister of Belarus Andrei Kobyakov made the statement as he presented the government's action program for 2016-2020 in the Oval Hall on 5 April, BelTA has learned.

“By the end of 2016 we intend to reduce interest rates on new loans (commercial ones) in the national currency to 24-27% per annum,” noted Andrei Kobyakov. In his words, the National Bank of the Republic of Belarus has already made a number of decisions. Thus, on 1 April the refinancing rate was reduced by 1% to 24% per annum. The mandatory reserves norm was reduced by 0.5% to 7.5%.

The Belarusian head of government stated that the gradual decrease in interest rates in the economy coupled with the reduction of directive-based (preferential) lending is necessary for the sake of restoring the competitive ability of the Belarusian economy and getting it adapted to external shocks.

“By reducing preferential lending volumes we will bring down interest rates on commercial loans, which in turn will bring lending back to normal. We would like common commercial loans to become as good as today's preferential loans,” explained the Prime Minister.

In his words, at the end of 2015 the average interest rate across the entire credit portfolio in the national currency stood at 17.3% while the commercial interest rate (without preferential loans) totaled 34.1%. Meanwhile, interest rates on new preferential loans averaged 9% per annum in 2015. “We are going to reduce interest rates by employing the relevant monetary management instruments. By slowing down inflation, by controlling the money supply, and reducing risk premiums of the banks we intend to make the interest rate for all loans as low as 10-12%,” stressed Andrei Kobyakov.