Gold Reserves: Store is No Sore
Belarus’ banking system is well-positioned to maintain a stable exchange rate of the national currency
in 2010 the Belarusian banking system fulfilled all the major targets of the national fiscal policy. this year sets even more challenging and conceptually new tasks. the priority will be given to bolstering the domestic and external balance of the Belarusian economy, which is essential for the country’s sustainable economic performance. first deputy Chairman of the Board of the national Bank of the republic of Belarus Yuri alymov reveals the major objectives of Belarus’ fiscal policy in 2011 to the Economy of Belarus Magazine.
Reduction of gold and foreign currency reserves is common for January and occurs every year. This is accounted for by seasonal factors - the settlement of last year’s payments and the need for foreign currency to pay for energy supplies.
The additional factors contributing to the reduction of the gold and currency reserves include the fall in prices for precious metals on the international market and the high demand of households for foreign currency in NovemberDecember 2010.
The net demand of households for foreign currency significantly fell in January, as expected, down to $57 million against $649 million in December 2010.
The current amount of reserves is sufficient to maintain the stable exchange rate of the Belarusian ruble within the established range. Nevertheless, the National Bank and the Government of Belarus are undertaking measures to increase the gold and currency reserves in order to enhance the macroeconomic and financial stability of the country.
In 2011 the reserves are to gain at least $1.2 billion. They will be increased mainly through raising FDI on the net basis ($6.4-6.5 billion), better effectiveness and higher competitive ability of the national economy, which will help redress the balance in foreign trade in goods and services.
Belarus was recovering from the global financial and economic crisis through 2010. New oil trade terms with Russia contributed to the negative trends in Belarus’ foreign economic trade.
In 2010 the current account deficit stood at $8.5 billion, up 32.9% (or $2.1 billion) over last year. The trade deficit grew extraordinary high (the deficit in foreign trade in goods and services increased from 13% to 15.6% of GDP). As a result, the borrowing could not completely make up for the current account deficit which led to the imbalance of supply and demand on the domestic foreign exchange market and reduction of international reserve assets by $621.8 million.
In order to rectify the situation, in January 2011 the National Bank raised the interest rates for standing facilities to support liquidity