Gold Re­serves: Store is No Sore

Be­larus’ bank­ing sys­tem is well-po­si­tioned to main­tain a sta­ble ex­change rate of the na­tional cur­rency

Economy of Belarus - - FISCAL POLICY - Li­ud­mila SATS, Econ­omy of Be­larus Mag­a­zine

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

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