Belarus’ national currency, financial sector and macrostability at risk due to political crisis – Fitch
<p> MINSK, Aug 19 - PrimePress. The political crisis in Belarus creates risks for the national currency, financial sector and macroeconomic stability, Fitch Ratings says. </p> <p> </p> <p> “The intensification of the crisis and uncertainty about how it will be resolved could increase pressure on external liquidity cushion and a highly dollarized financial sector, reduce the diversification of funding sources and further affect growth prospects,” reads the report. </p> <p> </p> <p> Further deterioration of the political situation and domestic confidence or prolonged disruption of economic activity can increase depreciation pressure on the Belarusian ruble, negatively affect the highly dollarized financial sector (65% of deposits and 52% of loans in the sector are denominated in foreign exchange) and lead to a reduction in the gold and FX reserves. </p> <p> </p> <p> This can negatively impact the improvements in macroeconomic stability achieved in recent years due to the increased coherence of monetary, fiscal and wage policies. Fitch explains that it is about such achievements as moderate inflationary pressures and relatively stable international reserves. </p> <p> </p> <p> An improvement of the current policy did not lead to an increase in economic growth. Real GDP only grew at an annual rate of 0.1% on average over the five-year period to 2019. Strikes in key sectors can further affect growth prospects, which have already been negatively impacted by the oil supply disruption and the pandemic this year. </p> <p> </p> <p> The prospects for longer-term economic reforms are also likely to worsen if political decision-makers focus on maintaining social and political stability, as this will freeze the pace of reform, especially with regard to the restructuring of large state-owned enterprises, the agency says. </p> <p> </p> <p> As previously reported, in June 2020, Fitch predicted a 5% decline in Belarus’ GDP in 2020 and 3.2% recovery growth in 2021. End </p>
2020-08-20
Primepress
MINSK, Aug 19 - PrimePress. The political crisis in Belarus creates risks for the national currency, financial sector and macroeconomic stability, Fitch Ratings says.
“The intensification of the crisis and uncertainty about how it will be resolved could increase pressure on external liquidity cushion and a highly dollarized financial sector, reduce the diversification of funding sources and further affect growth prospects,” reads the report.
Further deterioration of the political situation and domestic confidence or prolonged disruption of economic activity can increase depreciation pressure on the Belarusian ruble, negatively affect the highly dollarized financial sector (65% of deposits and 52% of loans in the sector are denominated in foreign exchange) and lead to a reduction in the gold and FX reserves.
This can negatively impact the improvements in macroeconomic stability achieved in recent years due to the increased coherence of monetary, fiscal and wage policies. Fitch explains that it is about such achievements as moderate inflationary pressures and relatively stable international reserves.
An improvement of the current policy did not lead to an increase in economic growth. Real GDP only grew at an annual rate of 0.1% on average over the five-year period to 2019. Strikes in key sectors can further affect growth prospects, which have already been negatively impacted by the oil supply disruption and the pandemic this year.
The prospects for longer-term economic reforms are also likely to worsen if political decision-makers focus on maintaining social and political stability, as this will freeze the pace of reform, especially with regard to the restructuring of large state-owned enterprises, the agency says.
As previously reported, in June 2020, Fitch predicted a 5% decline in Belarus’ GDP in 2020 and 3.2% recovery growth in 2021. End