2023-11-01 16:46:24
Anastasia Luzgina. Photo: beroc.org
According to the National Bank, the population’s debts to banks at the beginning of October amounted to 19 billion 343 million rubles. The total debt of Belarusians on bank loans has been growing for the sixteenth month in a row.
Since the beginning of this year, the total loan debt of Belarusians has increased by almost 2.4 billion rubles. In September, this figure increased by 357 million rubles.
Filin discussed with BEROC senior researcher Anastasia Luzgina what the loan record is connected with and how it will affect the country’s economy.
— Loans for the population are growing quite actively this year. When analyzing loans to individuals, you need to look at loans for consumer needs and for real estate, because they differ in terms of terms and purposes of spending.
For consumer needs these are relatively short-term loans, and for real estate – long-term for 10-15 years. In 2023, loans for both types are growing.
Debt on real estate loans at the end of September increased by about a billion rubles. As for loans for consumer needs, the increase was about 1 billion 400 million.
Debt on consumer loans is growing more rapidly than on real estate loans. However, if you look at the total debt, of course, the total amount for real estate loans will be about twice as large, because they are taken out for a long time and are paid back very gradually.
In the consumer segment, people are actively borrowing from banks to buy phones, household appliances, furniture and cheaper things. On the one hand, this is due to the fact that interest rates have decreased significantly compared to last year.
For example, in September 2022, rates on new short-term loans for individuals were at 12.2%. In September 2023, the rate dropped to 9.47%, and this was one of the main reasons why people began to actively take out loans.
The second reason is the variety of loans that banks now provide. Plus, of course, pent-up demand. Lending declined last year. With the outbreak of war in Ukraine, people decided to wait out the poorly predictable situation and could postpone purchases for future periods.
Accordingly, this year, when the situation in the economy stabilized, people got used to external risks, wages began to rise in real terms, new loan opportunities opened up – all this contributed to the revival of credit activity of citizens of Belarus.
What does this mean? A more sustainable trend is when long-term real estate loans are growing – they are invested in construction and reconstruction, that is, in essence they are investment loans.
When there is an active growth in loans for consumer needs, this leads to the fact that these borrowed funds “spill over” onto the market and, along with increasing wages, create additional demand for goods and services.
In such a situation, Belarusian producers cannot always respond to increased demand, because production capabilities are limited. Plus, consumers can switch to purchasing more expensive, but higher quality goods from foreign manufacturers. These processes lead to an increase in consumer imports.
Indeed, in 2023, Belarusian consumer imports are growing. And this creates, on the one hand, additional conditions for pressure on the Belarusian ruble, and on the other, it can stimulate inflation.
You need to understand that the picture of inflation is distorted in Belarus, because there is strict price regulation. Therefore, we cannot say exactly what inflation would be if market pricing were used. However, strict administrative restrictions can create an inflationary overhang over time.
— What measures do you think should be taken to reduce the credit crunch?
— If the task is to cool the market, then nothing better has been thought of than tightening monetary policy. An increase in the same refinancing rate by a fraction of a percentage point, say, over the course of several months would have an impact on the credit market. Because if the refinancing rate increases, this creates incentives for an increase in interest rates on loans and deposits in the banking system.
For example, what the Central Bank of Russia is doing now: it is raising the rate – and this affects, among other things, the credit market. It cools the market a little so that domestic demand falls and inflation slows down. In the case of the Belarusian economy, such a task does not exist today.
On the one hand, the National Bank sees risks associated with the growth of lending, but on the other hand, it has the task of continuing the stimulating monetary policy, since the main goal of the Belarusian authorities today is to maintain high rates of economic growth.
They are possible, first of all, thanks to a soft economic policy, that is, not only lending plays a role here, but also assistance from the budget, wage growth and the low base of last year. It can be seen that a GDP growth rate of 3.8% will be achieved this year, but we must take into account that exactly the same figure is planned for next year.
Further growth of the economy in conditions of limited resources is possible for some period due to the pumping of cheap resources and reaching maximum production capacity.
The state’s preservation of stimulating economic policy leads to the acceleration of inflation and devaluation processes. And Belarus has experienced such economic crises more than once.
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