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Belarus Banking and Finance
Under the communist regime, the currency of the Soviet
Union
was the ruble, and the banking system was owned and
managed by
the central government. Gosbank (Gosudarstvennyy bank--the
State
Bank) was the central bank of the country and its only
commercial
bank as well. It handled all significant banking
transactions,
including the issuance and control of currency and credit,
management of the gold reserve, and oversight of all
transactions
among economic enterprises. Gosbank had main offices in
each of
the republics, and, because the banking system was highly
centralized, it played an important role in managing the
economy.
After independence, Belarus restructured its banks into
a
two-tier system consisting of the National Bank of Belarus
and
thirty-six commercial banks (including four specialized
banks:
Byelagroprombank, Byelpromstroybank, Byelvnyehsekonombank,
and
Sbyerbank) with a total of 525 branches in 1994. Of these
banks,
Sbyerbank is wholly state owned, another bank is owned by
an
individual, and the rest are organized as either limited
liability companies or joint-stock companies.
Belarus's securities market was created at the end of
1992
and is licensed and controlled by the state inspectorate
for
securities and the stock exchange. The over-the-counter
market
dominates the securities market, with Russian corporate
shares
and bonds the most actively traded items. The country has
three
commodity and stock exchanges.
The Belarusian ruble was introduced in May 1992 in
response
to a shortage of Russian rubles with which to pay fuel and
other
debts to Russia. The zaychyk (hare), as the
Belarusian
ruble is known colloquially, was officially tied to the
Russian
ruble, but Russia would not accept the new unsecured
currency in
payment, forcing Belarus to dip into its hard-currency
reserves.
In September 1993, Belarus and five other CIS countries
agreed to
create a joint monetary system based on the Russian ruble.
Although Belarus and Russia continued to work at
creating a
monetary and economic union by signing an April 1994
treaty, only
a customs union was actually realized. Moscow postponed
implementation of the union itself, although it would have
given
Moscow significant control over the Belarusian economy,
for fear
of jeopardizing its own fragile economic reforms.
Belarus's
completely unreformed economy and accompanying high rate
of
inflation would have forced Russia to print large amounts
of
money to keep the Belarusian economy going, thereby
fueling
inflation in Russia.
In early 1995, Belarus's monetary policy was so loose
that
the National Bank of Belarus came under fire from the
International Monetary Fund
(IMF--see Glossary) when it
lowered
the country's key financing rate despite the country's
high level
of inflation. Belarus was in danger of jeopardizing other
IMF
loans by its actions. Despite the logic of the IMF's
reasoning,
President Lukashyenka's view of these difficulties is that
they
were the result of the IMF's dislike of Belarus's close
relationship with Russia.
In November 1994, the Supreme Soviet declared that the
country's sole legal tender would be the Belarusian ruble
as of
January 1, 1995, when the Russian ruble could no longer be
circulated. Although the zaychyk was convertible,
the
National Bank of Belarus used multiple exchange rates that
depended on the nature of the transaction, thus setting
limits on
the convertibility of the zaychyk.
The government's lax monetary policy failed to support
financial discipline, which caused the average monthly
inflation
rate in 1993 to increase to 45 percent in the last
quarter. Even
though monthly inflation was down to 10 percent by March
1994, it
rose again in 1994 and frightened off investments from
abroad,
including Russia. The consumer price index rose by 1,070
percent
in 1992, by 1,290 percent in 1993, and by 2,221 percent in
1994.
In 1995 inflation seemed to abate somewhat, with the
monthly
inflation rate of "only" 22 percent through April.
Data as of June 1995
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