National Bank may lift its ban on foreign currency housing loans for individuals

The Council of Ministers is considering the possibility of lifting a ban on the issuance of foreign currency loans to individuals for the construction and purchase of housing...

 

The Council of Ministers is considering the possibility of lifting a ban on the issuance of foreign currency loans to individuals for the construction and purchase of housing, a source told BelaPAN.

The ban may be lifted only if the government manages to ensure stability in the exchange market, the source said. This would be very good for housing construction because foreign currency loans are much cheaper than Belarusian rubel loans, the source explained. "However, the government should guarantee that there will be nothing like the 2011 foreign currency crisis," he said. "People would be in serious trouble if we had new currency shortages."

In July 2009, the National Bank of Belarus (NBB) issued a directive that imposed a temporary ban on foreign currency loans for individuals.

"Given the fact that our country's citizens receive their wages in Belarusian rubels as well as possible fluctuations of foreign currencies' mutual exchange rates in the long term, the issuance of foreign currency loans to individuals involves a high currency risk and a risk of non-repayment if the amount of loan payments rises to a level exceeding the borrower's income," the press office said.

Later in July 2009, Pyotr Prakapovich, who was then head of the National Bank, announced that foreign currency loans would be banned once and for all.

The NBB press office linked the move to make the ban permanent to de-dollarization and efforts to protect households and the banking sector against currency risks.

Interest rates on rubel loans soared following the drastic depreciation of the Belarusian rubel in 2011, causing the construction of housing in Belarus to decrease.