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by September 2018, although accelerating from 4.7% by the first half of 2018.
As inflation pressures stabilized, the benchmark interest rate was steadily cut during 2017-2018, from 17 to 10% by June 2018. As a result, lending rates fell, improving loan supply conditions and stimulating bank lending, which grew by about 11.5% in nominal terms y/y by mid-2018.
Still, the degree of dollarization remained high, with 67.2% of deposits denominated in foreign currency, while the share of the currency component of broad money went down, from almost 66% to 62% by the second quarter of 2018. However, the economy-wide ‘problem asset’ level at 13% (as of April 1, 2018) remains a concern.
The current account deficit narrowed substantially in 2017 before rising again in 2018. It fell to 1.7% of GDP from around 3% in 2015-2016, as more favourable terms of trade contributed to a growing value of goods and services exports. This factor, along with the continued net sale of foreign currency by households, helped maintain a stable nominal exchange rate until external market factors, such as the falling Russian currency, began to affect its dynamics.
Gross international reserves, after increasing to $7.3bn in 2017, remaining at $7.2bn by September 2018, with still limited coverage of two months of imports of goods and services. The net international investment position remains negative, totalling $41.5bn, or about 76.3% of GDP as of January 1, 2018, and deteriorating slightly to almost $42bn by mid-2018.
2.0 Politics
The Council of the European Union has extended for one year a limited set of remaining sanctions against Belarus , which include an arms embargo and an asset freeze and a travel ban against four former law enforcement officials, the Council said in a statement on February 22. The measures against the individuals were prolonged in connection with the unresolved disappearances of two opposition politicians, one businessman and one journalist, in 1999 and in 2000. In 2016, the Council introduced an exemption to the restrictions to allow the export of biathlon equipment to Belarus. February 2015, the EU lifted most of its sanctions against Belarusian authorities following a peaceful presidential election in October 2015. At the same time, the US last June prolonged by one year its sanction regime against officials deemed to undermine the country's democratic processes, including President Alexander Lukashenko. In January, Belarusian Foreign Minister Vladimir Makei urged the EU to lift all sanctions against Minsk. "The EU will revisit the remaining sanctions in February of this year," Makei told journalists. "Hopefully, a reasonable approach will triumph and that sooner or later this remnant of the past will be removed from our agenda."
5 BELARUS Country Report March 2019 www.intellinews.com