Page 30 - BELRptSept18

7.1 FX issues
The National Bank of the Republic of Belarus (NBRB) has ended mandatory FX sales requirements as the economic situation stabilises. The national bank has been gradually reducing the capital controls imposed in the crisis years and nixed a mandatory currency surrender requirement in August, the NBRB said at the start of August.
The presidential decree on abolishing the mandatory sale of foreign currency came into force the day it was officially published, 31 July. As of 1 August Belarusian commercial entities no longer have to sell their foreign currency proceeds, including money acquired before the decree came into force.
The amount of foreign currency that Belarusian companies earned from exports but were obliged to sell to the national bank has been gradually reduced and is now zero .
Previously Belarusian companies had to sell 10% of their foreign currency proceeds. However, they had been voluntarily selling over 47% of their foreign currency proceeds to support the cash-strapped government. While the mandatory sale size was reduced from 30% to 10%, the amount of foreign currency sold by Belarusian companies on a daily basis went up from the equivalent of $62mn in January-August 2016 to $77mn in October 2017 – June 2018.
The amount of foreign currency that Belarusian companies sold is determined by their demand for Belarusian rubles to pay things like payroll and taxes. The abolishment of mandatory foreign currency sales represents another step on the way towards harmonizing currency regulations in the Eurasian Economic Union (EAEU).
Additionally, during the last days of 2017, the National Bank abolished target purchase of foreign currency and approved a new version of the Instruction on currency exchange transactions. Starting from 11 April 2018, companies will be no longer be obliged to strictly adhere to the purpose for which foreign currency is purchased.
8.0 Financial & capital markets 8.1 Bank sector overview
The financial sector remains a contingency liability to the government
and a potential risk for macroeconomic stability, despite some improvements. Regulatory NPLs (the three riskiest categories) have stabilised, reaching 12.8% of gross credit exposure in 3Q17 due to the improved macroeconomic backdrop leading to lower interest rates and lower exchange rate volatility.
Capitalisation levels have improved somewhat, but remain modest given high credit risks. The large presence of the public sector (65% of assets)
30 BELARUS Country Report September 2018 www.intellinews.com