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PRESIDENTIAL DECREE OF THE REPUBLIC OF BELARUS

of December 18, 2015 No. 505

About approval of the Main directions of monetary policy of the Republic of Belarus for 2016

1. Approve the enclosed Main directions of monetary policy of the Republic of Belarus for 2016.

2. To provide to National Bank together with Council of Ministers of the Republic of Belarus accomplishment of the Main directions of monetary policy of the Republic of Belarus for 2016.

3. This Decree becomes effective since January 1, 2016.

President of the Republic of Belarus

A. Lukashenko

Approved by the Presidential decree of the Republic of Belarus of December 18, 2015 No. 505

The main directions of monetary policy of the Republic of Belarus for 2016

Chapter 1. Monetary policy purpose

1. Monetary policy in 2016 will keep orientation on assistance to the sustainable and balanced development of national economy through maintenance of price stability.

In 2016 decrease of the inflation rate, measured by consumer price index, to 12 percent (December, 2016 by December, 2015) will become main objective of monetary policy.

Chapter 2. Monetary policy realization

2. Goal achievement on inflation will be provided by control over the cash offer. In 2016 the National Bank will continue application of the mode of monetary targeting, using as the intermediate purpose wide money supply, as the operational purpose - ruble monetary base. The surplus of average wide money supply is predicted at the level of 18 percent plus-minus of 2 percent points (December, 2016 by December, 2015).

3. Realization of course and percentage policy by National Bank will be subordinated to task of effective management of the cash offer.

Carrying out course policy will be performed on the basis of the rule providing minimization of currency interventions of National Bank and ensuring dynamics of the exchange rate on the basis of the demand and supply in the foreign exchange market. Operational reference point of course policy the cost of basket of foreign currencies will remain. At the same time in the conditions of excess of the offer of currency over demand for it for the purpose of non-admission of deterioration in price competitiveness of the Belarusian exporters the National Bank will reserve opportunity to constrain strengthening of Belarusian ruble due to purchase of foreign currency.

Regulation of liquidity in bank system will be performed mainly by means of carrying out transactions in the public market on auction basis (auctions of interest rates according to in advance announced schedule and amounts with standard terms of transactions). In the conditions of emergence of the short-term not predicted changes of liquidity and feasibility of their smoothing through auction transactions holding additional auctions is in exceptional cases possible (out of the schedule). The planned amount of regular auctions will be determined taking into account need of accomplishment of the operational purpose by ruble monetary base.

Additional opportunities of regulation of liquidity are given to banks by constantly available tools of National Bank (swap overnight and the deposit overnight), interest rates for which form the upper and lower borders designed to limit interest rate fluctuations of the interbank market. As auxiliary carrying out bilateral transactions of liquidity support of banks by National Bank as the last resort lender is possible.

The fund of required reserves will be created according to the single standard rate and to be regulated for the purpose of maintenance of structural balance of liquidity of bank system, and also necessary dynamics of money supply.

The direction and size of change of rates on constantly available tools and refunding rates will be determined based on dynamics of interest rates at auctions of regulation of liquidity and in the interbank market.

In general the percentage policy will be directed to maintenance of interest rates in economy at the positive level in real terms and ensuring excess of profitability of savings in Belarusian rubles over currency savings. In process of delay of inflationary tendencies also the cost of credit resources will continue to fall.

4. Preserving and building-up of gold and foreign exchange reserves of the country will remain important nation-wide task in 2016. Dynamics of the international reserve assets of the Republic of Belarus will be determined mainly by condition of foreign trade and in general paying balance, and also amounts of refinancing by the state of obligations in foreign currency.

Chapter 3. Development of bank and payment systems, financial market

5. In 2016 the National Bank will continue work aimed at providing stability and efficiency of banking sector, deepening of interaction of banking sector with real production sector, decrease in dollarization of economy, forming of conditions for further development and implementation of new banking technologies, increases in standards and quality of banking services.

For the purpose of ensuring safe functioning of banks the measures directed to maintenance of sufficiency of the normative capital of banking sector at the level of at least 12 percent consistently will be performed quality requirements of the capital of banks, reliability of sources of its forming, and also the requirement to founders (shareholders), other beneficial owners and structure of property of banks will raise.

Maintenance of share of troubled assets of banks at economically safe level will be provided by means of further restriction of the credit and currency risks accepted by banks, including on the basis of carrying out complex assessment of financial condition of the companies - the largest borrowers.

When implementing banking supervision special attention will begin to be paid to quality evaluation of corporate management (including works of independent directors) and risk management systems, will continue to be enhanced evaluation methods of level of risks of banks. For improvement of quality of capital management and liquidity international standards Basel by III regarding the capital will be implemented and implementation of standards Basel III regarding liquidity will continue.

6. In 2016 actions of National Bank will keep orientation on stimulation of banks to building-up of steady resource base and active participation in development of economy by involvement on long-term basis of means of the population and legal entities with use of various financial instruments.

7. For the purpose of development of the financial market, including the security markets and financial instruments of forward transactions, and also insurance services, the events directed to enhancement of its regulation, development of its infrastructure, increase in reliability of its various segments that will promote expansion of opportunities for savings and investments into republic economy will be held.

Work directed to enhancement of legal regulation of activities of the microfinancial and leasing organizations including complex regulation of leasing of housing will be continued.

In the sphere of enhancement of financial mechanisms on export stimulation further development will be gained by such form of crediting of trading activities as forfaiting.

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