September 9, 2011

As part of the package of measures designed to establish a uniform equilibrium exchange rate of the Belarusian ruble, the National Bank of the Republic of Belarus shall introduce, beginning on September 14, 2011, new procedures for carrying out foreign exchange operations in the domestic foreign exchange market.

In compliance with Resolution of the Board of the National Bank of the Republic of Belarus No. 368 "On Foreign Exchange Purchase/Sale Transactions in the Domestic Foreign Exchange Market" dated September 7, 2011, the main trading session at the Belarusian Currency and Stock Exchange shall be used by banks:

• to sell, on behalf of and at the expense of currency operations entities, foreign exchange which is subject to mandatory sale and to sell other foreign exchange; and
• to buy, on behalf of and at the expense of currency operations entities, foreign exchange with a view to paying for medicines and medical products (provided their purchase is approved by the Ministry of Health of the Republic of Belarus) as well as to paying for imports of natural gas and electricity to Belarus.

In compliance with Resolution of the Board of the National Bank of the Republic of Belarus No. 367 "On Amending Resolution of the Board of the National Bank of the Republic of Belarus No. 208 as of August 20, 2001" dated September 7, 2011, the results of the main trading session at the Belarusian Currency and Stock Exchange shall be used to set official exchange rates of the Belarusian ruble against foreign currencies.

The additional trading session at the Belarusian Currency and Stock Exchange shall be used by banks:

• to sell, in their own name and at their own expense or on behalf of and at the expense of currency operations entities and non-resident banks, foreign exchange, excluding mandatory sale of foreign exchange; and
• to buy, in their own name and at their own expense or on behalf of and at the expense of currency operations entities and non-resident banks, foreign exchange.

The exchange rate for the purchase and sale of foreign exchange in the additional trading session at the Belarusian Currency and Stock Exchange shall be set based on the results of fixing relying on the demand for and supply of foreign exchange.

Changes and amendments to Regulations on Foreign Exchange Trading and Trading Day Operating Regulations on Foreign Exchange Purchase/Sale and Conversion Transactions at the Belarusian Currency and Stock Exchange are posted on its web-site at: www.bcse.by.

The mandatory requisite of currency operations entities', non-resident banks', and banks' applications for the purchase of foreign exchange in the additional trading session shall be maximum exchange rate for the purchase of foreign exchange at which these applications may be granted. Also, the clients have to ensure that funds in Belarusian rubles equivalent to the amount indicated in the application for the purchase of foreign exchange at maximum exchange rate specified therein are available on appropriate accounts with the bank.

For the purpose of taking part in financial instruments trading which is settled via separate ledger accounts opened with the National Bank, banks participating therein shall be obliged to ensure that monetary funds in Belarusian rubles are transferred in advance - having regard to maximum exchange rates indicated in the applications for the purchase of foreign exchange - to the specified separate ledger accounts before 3.00 p.m. of the day preceding the trading day.

The National Bank shall buy and sell foreign exchange both in the main trading session at the Belarusian Currency and Stock Exchange and in the additional trading session.

Banks shall come on the OTC foreign exchange market:

• to buy foreign exchange from currency operations entities in the amount that does not exceed one lot, prescribed for auctions, of one of foreign currencies per day in respect of each currency operations entity;
• to sell foreign exchange to currency operations entities in the amount that does not exceed one lot, prescribed for auctions, of one of foreign currencies in respect of each contract/transaction/operation, but not more than one lot, prescribed for auctions, per day in respect of each currency operations entity; and
• to trade in foreign exchange between banks and between banks and non-resident banks.

In cases where a bank's client needs to sell foreign exchange which is not traded at the Belarusian Currency and Stock Exchange, it is possible to carry out a conversion transaction with the bank in order to change this foreign currency into the currency that is traded at auctions and to sell received foreign exchange in the main or additional trading session.

Under current legislation foreign exchange operations involving natural persons shall be carried out without restrictions.

In compliance with Resolution of the Board of the National Bank of the Republic of Belarus No. 366 "On Amending Resolution of the Board of the National Bank of the Republic of Belarus No. 188 as of May 23, 2011" dated September 7, 2011, caps on exchange rates at which foreign exchange may be bought\sold and converted in the domestic foreign exchange market shall be removed.

In connection with this, when determining exchange rates of foreign currencies for carrying out foreign exchange operations in the OTC foreign exchange market involving legal persons, independent entrepreneurs, and banks as well as involving natural persons, banks shall set an exchange rate, targeting exchange rates prevailing at the end of the additional trading session at the Belarusian Currency and Stock Exchange.

Also, the National Bank draws banks' attention to the need to ensure high degree of organization of the work when carrying out foreign exchange operations at exchange offices (cash desks), including cash replenishment thereof in a timely fashion.

Nadezhda A. Ermakova is appointed as the Chairperson of the Board of the National Bank of the Republic of Belarus. The President of the Republic of Belarus signed relevant Edict No. 330 dated July 27, 2011.

Nadezhda A. Ermakova took the office beginning on July 28.

July 19, 2011

Petr Prokopovich was released from office of the Chairman of the Board of the National Bank of the Republic of Belarus in view of his retirement. Corresponding Edict No. 322 was signed by the President of the Republic of Belarus Alexander Lukashenko on July 18, 2011.

April 1, 2011

Foreign investors, main trading partners of our country, and leading international insurance organizations ask monetary authorities about economic situation in the Republic of Belarus because of downgrading the sovereign credit ratings of the country as well as introducing a number of measures in the domestic foreign exchange market by the National Bank.

In this connection, the National Bank of the Republic of Belarus informs that with a view to stabilizing economic situation and slashing current account deficit of the balance of payments it maintains, beginning in early 2011, the course aimed at significant tightening of monetary policy and curbing total domestic demand. All available instruments are used for this purpose.

The following measures have been taken in the sphere of monetary policy in January – March 2011:

• the refinance rate of the National Bank has been increased by 1.5 percentage points (up to 12% per annum), interest rates on standing facilities designed to support liquidity – by 2 percentage points (up to 18% per annum), and interest rates on auction operations designed to support liquidity (up to 16.5% per annum) and bilateral swaps (up to 17% per annum) respectively;
• legal reserve requirement on the funds in the national and foreign currencies attracted from legal persons was raised from 6% to 9%; and
• the exchange rate of the Belarusian ruble versus the currency basket (comprising the US dollar, the euro, and the Russian ruble) has been depreciated by 6.17% percent compared with the beginning of the year.

In 2011, the currency basket fluctuations will be within the band plus/minus 8% of its central value as at the beginning of the year. The exchange rate of the Belarusian ruble versus the US dollar and the euro will be defined taking into account mutual fluctuations of currencies in the international markets.

The National Bank completely excludes the possibility of a one-off significant adjustment of the exchange rate of the Belarusian ruble.

The National Bank is ready to consider and implement, as appropriate, other measures which will make it possible to adjust external imbalances and ensure the sustainability of external positions in the short and long-term perspective.

Having regard to the current state of gold and foreign exchange reserves we would like to inform you that as at the end of February the volume of gold and foreign exchange reserves of the Republic of Belarus in the national definition dropped by USD68 million, amounting to USD5,511.5 million as of March 1, 2011. Also, in February the Republic of Belarus made payments under external debt in full and in due time, including redemption of the first coupon of sovereign eurobonds.

According to the IMF's SDDS definition, the level of gold and foreign exchange reserves deteriorated by USD319.4 million, amounting to USD4,023.6 million as of March 1, 2011. A more significant reduction in reserves, according to the IMF's SDDS definition, compared with the reserves, according to the national definition, is associated with the methodology of the indicator's calculation according to the international definition, namely with the specific features of the inclusion of separate assets in precious metals therein.

At the same time, in early March the country's economy faced a sharp increase in the households' and economic entities' demand for foreign currency that was provoked by the fears of possible one-off devaluation of the national currency.

In this regard, the National Bank of the Republic of Belarus has taken a number of prompt measures aimed at stabilizing the situation and preventing negative trends in the domestic foreign exchange market, including speculative pressure on the Belarusian ruble.

Thus, starting from April 1, 2011, a new temporary procedure for purchasing foreign currency will be introduced at the Belarusian Currency and Stock Exchange, according to which the priority will be given to the enterprises' and banks' orders to pay under the contracts for the imports of medicines, natural gas, repayment of loans in foreign currency, and for other purposes.

At the same time, the economic entities and banks will still preserve the possibility to freely purchase foreign exchange in the over-the-counter market, where more than 70% of the foreign exchange revenues of the country may be reallocated. Thus, the main volume of the Belarusian economic entities' demand for foreign exchange will be satisfied in the over-the-counter market.

For the purpose of improving the efficiency of market regulation of supply and demand, the National Bank of the Republic of Belarus expanded the band of the Belarusian ruble exchange rate fluctuations in the interbank market to 10%. Thus, the National Bank gives priority to the functioning of the over-the-counter market as the most market-oriented segment of the foreign exchange market.

These measures are aimed at ensuring immediate and unconditional satisfaction of the demand for foreign currency for emergency needs, meeting by the residents of the Republic of Belarus of their liabilities to foreign counterparties, as well as retaining the country's gold and foreign exchange reserves to implement the government debt policy, according to which the external debt servicing and repayment is assigned priority by legislation of the Republic of Belarus. The strategy of external government debt management is based on the following principles:

• satisfaction of the country's demand for financial resources at the minimum possible costs of the borrowings;
• maintenance of the volumes of the external government debt at the economically safe level;
• minimization of annual costs of government debt servicing; and
• satisfaction of liabilities in full.

As the situation in the domestic market of the Republic of Belarus stabilizes and external financing is attracted in the required volumes, the National Bank of the Republic of Belarus will lift the previously introduced measures designed to regulate foreign exchange purchase/sale transactions and ensure the full-fledged convertibility of the Belarusian ruble under current operations.

In this regard, on March 31, 2011, the Board of the National Bank of the Republic of Belarus made a decision not to impose any additional restrictions in the field of foreign exchange regulation and control.

With a view to keeping sustainable balance of payments, the Government of the Republic of Belarus asked the Russian Federation and the Anti-crisis Fund of the EurAsEC to provide stabilization loans in the total amount of USD3 billion.

At the same time, in order to balance the economy and reduce the adverse balance of foreign trade the Government and the National Bank of the Republic Belarus are developing the programs of economic measures and structural reforms involving privatization of state property.

In order to carry out planned reduction of the budget deficit of the government agencies from 3 to 1.5% of GDP, the measures designed to increase the receipts and decrease the expenditures of the budget are being taken.

In addition, the inflow of foreign direct investments in the amount of USD6.4 billion is expected in the current year. At that, the main task set by the President of the Republic of Belarus before the National Bank and the Government envisages prevention of further decrease in official gold and foreign exchange reserves and increasing them by the end of 2011 to the amount equal to the three-month average imports (USD9–10 billion), that ensures the required level of the country's economic security.

Actual achievement of the sufficient level of gold and foreign exchange reserves will be the starting point for the negotiation with the international rating agencies the upgrading the sovereign credit rating of the Republic of Belarus to a qualitatively higher level.