The National Bank of Belarus (NBB) has issued a directive that imposes a ban on the issuance by banks of foreign currency loans to individuals, except for small business owners with sole entrepreneur status.
Under the directive, dated July 14, the ban will come into force on the date of the official publication of the directive (when the directive is posted on the site of the National Register of Regulations) and will be in effect until January 1, 2011.
"Given the fact that the citizens of our country receive their pay in Belarusian rubels, as well as the possible fluctuations of the exchange rates of foreign currencies, the distribution of foreign currency loans to individuals poses a high risk of failure to repay such loans," the National Bank says in a statement.
In addition, according to the statement, the NBB considers it a priority to phase out payments in foreign currency between residents in Belarus. The ban will help ensure the stability of the Belarusian rubel and increase confidence in the national currency, the statement says.
Since restrictions on the use of foreign currencies have both positive and negative effects, the ban is temporary and will be in effect until the economic situation in the country stabilizes, the NBB says.
The ban will start applying to overdraft lending a month after the official publication of the directive.