National Bank will not increase money supply

The National Bank of Belarus (NBB) will not increase the money supply to ensure meeting the GDP growth target for this year, NBB head Nadzeya Yermakova told reporters in Minsk on Wednesday.

"We have no right to issue more money and will not do this," Ms. Yermakova said.

According to the National Statistical Committee, the GDP growth rate fell from 5.3 percent in 2011 to 2.2 percent in the first 10 months of 2012, whereas the government’s target for the year, imposed by Alyaksandr Lukashenka, was an increase of five to 5.5 percent.

While speaking Tuesday to Prime Minister Mikhail Myasnikovich, Economy Minister Mikalay Snapkow and Finance Minister Andrey Kharkavets, the Belarusian leader directed that the GDP growth target should necessarily be met, and Mr. Myasnikovich promised to him that all of his directives would certainly be fulfilled.

When asked last week about this year’s slowdown in Belarus’ GDP growth, Mr. Myasnikovich told reporters that economic growth should be real. "It is not the quantity that matters, but the quality," he noted.

"We should have real economic growth," Mr. Myasnikovich said. "We believe that the Belarusian economy ensures recovery and the main goal is still to have steady real economic growth."
It is currently difficult to measure GDP growth, he noted. "Last year we had a very high inflation rate and it remains high," he said. "We expect a rate of about 20 percent for this year. The high inflation certainly affects the accuracy of GDP and GDP growth estimates. But if we look at components, we’ll see that we do have economic growth: the population’s purchasing capacity increases, a steady performance is shown by the industrial and agricultural sectors, which have year-on-year growth rates of 6.5 to seven and six percent, respectively. This is real economic growth. Yes, we have some decline in construction, but it is not because we should not build something but because we should build within the finances and not inflate bubbles."