"We expect Belarusian banks’ asset quality to weaken in the next 12-18 months, as falling exports, the economic recession and the depreciation of the Belarusian ruble will reduce borrowers’ ability to service their loans," Moody’s Vice President and Senior Analyst Alexander Proklov stated.
Moody’s forecasted that Belarusian banks’ capital adequacy ratio — a measurement of the bank’s financial risk — will decline to 13.5 percent over the next 12 months.
Non-performing loans — loans whose debtor has not made a payment for at least 90 days — could account for nearly 8 percent of the banks’ total loans in the next two years, Moody’s added.
The Belarusian economy is faltering largely because of the falling number of exports to Russia, the country’s largest foreign market, Moody’s pointed out. Russia accounts for about 50 percent of Belarus’ exports.
In January, the dollar value of Belarusian exports reached its lowest level since 2009 and declined 20 percent from the previous year, according to the National Statistical Committee of Belarus.
Moreover, 60 percent of Belarus’ total bank deposits are foreign-currency dominated, leaving banks especially vulnerable to turbulent currency exchange rates. Earlier this month, Belarus’ Ministry of Statistics and Analysis also blamed falling oil prices for the country’s steady economic decline.
On Monday, the Council of the Eurasian Fund for Stabilization and Development (EFSD) approved the provision of a new $2 billion loan to Belarus to support reforms the government hopes will stabilize the economy.
