Belarus banned issuing retail loans denominated in foreign currencies to shore up the ruble and curb risks to bank assets as the economic slump erodes borrowers' ability to repay debt, the central bank said Sunday in a statement on its web site.
The new law, which won't apply to small businesses, will be in effect until Jan. 1, 2011, the bank said. It will be in place "until the country's economy stabilizes," it added.
The country, whose pipelines handle a fifth of Russia's gas shipments to Europe, devalued its ruble in January, pegging it to a basket of dollars, euros and Russian rubles. The central bank last month widened its exchange rate band for the ruble to 10 percent of its target basket to make the currency more flexible.
The new measure will "contribute to defending and assuring the stability of the Belarussian ruble, including its purchasing power compared to foreign currencies, and will also increase confidence in the national currency," the central bank said.
Ukraine's parliament voted in June to ban foreign-currency loans to households and the early repayment of loans denominated in foreign currencies to nonresidents. Last week, Hungarian lenders rejected a proposal from the Magyar Nemzeti Bank aimed at reducing the risks of foreign-currency credits.
Belarus' short-term debt was 290 percent of its reserves, the World Bank said June 23, predicting that its economy will contract 3.3 percent this year and the current-account deficit will reach 7.8 percent of gross domestic product.
"The worsening economic conditions in Belarus are likely to translate into a deterioration in banks' financial fundamentals," Moody's said July 14.