## Republic of Belarus: Financial System Stability Assessment

_IMF Staff Country Reports, September 21, 2016_

## Source details

**Canonical URL:** [Republic of Belarus: Financial System Stability Assessment](https://www.imf.org/en/publications/cr/issues/2016/12/31/republic-of-belarus-financial-system-stability-assessment-44280)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/republic-of-belarus-financial-system-stability-assessment-44280/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/republic-of-belarus-financial-system-stability-assessment-44280/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/republic-of-belarus-financial-system-stability-assessment-44280/bundle-manifest.json)

## Bibliographic details
- Published: September 21, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475537192.002

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### Overview
- This paper presents an assessment of financial system stability in Belarus.
- The state-dominated financial sector of Belarus confronts several critical challenges.
- Deep and long-standing structural problems and negative external spillovers are distorting the credit channel and overall financial stability.
- Financial sector contingent liabilities are on the rise, accentuating an already weak fiscal situation.
- The government is directing a large proportion of loans from state-owned banks to unhedged state-owned companies.
- Foreign currency liquidity risk is high.
- Transition to independent and risk-based oversight of the financial sector is urgently required.

### Key findings
- State dominance of the financial sector is a central structural vulnerability.
- Credit channel distortion is driven by directed lending to state-owned companies.
- Financial sector contingent liabilities are increasing and worsening fiscal vulnerabilities.
- Foreign currency liquidity risk is assessed as high.
- Independent and risk-based oversight of the financial sector is absent and urgently needed.

### Risks and vulnerabilities
- Contingent liabilities from the financial sector are rising, adding pressure to an already weak fiscal position.
- Concentration of lending: a large proportion of loans from state-owned banks are directed to unhedged state-owned companies, increasing credit and liquidity risks.
- External spillovers and persistent structural problems are amplifying domestic financial-stability risks.
- Foreign currency liquidity risk remains elevated.

### Policy recommendations and required actions
- Move toward independent and risk-based oversight of the financial sector.
- Reduce directed lending by state-owned banks to unhedged state-owned enterprises to mitigate credit and contingent liability risks.
- Strengthen fiscal buffers to absorb rising financial sector contingent liabilities.
- Address foreign currency liquidity vulnerabilities through appropriate supervisory and market measures.

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## Content in this bundle

- **Republic of Belarus: Financial System Stability Assessment; IMF Country Report 16/299; July 25, 2016**
  - [Republic of Belarus: Financial System Stability Assessment; IMF Country Report 16/299; July 25, 2016 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16299.pdf.md){rel="alternate" type="text/markdown"}
  - [Republic of Belarus: Financial System Stability Assessment; IMF Country Report 16/299; July 25, 2016 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16299.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/republic-of-belarus-financial-system-stability-assessment-44280_