The Future of the System of Directed Lending (in Russian)

This paper deals with directed lending in Belarus and aims at selecting the best option for reforming it. The study visualizes main specific features of directed lending in Belarus and the channels of its impact on economic growth. Directed lending causes allocative inefficiency, lower capital productivity, and inefficiency in financial intermediation, which dampens economic growth. Furthermore, in a short-term perspective, the practice of directed lending may generate shocks at the money market, challenging macroeconomic stability. In this paper, a list of policy recommendations has been elaborated in order to eliminate/mitigate adverse effects of directed lending and provide a “road map” of quit from this vicious practice.