Belarus : Financial Sector Assessment

Abstract

The Financial System Assessment (FSA) is
 based on the work of the joint International Monetary Fund
 (IMF)-World Bank Financial Sector Assessment Program (FSAP)
 updates that visited Belarus from September 17, 2007 to
 September 30, 2008. The principal objective of the FSAP
 update was to assist the authorities in evaluating progress,
 assessing potential vulnerabilities of the financial system,
 and determining future challenges. The IMF and the World
 Bank, an aide-memoire, technical notes on a detailed
 assessment of compliance with Basel Core Principles (BCP)
 principles of Banking supervision, summary assessment of
 compliance with the International Organization of Securities
 Commissions (IOSCO) principles, and access to finance, and
 background notes on stress-testing and the insurance sector
 have been submitted to the authorities. Overall, the
 supervisory framework for banks has significantly improved
 since the 2004 FSAP, though concerns remain in some crucial
 dimensions. The new Banking code was passed in 2006, and
 secondary legislation is updated on a regular basis. While
 the majority of recommendations made by the 2004 BCP
 assessment have been adopted or are in process of
 implementation, the independence of the National Bank of
 Republic of Belarus (NBRB) Board and bank supervisory
 processes continue to pose operational and reputation risks.
 As well, the capital adequacy framework needs substantial
 improvement to more accurately reflect the structure of the
 banking sector. Supervisory actions could be significantly
 enhanced by imposing adequate corporate governance
 requirements for banks.