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30 Oct 2012

Belarus to ask new credit from IMF

Negotiations with IMF

On October 29, the last day of the International Monetary Fund (IMF) mission in Belarus Prime Minister Mikhail Myasnikovich met with David Hoffman, the head of the IMF delegation. As noted by Hoffman, because of "a long meeting," he almost missed the briefing for journalists. Based on the appeared soon after the press release of the Belarusian government, it is clear that official Minsk is trying to aggressively persuade the IMF to give a new loan. The Fund though remains adamant in its demands.

Mikhail Myasnikovich said that Belarus had successfully implemented recommendations of the IMF to stabilize the economy and can therefore count on a new program with the Fund. "We believe that Belarus considering the hard work done by us can count on a program with the IMF – Myasnikovich said - I think it should be reported to the executive directors and to the political leadership of the fund."

The mission of the IMF experts had been working in Belarus for 11 days. It then presented draft outcome document to the Belarusian government. "By supporting in principle findings of the mission, I would like to note that for some items, maybe you did not have enough information, and in this situation there are some conclusions which are not completely objective", - said Mikhail Myasnikovich.

David Hoffman (left) and Mikhail Myasnikovich 

According to him, the IMF experts had the opportunity to make sure that the government and the National Bank consistently ensure stabilization of the economy, their actions are fully in line with the recommendations of the previous mission of the IMF. In particular, there was stabilization on the currency and consumer markets. "We have reached a balanced budget, driving the growth of international reserves. If you look at our trade balance, it is also positive, and even if you use different methods of calculations even with different approaches, you will see we are quite successfully export products for industrial purposes and agriculture products ", - said the Prime Minister.

The International Monetary Fund, in turn, expects the Belarusian government first to plan deep structural reforms to begin negotiations on the new stand-by credit. "We are continuing discussions with the authorities on the economic policies and prospects for the new program," - said the head of the IMF mission to Belarus David Hoffman at a briefing in Minsk. "In the negotiations on a possible new program still requires the consent of all officials, including at the highest level, on a package of economic policy measures, which will then receive sufficient support from all IMF member countries," - he explained.

David Hoffman also said that the government of Belarus has not yet determined the amount of the loan it needs under the new possible stand-by program. According to him, the Belarusian authorities have not yet addressed the IMF for a postponement or rescheduling commitments of Belarus on the loan in 2009-2010. The head of the IMF mission to Belarus said that the Belarusian authorities had formally requested the Fund for a new loan in May 2011. "We understand that dialogue [with the Belarusian authorities] is still going on, the request is still valid," - he said.

David Hoffman said that the recommended fund key structural reforms include the liberalization of prices, the strengthening of private property rights, the development strategy of restructuring and privatization of state enterprises, and the introduction of targeted social benefits to protect the most vulnerable part of population of Belarus.

IMF experts offer the Belarusian authorities to "spend more decisive policy measures" in order to avoid pressure on inflation and the exchange rate. David Hoffman also recommended "restraining lending under government programs", "prevent the growth of wages faster than the growth rate of output, because such growth may not be sustainable and will lead to additional pressure on prices and the exchange rate."

IMF mission led by David Hoffman started in Belarus on October 18 and finished on October 29. The purpose of the mission - the country's third post-program monitoring the Belarusian economy. After the end of the mission, the report will be discussed by the IMF Executive Board.

Belarus implemented a program stand-by, which was supported by the IMF loan of $3.6 billion, from January 2009 to April 2010. The Belarusian side has repeatedly expressed interest in a new program with the International Monetary Fund.

In 2013-2014, Belarus will face a peak of payments on foreign debt. Each year, it will be necessary to return to $3 billion. The official Minsk would like to refinance the old debt through a new loan from IMF.


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