Ministry of Finance expects the IMF to compromise

The Ministry of Finance of Belarus expects that loan programme with the IMF will be resumed.

The Minister said the Belarusian economy reform programme, implementation of which is a precondition for the cooperation with the IMF, coincides on the majority of issues with the anti-crisis programme of the ACF of the EurAsEC. Minister Kharkovets noted that the IMF expected comprehensive actions by the government to adjust macroeconomic policies. However such actions could lead to social costs and economic losses. He added that the amount of the IMF loan will be calculated based on the needs of funding of the current account deficit. The latter will depend on the economic growth rate in the second half of the year, i.e. to what extent imports will reduce and exports will increase. The Minister assessed the prospects for cooperation with the IMF as overall positive.

Comment

The government seriously overestimates the readiness of the IMF to compromise on the loan programme for Belarus, and is will not adjust macroeconomic and social policies significantly.

The IMF’s position is unequivocal it lists a single exchange rate and normal functioning of the currency exchange market as the main precondition for cooperation with Belarus.

The IMF’s position is unequivocal it lists a single exchange rate and normal functioning of the currency exchange market as the main precondition for cooperation with Belarus.

The Belarusian government believes that the single exchange rate would be achieved next year as it requires devaluation and/or significant foreign currency resources for interventions at the foreign currency exchange in order to maintain the new or existing rates.

The head of the Finance Ministry believes the measures undertaken in Belarus at the moment are hard enough already: Belarus has been reducing the money supply and tightening the monetary policy, so far the budget is executed with a surplus, the country actively accumulates resources to be spent on social welfare for the population in the autumn, when utility costs to be increased significantly.

“The issue is that we implement this policy during a longer period of time in order to lower social costs”, the Minister said.

“The issue is that we implement this policy during a longer period of time in order to lower social costs”, the Minister said. “We need to talk about finding a compromise between our positions. It is reasonable for us to ask the IMF to take into account social policies implemented in the country, rather than pursue purely fiscal and macroeconomic goals”.