Talks about the IMF loan: result is predetermined

In 2013, Belarus will have to pay off the IMF ‘Stand-by’ Programme’s loan at SDR 1,113 million. Belarus is under pressure to agree on debt refinancing or obtain another IMF loan, as in 2013 a three-year period with high foreign debts payments will begin. However, the Belarusian Government’s reluctance to listen to the IMF recommendations predetermines an unsuccessful outcome in these negotiations.

On September 12^th the National Bank Head Mrs. Yermakova said that talks with the IMF would be resumed in October 2012.

Belarus has circa USD 9 billion of foreign debt to repay in 2013-2015. Moreover, a significant amount will be spent on paying off debts in other sectors. These expenses could be covered by successful foreign trade and by attracting foreign direct investment in Belarus. People’s savings should not be considered as a source of foreign debt repayment, given the unpredictability of the population’s actions.

The projected exports growth rate in 2013 provokes experts’ skepticism: July’s foreign trade output demonstrated an extremely high degree of dependence on energy products, therefore it is difficult to regard foreign trade as a major source to repay external debt. Most probably, the debts will be repaid using new loans and direct investments.

The IMF recommendations for 2012 were to limit GDP growth to a reasonable rate (3%) and to hold back on wages growth. Although the IMF recommendations worked out formally, the government has demonstrated a commitment to maintaining the population’s social well-being regardless of the economic performance.

The IMF has some experience of cooperation with Belarus, and the new programmes could have been carried out. However, Belarus has breached its obligations under the previous programme and it has political disagreements with the countries, which influence the decision-making concerning new loans. As a result, negotiations in 2012 will hardly be successful.

Conclusion: Belarus’ desire to participate in the new IMF ‘stand-by’ programme is not enough. The country’s leadership must demonstrate a commitment to reforms proposed by the IMF and demonstrate some real results, only then a positive decision would be taken. At this stage, the authorities’ actions leave no chances for a positive outcome in the negotiations with the IMF.