Every reason to believe

Belarus and IMF launch discussions on new credit programme

By Timofey Kirillov

“We have a long way to go. We need to further discuss macro-economic policy in Belarus and agree on structural reform,” the Head of the IMF Mission to Belarus, Chris Jarvis, has told journalists. As for the possible volume of credit support, Mr. Jarvis explains that this will depend on the balance of payments and the terms of the new programme, which will probably run for three years, bringing a number of major structural changes. In particular, the banking sector will need to set up a well-functioning development bank to provide loans under state programmes. As regards privatisation, the IMF recommends paying attention to the functioning of the National Agency for Investment and Privatisation.

Speaking of the stabilisation of the currency market, the IMF recommends that Belarus shift to a floating exchange rate. Its experts make no forecasts regarding possible exchange rate figures.

Mr. Jarvis notes that the National Bank of Belarus acted correctly in stopping foreign currency interventions in March. However, he believes that, if there is a transition to a floating exchange rate, some intervention may be necessary — to avoid major rate fluctuations. He adds that the floating exchange rate will prove efficient if the National Bank toughens its monetary and credit policy and raises interest rates. Moreover, budget-tax policy needs to be tightened. Other IMF recommendations include the increase of rates paid on deposits at banks, the achievement of a non-deficient budget and non-raising of salaries.

Mr. Jarvis stresses that, according to IMF assessments, Belarus is solvent and can service its external debt. “We receive affirmations from the Government and the National Bank that the debt will be redeemed. There are serious grounds which allow us to believe this to be true,” he adds.

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