Look before you leap
Belarus entered the external financial market not long ago but has already recommended itself as an honest and reliable partner
Belarus entered the external financial market not long ago but has already recommended itself as an honest and reliable partner, successfully servicing debts and repayment commitments. We have a modern economy and tangible stability but unskilled application of loans may disturb this stability. A careful approach is required, stresses the President.
From November 9th to 19th, International Monetary Fund representatives were in Minsk, discussing a prospective programme of economic measures with the Government and the National Bank, for IMF loan support.
While the money would be welcome, caution needs to be observed, as the IMF requires a range of reforms to be in place before allocating funding: reforms which can affect the most socially vulnerable citizens: children, pensioners and those working in the budgetary sphere.
The President clearly outlined his position, stating, “There would be no problem in harmonising the programme proposed by the IMF, since it is reasonable. Sooner or later, we will need to act. However, the terms and consequences must be considered. I’m not guided by populism but nor do I wish to offend my people to please someone.”
Mr. Lukashenko asserted that state social directness remains vital. He underlines that reform will only be undertaken where it improves the existing system and when we will be convinced that a rise in utility tariffs is affordable to ordinary people. He added, “As for privatisation, we must be sure that it will be honest, clean, open and, especially, competitive. Regarding raising the pension age, the IMF strongly recommends that we do so; as I said before the elections, I’m convinced that we need to do so, and gave reasons. But I also said that we must consult with people. I’ve instructed the Belarusian Presidential Administration to find an algorithm. I’m sure that educated and sensible Belarusian people will support us when we have figures and facts to offer. If we don’t act today, the burden will lie with our children.”
As to whether an IMF loan would be beneficial, Prime Minister Andrei Kobyakov explains, “We need to attract IMF resources and secure the best repayment terms possible: a $3bn loan at an interest rate of 2.28 percent, repayable over ten years.”
The Head of State agrees that the loan terms are good, being better even than those offered by the Russians, and that the loan size is adequate.
However, dry macroeconomic figures pale into insignificance if they adversely affect social welfare. According to the Deputy Prime Minister, Vasily Matyushevsky, before taking a decision, we need to consider carefully. He stated, “We’ve undertaken deep and serious analysis. The major conclusions are that we need to look further into the consequences of this programme. Various aspects are already evident but we need to return again to the issue of utility tariffs, which is a very sensitive topic. Then, we’ll adopt a final decision.”
Alexander Lukashenko, President of Belarus:
We should act exclusively in the interests of our own nation. Even if the IMF doesn’t support us and doesn’t understand us, there’s nothing tragic in this. We’ll continue working with or without them. Our people and our state are most important, so this should guide our actions. Nothing should be done on the spur of the moment, or we’ll risk damaging the country, offending the nation and destabilising the situation. We’ll risk losing our Belarus.
By Maxim Osipov