Useful credit for stable growth

Council of Eurasian Fund for Stabilisation and Development approves $2bn loan to Belarus
Council of Eurasian Fund for Stabilisation and Development approves $2bn loan to Belarus



The money will come in seven tranches over three years, with the first tranche of $500m already received. The Fund notes that Belarus has realised all conditions for the first tranche and that remaining sums will come as necessary conditions are met: two tranches are scheduled for 2016, three for 2017, and the last in 2018.

“The loan will support a programme of reform by the Government and the National Bank, which comprises two major blocks of economic politics: the creation of macroeconomic prerequisites for economic growth; and market reforms to ensure sustainability,” explains the Eurasian Development Bank. “The aim is to achieve macroeconomic stabilisation — including regarding inflation and gross international reserves (under conditions of price liberalisation).”

The programme envisages strengthening control over monetary proposals, conducting a flexible foreign currency policy and achieving a deficit-free budget. Fulfilment of the programme’s monetary-credit parameters will be ensured via continued monetary targeting, and flexible foreign currency rate formation (under a mechanism of double auction). The latter has proven efficient in the fight against inflation, while helping stabilise the foreign currency market and gold-and-currency reserves.

Reforms will include a significant increase in public contributions towards housing utility tariffs (up from 30 percent in late 2015 to 70 percent in late 2017). It’s hoped that residents will use services more ‘rationally’ when paying more of the cost. Reduced cross-subsidisation should enhance the Belarusian economy’s competitiveness. To ensure more efficient use of commercial banks’ resources and reduced liquidity and credit risks, directive crediting is to be cut by 1 and 2 percent of GDP in 2016 and 2017. Alongside price liberalisation, other measures enhancing the potential of economic growth will include the lifting of directive parameters for state enterprises, the reduction of the accumulated gap between real salary growth and labour efficiency, measures to enhance entrepreneurial initiative, the reduction of regulative expenses for businesses and the promotion of privatisation.

By Vyacheslav Ivanov
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