IMF forecast for cuts forecast for Belarus’ economic growth went downward

telegraph.co.uk

The International Monetary Fund (IMF) has revised its forecast for growth of Gross Domestic Product in Belarus.

In July, the IMF assessed Belarus’ GDP at 0.9 percent, while the past April it was expected that it will grow by 1.6 percent this year, informs BelaPAN.

The IMF marks slow growth, persistent external imbalances, high risks are high tilted to the downside.

With weak Russian growth weighing on external demand and with domestic demand slowing, only 0.9 percent GDP growth is expected this year, while inflation is forecast to remain around 16 percent, note the IMF experts. 

The IMF also outlined that Belarus was projected to have a current account deficit 8.75 percent of GDP in 2014 “on weak external demand, low competitiveness, and a policy mix that continues to be too loose.” 

The institution urged the Belarusian authorities to deepen structural reforms to eliminate constraints to higher and sustainable growth. 

It expressed concern about what it described as high pay growth in Belarus in recent years, and warned that pay growth should be kept “aligned with productivity improvement to avoid fueling inflation and regain competitiveness.” 

The IMF also called on the Belarusian government to scale back foreign exchange intervention to allow greater exchange rate flexibility needed to strengthen competitiveness. 

As “EuroBelarus” Information Service earlier reported, IMF still recommends Belarus to introduce deep economic reforms. The mission of the International Monetary Fund stayed on a visit in Minsk between April 17-28 and its goal was to hold consultations with the Belarusan authorities.

David Hofman, head of the IMF mission to Belarus, stated that more decisive policy changes are urgently needed to mitigate the risk of a disorderly adjustment of external imbalances. “In particular, to contain domestic demand and reduce imbalances, directed lending needs to be reduced much more rapidly than currently envisaged and wages should not be raised further this year,” he is quoted saying so.

IMF recommends the Belarusian government to reduce low-interest lending and refrain from raising pay, as well as to increase Belarus’ international reserves and not allow them to decline, David Hofman said.