Dmitry Kruk: At the moment no specific arrangement concerning IMF loan was discussed

IMF hasn’t discussed any draft program with Belarusan authorities yet. It was stated on October 28 at the briefing in Minsk by David Hofman, head of a visiting staff team of the IMF.

David Hofman explained that greater exchange rate flexibility was needed to maintain the competitiveness of Belarusian exports. If the exchange rate is not flexible, prices and wages in the country rise faster than in other countries, which makes exports less competitive, BelaPAN reports him saying.

He added that more measures were needed to improve the economic situation amid a widening current account deficit.

Mr. Hofman blamed the widening deficit on a combination of external factors, including slower economic growth in Russia and shrinking exports of potash and petroleum products, and a too fast wage growth and an increase in directed lending.

The IMF expert called for limiting wage growth and taking other measures to contain domestic demand.

Let us recall that the IMF team arrived in Belarus earlier this month to conduct the fifth Post-Program Monitoring review of the Belarusian economy, following the Stand-By Arrangement with the IMF that expired at the end of March 2010.

As to the new program, it is not under discussion now; however, there is such possibility in the future. “Deeper structural reforms and support of countries-members of the IMF are required for that”, - said David Hofman, summing up the work of yet another mission.

Dmitry Kruk, the researcher and economist from the Belarusian Economic Research and Outreach Center (BEROC), in the interview with the EuroBelarus Information Service shared his views on the results of the IMF experts’ work.

- Why IMF is not even considering the new program aid program for Belarus?

- IMF stated more than once that it is ready to start the discussion of the new program, but only if “structural reforms” approved by high authorities are carried out. It seems that IMF and Belarusan authorities have different understanding of what structural reforms are.

- Do you mean the National Bank and Council of Ministers common actions plan?

- Yes.

- The recommendations of each IMF mission are basically the same: to carry out “structural reforms”.

- It will continue until IMF records changes in the Belarusan economy.

Each year IMF analyses situation in the economy of each country, suggests priorities for the development of economic policy. IMF won’t change its stance before situation in Belarusan economy changes; it is rather stable.

- How much will IMF non-cooperation deteriorate the financial situation of official Minsk?

- IMF didn’t make a decision to stop cooperation; however, before it considers the issue of a new loan to our country, Belarusan authorities have to sign a respective Memorandum. As our government didn’t take any formal steps, IMF didn’t start discussion of a new program either.

At the moment no specific arrangement concerning IMF loan was discussed. Extra money inflow is of vital importance for stabilization of macro-economic indicators.

However, as now IMF aid is inaccessible, we have to look for other sources to replenish currency.