Leu Marholin: Everyone but Lukashenka knows that economy cannot live at the expense of loans

Non-reformed Belarusan economy can exist only as a leech that worms it way to Russia.

Belarus won’t get a loan in 2015 and can hardly expect help from Russia, at least, before the elections. This opinion was voiced by the economist Leu Marholin by results of the wok of the IMF mission in Minsk. IMF experts were working in Minsk from July 8 till 15 and were discussing the policy of Belarus’ authorities and plans of reforms, as well as studying the possibility of realization of IMF program in their support.

Despite the existing tradition, IMF mission refused to give the concluding briefing. IMF declares its readiness to start negotiations on allocating the loan as soon as in 2015; however, without the concrete plan of reforms finance experts won’t even bother themselves with negotiations.

The economist Leu Marholin described the results of the IMF mission’s work and prospects of Belarusan economy in the interview with the “EuroBelarus” Information Service.

- IMF mission described negotiations with the official Minsk as constructive. However, it was for the first time that the experts of the Fund didn’t even hold a traditional briefing by results of negotiations – did they have nothing to say?

- I think so. It is a typically diplomatic move – to say that negotiations were constructive and even friendly. However, if some concrete agreements were reached, IMF representatives would voice them in public.

It is very hard to negotiate with the Belarusan authorities. IMF is used to dealing with market economies, but Belarus is not one of them. Financial experts often have hard times understanding Belarusan arguments and methods of managing the economy sector.

- IMF doesn’t exclude the possibility of starting negotiations about allocation of loan to Belarus in 2015. What should the government do for the IMF to start talks with it?

- Belarusan government should provide a program of reforms, which should at least minimally correspond to IMF demands. IMF is signaling to Minsk: prepare a proper program of reforms and if we have a subject of discussion we can start negotiations this year.

By the way, IMF mission didn’t say that it is ready to provide Belarus with a loan this year. Even if the negotiations start in 2015, they are going to be long; even if their outcome is positive, IMF will demand the most detailed report.

- Thus, Belarus shouldn’t expect a loan of $3.5 billion this year…

- Not even in the next few years, I think. Even if the Belarusan government elaborates a plan of reforms within a month that would be positively received by lenders, the first tranche of $500 million will come next year in the best-case scenario.

IMF insists on holding reforms within 6-18 months, while Belarus tries to get a longer term; each stage of reforms gets a concrete sum of money, and after each stage IMF demands a detailed report to decide on allocating the next tranche after.

- Belarusan authorities ask Russia for $3 billion. Are there any hopes to get at least a part of this sum?

- It is a little bit easier and harder at the same time since it is rather a political question, not economical. Although recently Russia has started being more reasonable with allocating loans since financial authorities are interested in the return of loans, sooner or later. However, it is Putin who takes decisions in Russia and the decisive factor when allocating a loan might become political.

On the other hand, after elections Russia shouldn’t worry: when Lukashenka will “elegantly” win again, why bother and help his economy?

I doubt that Lukashenka will get billions of dollars even from his allies.

- We don’t need to wait for loans. At the expense of what will Belarusan economy exist?

- Everyone except Lukashenka understand that economy cannot live at the expense of loans, since they are a temporary phenomenon, which pursues certain goal. If a program of radical market reforms was really adopted, which resulted in getting Belarusan economy to a new level, then we could hope for a loan. But it isn’t happening, since anyone gets fed up with it in the end.

- But people need to be paid salaries and enterprises should be supported...

- Loans cannot support industry. The government adopted measures for supporting MAZ and MTZ by giving them a delay in paying VAT for 3 months. But it doesn’t work like that.

A loan means support of budget and all budget processes. Of course, salaries to employees of state enterprises should be paid; but loans don’t give anything more than that.

- How the economy will survive then?

- I don’t know. Non-reformed Belarusan economy can exist only as a leech that worms it way to Russia. If Russia recovers, we might recover, too. But situation will be worsening anyway: our competitiveness fell even at the Russian market. We are no longer living in late 90s: now Russia doesn’t need our equipment and won’t need Belarusan food in future. We neither settled in European markets nor in Asia.

And I cannot imagine what is awaiting Belarusan economy after the elections.

- Are there any internal reserves for supporting livability?

- There are almost none. Look at the statistics: each month a number of enterprises that are delaying salaries and a number of loss-makers are growing, so why should they suddenly become profitable? Economy is degrading, people are moving abroad…

The only hope is that people will wake up and say: enough of that! But when this moment comes and whether it will come at all is not a question of economy.