The IMF's Credit to Be Wasted or Spent on Debts

The Belarusian government is not going to take reforms.

To take concrete discussion of the programme with the IMF is the task of official Minsk based on results of the visit of the Fund's mission which started yesterday.

According to Economy Minister Uladzimir Zinouski, most of conditions required for a new credit of $3 billion are being implemented. Just one small thing is lacking. Belsat reports how much this credit is needed and what the obstacles are for its raising.

The IMF wants the phased transition to full redemption of tariffs for housing and public utilities by population to occur more rapidly, therefore, the cost of utility services can somewhat increase in price before the end of the year. This is one of fundamental contradictions which remained between the IMF and official Minsk, the Economy Minister stated.

Admittedly, last year the same employee stated the agreement with an international creditor had been reached at all significant points, but then negotiations had unexpectedly failed.

"At first sight, all levels of economic power understand the need of reforms and everyone supports them. But in the most unexpected moment the head of the state says that we need no reforms," Vadzim Iosub, senior analyst of Alpari, draws attention.

According to Lukashenka, he resists those requirements of the IMF which are aimed at decrease of living standards of the population. He says he understands the necessity of such steps, but insists on the right to do it in phases.

"I have not denied anything. Neither tariffs, nor wages. But it can't be done on the spur of the moment," Lukashenka believes.

Since that moment the government has decreased salaries and increased rates of the housing and public utilities and retirement age without any programme of the IMF. Meanwhile, there is still no any programme. Head of the Fund's mission in Belarus Peter Dolman explained earlier that they considered precisely those measures of the government insufficient which, on the contrary, must lead to increase of living standards.

"We call to carry out comprehensive overhauls for stabilization of the economy and provision of economic growth and growth of well-being in the medium term" the head of the IMF's mission explains.

According to the senior analyst of Alpari, non-acceptance of requirements related to restructuring of public enterprises, privatization, and other measures aimed at state's deviation from the manual control of the economy.

The government needs the IMF's credit to cover foreign debts which only in the public sector equal to $3 billion a year. One third of the sum is planned to be paid from the revenue from export oil duties. Other part will be paid from current tranches of the $2-billion credit given by the Eurasian Found for Stabilization and Development. And the last part is to be paid at the expense of the IMF's credit. In case of failure to receive it, our foreign exchange reserves may decrease by quarter this year.

Political observers say that Lukashenka hopes the complex geopolitical situation in the region will force western countries to affect the IMF so that it could grant a credit based on political reasons – not for reforms, but for disinvestment. It will be clear on June 30 (current mission of the IMF completes its work in Belarus) whether such hopes are reliable or not.