Belarus Hoping for New Credits :: Charter'97 :: News

Belarus, which most of the foreign investors stay away from, is seeking ways to improve business relations with the international financial organizations. “Reforms… Hate that word. We aren’t used to market economy,” – repeated over and over again Alexander Lukashenko, addressing his 10-million nation. Afterwards, in September, the Minsk tsar, who rules over the country since 1994, decided to hold elections. He confirmed his authority for another 5 years – sometimes through tricks or force, but also with the help of his followers, who are looking up to Russia in fear of reforms, which are synonymous to robbery to them. These folks – village peasants and old pensioners, were promised by the new old president that the government would never expose them to an economic shock therapy. However, now we are witnessing signs that the Belarusian economy is crumbling to pieces. Nobody can say for sure for how long this will last. One thing is clear, though: even the most cautious actions will shake Lukashenko’s throne.

Failed plans

Among western circles one may hear an opinion that Minsk is manifesting serious interest towards the development of its economic policy. The government has ostensibly come to a conclusion that well-balanced relations with international financial organizations will finally justify themselves. So now it moved on to the fulfillment of the IMF program, designed for more than half year. For doing so the country hasn’t been promised any credits. Nonetheless, the government associates certain hopes with this project, as far as upon its accomplishment it may apply for another IMF program and another portion of credits. Six years ago IMF and the International Bank for reconstruction and development ceased earmarking funds to Belarus, due to a substantial misunderstanding with Minsk.

At the moment IMF refrains from any concrete forecasts, let alone promises. Head of the IMF mission for Belarus Mr.Horton has recently warned Belarus not to fall deeper into an economic abyss. In fact, the inflation rate, which amounted to 100% last year, reached in the first six months of 2001, according to official statistics, the level of 22,4%, although the need for structural reforms stays as acute as ever. The situation in the real economy deteriorated, believes Horton. Even the official data, which many foreign experts call exaggerated, confuse the authorities. In the first half of the year the gross domestic product rose by 3% in relation to the analogous period last year. This is 1% less than claimed by the planning economy. Likewise the rise of the manufacture turned out to be 4% below the expected level. Meantime, imports dropped by almost 12%, whereas export grew by 4%. In first place, there fell the volume of import from the countries, that aren’t part of the Commonwealth of independent states (CIS), which curtailed their imports to Belarus by 20%. The country’s trade balance remains largely negative.

Russian capital on the run

In order to spare the economy from ultimate collapse, Belarus, which the investors stayed away from for a few years now, needs an urgent influx of means. Minsk can no longer brush off this reality. The government has already declared its intentions to speed up the privatization process, ensure control over the state budget and cut off financial backing of unprofitable companies. Moreover, by December they must halt control over the prices of 95% of all commodity. The remaining first necessity stuff will still be state-controlled, taking into account the misery in which the country’s populace dwells, reads the justification of this measure. So far we don’t know whether any concrete steps will be embarked on at all, for void promises have been quite numerous in the past.

Seemingly, at least when it comes to privatization, one may test the readiness of the Belarusian authorities for real action, although now it is more of an involuntary act. Russian capital, according to many sources, upheld Lukashenko at the presidential ballot, both politically and economically. Now it demands to be paid interest. For instance, “Lukoil” oil concern is negotiating with Minsk over the creation of a joint venture, which would include the “Naftan” refinery and the “Polimir” plastic-producing factory. “Siberian aluminum” holding is dying to get control over the MAZ Minsk car plant. Other Russian giants, such as “Itera” and “Slavneft” also take great interest in the Belarusian industry.

West looks for alternative ways

In the meantime, the West is apparently willing to find new ways of building its relations with Belarus – after it passed certain sanctions against it, protesting Lukashenko’s undemocratic policy. The International Bank for reconstruction and development has recently allotted to Minsk a $22,6mln loan for the reduction of energy consumption tariffs in schools and hospitals. Now it is also elaborating a new strategy, within the framework of which Belarus will receive in 2002-2004 a loan, worth $260mln, designed to protect environment, fight poverty, AIDS and assist small business. Politically explosive areas, such as restructuring and privatizing large state companies, remain a secondary issue on their agenda.

Another crucial item will be a decision of the European Bank for reconstruction and development concerning its future collaboration with Minsk, after the OSCE declared the course of the presidential elections unsatisfactory. In this regard, EBRD president Lamiere forwarded a letter to Lukashenko in which he threatened him with the rupture of relations with Belarus. However, in spite of the shortage of democracy in Belarus, OSCE called on the international community to revise its policy toward Minsk and not to isolate population. The Bank’s board is set to pass their final conclusions on Belarus. This decision will no doubt be politically motivated.