19 March 2024, Tuesday, 13:34
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Leu Marholin: Govt Persuaded IMF To Give Something In Advance

Leu Marholin: Govt Persuaded IMF To Give Something In Advance

Officials allegedly told Lukashenka about the need for reforms and at the same time persuaded the IMF to give something in advance.

The International Monetary Fund suspended negotiations with Belarus because of the lack of support for necessary reforms.

As the IMF representative William Murray said, this primarily referred to the state-owned enterprises and the municipal sector.

Herein, it is worth noting that the International Monetary Fund was ready to allocate Belarus a loan of $ 3 billion at 2,28% per annum on condition of the liberalization of the Belarusian economy. However, the Belarusian authorities preferred to abandon the proposed reforms, and to solve the financial problems by placing Eurobonds for $ 1,4 billion at 7,1-7,6% (!).

On the financial side, the loss is undeniable. What then motivates the authorities' unwillingness to carry out reforms?

"The main requirements of the IMF for the adoption of the credit program were: the cessation of cross-subsidization, when the population pays for utilities less cost, and enterprises - more, and the end of support for the inefficient public sector," - economist Leu Marholin explained in a comment for ucpb.org. – As for the state sector, it was necessary to change the management scheme for enterprises at the first stage (take the enterprises from the ministries and transfer them to a single body that will achieve profitability, and reform or close the unprofitable enterprises). In the future it was planned to proceed with their privatization.

The first can cause discontent of the people, and the second can undermine controllability by labor collectives. Both are a direct threat to Lukashenka's regime. However, the situation in the economy required serious decisions, so the government tried to play a double game: convince Lukashenka of the need for reforms, and persuade the IMF to give something in advance. But Lukashenka quite clearly stated several times during the last year that he would not allow any reforms, and the IMF already had a sad experience in providing a loan "for promises" and now it did not make concessions.

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