IMF Asks Belarus to Limit Lending of Government Plans
05.11.2012 / 11:49
The International Monetary fund (IMF) has advised Belarus to limit the lending of the Government proposals. The IMF Mission Head David Hofman has revealed this before the reporters subsequent to the mission s accomplishment of work on 29th Oct. in Belarus.
The Belarusian Government’s adoption of meticulous economic policy in late 2011 has facilitated trimming down of the inflation and alleviating the currency market in the first half of 2012.
Hofman observed, nevertheless, the initial success was followed by the fast reduction of the refinancing rate and rapidly rising salaries in real terms. Once again the factors now lead to the emergence of pressure on prices and the exchange rate. Due to the pressure it is necessary to take decisive and consistent reactive economic policy measures to keep the economy stable.
For this reason, the IMF has greeted the elevated obligatory reserves lifted by the National Bank of the Republic of Belarus (NBRB) in September and the NBRB s latest statement on declaring a probable hike in the refinancing price in the near-term.
The IMF Mission Head remarked, We believe that the National Bank should start raising interest rates on the central bank s operations immediately in order to keep them sustainably positive in real terms in order to secure the protection of Belarusian ruble depositors. We also welcome the intention of the government to balance the state budget in 2012 and 2013. It meets stabilization goals.
According to Hofman, it is vital to adopt a wide-ranging and attuned economic strategy in synchronization with all the top officials of the Government. He has emphasized on giving priority to cut inflation and bring firmness than that of the official growth aim for GDP. Hofman said, Keeping down the lending available to government programs should be one of the measures. It will comply with the monetary management policy, contribute to the growth of lending while limiting risks for the state budget. It is extremely important to prevent salaries from growing faster than the output of products because the growth cannot be sustaining and will lead to more pressure on prices and the exchange rate.
The IMF Mission, headed by David Hofman, began work in Belarus on 18th Oct. to complete the job on 29th Oct. The Mission was intended to carry out the third post-program screening of the country s economy. The IMF Board of Directors will discuss the Mission's report. The Mission s Belarus trip was aimed at providing an occasion to the Belarusian authorities and IMF officials to talk about the economic policy of the Government and the outlooks on the growth of national economy in 2013.
The country has executed a sustained program via IMF support of $3.6 billion amid January 2009 and April 2010. The Belarusian authorities have expressed their eagerness to launch a new plan once again.