Belarus and IMF began discussion on new financial program

Belarus and IMF began discussion on new financial program

2011-06-13 23:19:17 GMT+7 (ICT)

MINSK, BELARUS (BNO NEWS) -- Belarus and the International Monetary Fund (IMF) on Monday began discussions for agreeing in a new program in order to achieve financial stability in the former Soviet state, the BelTA news agency reported.

"We have begun talks on the new program. We have a long way to go. We need to further discuss the macroeconomic policy in Belarus and to agree on structural reforms," said Chris Jarvis, head of the IMF mission in Belarus.

Jarvis added that so far there is no date for launching the fore mentioned program but remarked that measures are needed as soon as possible to stabilize the economic situation in the country.

The IMF official added that the new program will be designed for three years and will imply a number of major structural changes. The amount of the IMF loan has not been set and will depend on the balance of payments and other factors.

The IMF advised Belarus to set up a well-functioning Development Bank, which will provide loans under state programs. In addition, Jarvis recommended paying attention to the National Agency for Investment and Privatization for facilitating an effective privatization.

On the other hand, the Belarusian government and the National Bank assured the IMF that the country's finances are solvent. In this way, the IMF determined that Belarus is able to pay off its foreign debt.

Belarus' financial crisis worsened last May when the National Bank of Belarus (NBRB) set the official exchange rate of the Belarusian Ruble against the U.S. dollar at Br 4,930 per $1, a devaluation of over 50 percent.

The IMF recommended Belarus to use a floating exchange rate in order to achieve stabilization of the exchange rate of the Belarusian ruble instead of using a fixed exchange rate.

"We believe that a floating exchange rate is better than a fixed one. The current multitude of exchange rates in Belarus leads to all kinds of economic distortions," added Jarvis.

Belarus applied for a $1-billion loan from Russia and a $2-billion loan from regional organization Eurasec to stabilize the currency market. Belarusian President Alexander Lukashenko recently announced that he is negotiating a loan between $3.1 and $6 billion from Russia.

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