IMF Completes Fourth Review Under Stand-By Arrangement with Belarus, Approves US$662.9 Million DisbursementPress Release No. 10/119
March 26, 2010
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Belarus’s performance under an economic program supported under a Stand-By Arrangement (SBA). The 15-month, SDR 1.62 billion (about US$2.45 billion) SBA was approved on January 12, 2009 (see Press Release No. 09/05) and on June 29, 2009 the size of financial package provided under the SBA was increased to an amount equivalent to SDR 2.27 billion (about US$3.44 billion) (see Press Release No. 09/241).
The completion of the fourth and final review enables the immediate disbursement of SDR 437.9 million (about US$662.9 million), bringing total disbursements under the program so far to an amount equivalent to about SDR 2.27 billion (about US$3.44 billion).
Following the Executive Board's discussion on Belarus, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:
“Belarus has made good progress in recovering from the economic crisis and performance under the Stand-By Arrangement has remained satisfactory. Output has stabilized, inflation is declining, and reserves have increased. However, the current account deficit increased in 2009 and public and external debt levels rose markedly, underscoring continued external vulnerability.
“Belarus’s response to the latest oil import price shock has been strong. The increase in domestic prices of oil products and reduction of output by the oil refineries will reduce the need for subsidies. These measures, together with strong revenue, exchange rate, and credit policy measures already taken, are expected to offset a large part of the balance of payments and fiscal impacts of the oil price shock. Further measures may be needed over the medium term if the deterioration of terms of trade turns out to be permanent.
“Macroeconomic policies have been generally appropriate. Fiscal policy has served as an important anchor to the economic program, with the deficit in 2009 being less than 1 percent of GDP. The decision to cut lending under government programs and reaffirmation of the binding nature of the lending limit will make more financial resources available to private business, creating conditions for gradually reducing market interest rates. The recentering of the exchange rate band at end-2009 and the depreciation of the rubel against the currency basket have supported external adjustment.
“Financial sector reform has made important headway. The establishment of a special financial agency will relieve the commercial banks from the obligation to provide loans for government programs, making the banking system more commercially oriented and facilitating bank privatization. However, it is important to step up efforts in other structural reform areas, including privatization, measures to attract foreign capital and reducing government intervention in the economy.
“In addition to pursuing prudent macroeconomic and financial policies to reduce external vulnerability, structural reforms aimed at improving productivity will be essential for Belarus to restore high and sustainable growth rates. The Fund, in collaboration with the World Bank and other international financial institutions, stands ready to support Belarus with its reform efforts”.