## Press Release: IMF Approves Second STF Drawing for the Republic of Belarus

_IMF News, January 31, 1995_

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## Bibliographic details
- Published: January 31, 1995

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### Approval and Financing
- The IMF approved a second drawing under the systemic transformation facility (STF) for the Republic of Belarus equivalent to SDR 70.1 million (about US$103 million) to support the Government's 1995 economic reform program.
- The first disbursement under the STF was SDR 70.1 million, approved on July 28, 1993 (Press Release No. 93/31).
- The Republic of Belarus joined the IMF on July 10, 1992; its quota is SDR 280.4 million (about US$ 413 million), and its outstanding use of IMF credit currently totals SDR 70.1 million (about US$ 103 million).

### Background: economic conditions entering 1995
- Since independence, Belarus adopted a cautious approach to economic reform that did not maintain economic activity, standards of living, or price stability.
- Progress of reforms since the first STF drawing was slow, though many elements of a comprehensive reform program were approved by Parliament in October 1994.
- Real GDP contracted by 21.5 percent in 1994.
- Industrial production in the last quarter of 1994 is reported to have been at about the level of a year earlier.
- Monthly consumer price inflation was 31.3 percent in December 1994, reflecting excessive credit expansion.
- Overall budgetary performance in 1994 was significantly better than expected due to higher revenues and savings in outlays driven by lack of external financing.
- The 1994 external current account deficit widened to 11.6 percent of GDP as prices for energy imports moved towards international levels.

### The 1995 Program: objectives and macro targets
- Main objectives:
  - Stabilize the economy by reducing the monthly rate of inflation to 1 percent by year-end.
  - Narrow the external current account to 5.7 percent of GDP.
  - Make decisive steps towards creating a market economy.
- Fiscal policy:
  - Limit the fiscal deficit to about 3 percent of GDP.
  - Limit domestic financing of the deficit to no more than 2 percent of GDP.
- Monetary policy:
  - Pursue a tight monetary policy by limiting the expansion in base money and bank credit.
  - Maintain positive real interest rates.
- Note: Although the program was designed to meet the requirements for a stand-by credit, consideration of a request for a stand-by has been delayed by a lack of external financing.

### Structural reforms (policy measures)
- Price liberalization and adjustment of remaining administered prices for utility services:
  - Food prices to reflect market forces.
  - Domestic energy prices to reflect their full import costs.
- Removal of remaining impediments to full unification of the foreign exchange market and lifting of barriers to exports.
- Credit allocation to be made increasingly on market terms.
- Acceleration of privatization, focusing on both small and large state enterprises.

### Addressing social costs
- The Government intends to continue financing an adequate social safety net to shield vulnerable groups of the population against the impact of price liberalization.

### Risks and the challenge ahead
- If fully implemented, the program should contribute decisively to stabilizing the Belarussian economy and reforming it along market lines.
- A substantial curtailment in external financing could seriously jeopardize the program's objectives and excessively delay tangible improvements in the Belarussian economy.

### Republic of Belarus: Selected Economic Indicators
- Real GDP (percent change):
  - 1993: –9.5
  - 1994: –21.5
  - 1995*: –7.0
- Monthly consumer price inflation (end of period):
  - 1993: 46
  - 1994: 31
  - 1995*: 1
- External current account balance (deficit –) (percent of GDP):
  - 1993: –7.2
  - 1994: –11.6
  - 1995*: –5.7
- Fiscal balance (deficit –) (percent of GDP):
  - 1993: –8.3
  - 1994: –1.5
  - 1995*: –3.2
- Sources: Belarussian authorities; and IMF staff estimates.
- *Program

*International Monetary Fund — Press Release No. 95/9 (January 31, 1995).*

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## References

- [Republic of Belarus and the IMF](http://www.imf.org/external/country/BLR/index.htm)
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_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9509_