Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
December 31, 2008
The IMF announced plans to lend about $2.5 billion to Belarus to support the country's efforts to restore economic stability.
Natural gas plant in Nesvizh, Belarus: country's economy has recently shown signs of overheating (photo: Viktor Drachev/AFP/Getty Images)
GLOBAL FINANCIAL CRISIS
The loan, which could receive final approval in January, would support a program of policies to help Belarus adjust to shocks from the global financial crisis.
The loan, to be extended as a 15-month Stand-By Arrangement, is subject to final approval by the IMF's Executive Board. The loan agreement could go before the Board in mid-January, and Belarus would be able to draw on about $800 million immediately after Board approval.
IMF Managing Director Dominique Strauss-Kahn said in a statement that Belarus had been hit hard by the global crisis and faced a difficult economic situation. Adverse terms of trade movements, falling demand from trading partners, and difficulties in accessing trade and other external finance had led to a decline in the country's economic reserves.
External shocks
"The authorities are now taking strong actions to arrest the decline in reserves, restore economic stability, and lay the groundwork for a resumption of high growth," Strauss-Kahn added. "The Fund-supported program will help Belarus achieve an orderly adjustment to the external shocks that it is facing and offer protection against its most pressing vulnerabilities."
The announcement of a staff-level loan agreement for Belarus takes place against the backdrop of a worsening global economy. In its latest assessment of the world economy, the IMF cut its forecast for global growth by ¾ percentage point to 2.2 percent for 2009. A growing number of emerging market countries have sought financial assistance from the IMF in recent months, and new loans worth more than $40 billion have been approved for Ukraine, Iceland, Pakistan, Hungary, and Latvia.
Strauss-Kahn said the policy program agreed with Belarus's government includes a strengthened monetary and exchange rate policy framework, fiscal restraint through cuts in public investment and directed lending by banks, and strict public-sector wage restraint. The social safety net would be strengthened to protect the most vulnerable.
"The strong measures that the authorities are taking justify the exceptional level of access to Fund resources—equivalent to around 420 percent of Belarus' quota in the IMF—and deserve the support of the international community," Strauss-Kahn said.
Comments on this article should be sent to imfsurvey@imf.org
