The awaited tranche of the EurAsEC ACF loan may be delayed

The Eurasian Development Bank (EDB) expects an adjustment letter from Belarus regarding its intent for the USD 3 billion loan, allocated in 2011, in order to make a decision about the following tranche.

Based on the updated assessment of the economic performance of Belarus in 2011, the EDB will draft its recommendations on the provision of the following, third tranche for Belarus (USD 400 million). These funds are very important for Belarus, both in terms of stable operation of the foreign exchange market and as replenishment of the gold reserves.

However, the leadership of the EDB has not yet set a date for the completion of the assessment, as well as the date of the third transfer (Belarus expected it by the end of February). So far neither the date of the meeting of the Board of the Fund has been set, nor has the adjustment letter been sent by Belarus, which means, the money will not come to Belarus soon.

This is bad news for the country as after receiving the letter the Fund may raise questions and discussion about its contents.

Therefore the dependence of Belarus on the decision of the Fund is obvious: the Government has to ask, explain, demand, etc. It is possible that the Fund may require the implementation of new, unforeseen reforms by the government.

At the same time, any delays are undesirable for the Belarusian leadership, as there are reasons to suspect them of manipulation with macro and banking statistics in January. February statistics could be worse and in March the decision to resume emission support for the largest state-owned enterprises, construction and agriculture industries could be made, in principle, contrary to the requirements of the Fund. Therefore it is in the best interests of Belarus to coordinate all issues as soon as possible and to obtain the long-awaited tranches, while Russian interest (Fund) is to delay negotiations and payments.