No date for the third tranche of the EurAsEC for Belarus yet

April 22, 2016 18:07

On April 3, ACF experts held the following round of consultations with the Belarusian authorities regarding the updated draft of the letter of intent, which was handed over to the ACF on March 20.

Comment

The creditor insists on tightening of the monetary policy by the authorities of Belarus in order “to curb credit expansion and buildup of international reserves to reach the economically safe level with positive real interest rates”, as well as on tight fiscal policy. It implies that:1) the ACF disagrees with the Belarusian authorities that the crisis is over; 2) the ACF is against the mitigation of the monetary and fiscal policies, which the Belarusian authorities need to stimulate the GDP, to hold the harvesting campaign, to increase incomes of the population in the view of the upcoming parliamentary campaign, etc; 3) the ACF insists on increasing the reserves up to three months worth of imports (currently it corresponds to the volume of two months of imports), which means to increase the reserves by USD 3-4 billion.

The second stumbling block is privatization. Belarus committed to ensure not less than USD 2.5 billion of annual proceeds from privatization in 3 years (2011-2013). Belarus closed 2011 with the sale of Beltransgaz, and during December-February the Belarusian government tried to coordinate a list of companies, the sale of which would ensure the implementation of the privatization commitments in 2012. However last week, Lukashenko refused to agree on privatization lists with the real (the ACF) and potential (the IMF) creditors. In fact, the privatization process is returning to its traditional mode, when the sale of government property is coordinated via the Presidential office (via direct negations with Lukashenko).

Therefore the fate of the third tranche is still unknown, at the same time, the Head of the National Bank, Mrs. Ermakova, is convinced that both remaining tranches will be received before the end of the year.