Belarus interested in the New IMF Standby Program
Belarus is interested in implementing the new IMF standby program with corresponding financial support. However, cooperation can be resumed only on condition that Belarus stabilizes its relations with the EU and the USA. Belarus also has to implement serious structural reforms in the economy and extend its program on the privatization of state assets.
Belarus would like to resume a dialogue on prospects for the allocation of a second standby program with corresponding financial support from the IMF, said Belarusian Prime Minister Mikhail Miasnikovich during his meeting with the new head of the IMF mission to Belarus David Hoffman on June 6.
Hoffman noted that he is replacing the previous head - Chris Jarvis. The purpose of this mission is to become familiar with the situation and prepare ground for the work of the third post-program mission that is scheduled to begin in October 2012. David Hoffman has previously worked in the European department of the IMF.
We believe that allocation of a new backup IMF loan would allow the residents of Belarus to pass the peak of forthcoming payments on foreign debt as normal. It should be noted that, as of April 1, Belarus’ total external debt amounted to USD 33.727 billion, which is equal to 80.1% of GDP on an annualized basis.
At the same time, cooperation between the IMF and Belarus is possible only if political relations are normalized between Belarus and the USA and the EU, which are the main members of the IMF. Moreover, the Belarusian authorities have to confirm their strong willingness to carry out serious structural and market reforms in the economy, including the extension of the privatization program of state property in the short-term as well as the medium-term.
For reference. In February 2009 - June 2012, Belarus made debt-service payments on the backup IMF loan totaling USD 303.6 million. As a result, the outstanding balance of principal of IMF loan declined from USD 3.484 billion as of January 1, 2012 to USD 3.351 billion as of July, 1 (subject to exchange rate fluctuations of SDR against the U.S. dollar). The next payment of interest and commission payments is scheduled in August this year.
According to Decree No. 221 of June 23rd, 2017, deadlines for the completion of foreign trade operations have been extended from 90 to 180 days for exports and from 60 to 90 days for imports. Delayed payments entailed a fine up to 2% of the transaction cost for each day of the delay, but could not exceed the total cost of the transaction. Most companies, when working with new counterparties, require a deferred payment for a period of three to six months. Due to the new regulation, violations are likely to reduce in number, so as the fines. Trade enterprises are likely to expand the assortment list due to the supply of new products in small lots, and the assortment list of exported Belarusian goods could expand, too. The new terms for completing foreign trade transactions would enable medium and small companies on the foreign trade market, exporters and importers are likely to grow in number and the geography of export-import operations could expand.