Ministry of Finance expects the IMF to compromise

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April 22, 2016 17:56

The Ministry of Finance of Belarus expects that loan programme with the IMF will be resumed.

The Minister said the Belarusian economy reform programme, implementation of which is a precondition for the cooperation with the IMF, coincides on the majority of issues with the anti-crisis programme of the ACF of the EurAsEC. Minister Kharkovets noted that the IMF expected comprehensive actions by the government to adjust macroeconomic policies. However such actions could lead to social costs and economic losses. He added that the amount of the IMF loan will be calculated based on the needs of funding of the current account deficit. The latter will depend on the economic growth rate in the second half of the year, i.e. to what extent imports will reduce and exports will increase. The Minister assessed the prospects for cooperation with the IMF as overall positive.

Comment

The government seriously overestimates the readiness of the IMF to compromise on the loan programme for Belarus, and is will not adjust macroeconomic and social policies significantly.

The IMF’s position is unequivocal it lists a single exchange rate and normal functioning of the currency exchange market as the main precondition for cooperation with Belarus.

The IMF’s position is unequivocal it lists a single exchange rate and normal functioning of the currency exchange market as the main precondition for cooperation with Belarus.

The Belarusian government believes that the single exchange rate would be achieved next year as it requires devaluation and/or significant foreign currency resources for interventions at the foreign currency exchange in order to maintain the new or existing rates.

The head of the Finance Ministry believes the measures undertaken in Belarus at the moment are hard enough already: Belarus has been reducing the money supply and tightening the monetary policy, so far the budget is executed with a surplus, the country actively accumulates resources to be spent on social welfare for the population in the autumn, when utility costs to be increased significantly.

“The issue is that we implement this policy during a longer period of time in order to lower social costs”, the Minister said.

“The issue is that we implement this policy during a longer period of time in order to lower social costs”, the Minister said. “We need to talk about finding a compromise between our positions. It is reasonable for us to ask the IMF to take into account social policies implemented in the country, rather than pursue purely fiscal and macroeconomic goals”.

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.

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