No IMF credit for Belarus in 2012
Head of the IMF mission in Belarus Chris Jarvis said that the allocation of a new loan for Belarus depended on the willingness of the authorities to reform the country and on the position of the member countries of the Fund.
He emphasized that the IMF considered Belarus as solvent, i.e. able to repay the debt to the IMF and other external creditors on time.
The opinion of the IMF was not unexpected, since the Fund’s position was always unequivocal and transparent. The IMF put forward significant conditions for a new loan, in the first place, the implementation of structural reforms. However, the attitude of the Presidential Administration about reforms is well-known. That is why the IMF representative said diplomatically, that “Program negotiations would require an agreement among all policy makers, including at the highest level”. Chris Jarvis also did not deny a politically motivated intrigue with a new loan, “We would also need to be confident that a new program would be supported by the IMF s membership”.
At the same time, the IMF did not say a final and irrevocable “no” to Belarusian attempts to receive a loan. Mr. Jarvis said that, given the low reserves, Belarus could nevertheless attract new loans. At the same time, he clearly stated that the IMF will not get involved in the refinancing of the old loans, but “considers the balance of payments in general”. All in all, the position of the Fund is as follows: basically, we do not mind, however firstly you need to this, then that… and even if you meet all these requirements we cannot guarantee anything.
At the same time, this loan would be of extreme importance for Belarus: in terms of meeting the obligations within the old debts, and in terms of saving its reputation vis-à-vis other countries/investors and international organizations. Today all policy makers of the country understand this, except Mr. Lukashenko.
Gross foreign debt of Belarus in 2011 increased by USD 5.627, or 19.8%, and on January 1, 2012 amounted to USD 34.028. At the beginning of 2012, the gross external debt reached 62.3% of the GDP against 51.6% of GDP on January 1, 2011. Gross external debt per capita on January 1, 2012 increased by USD 600, or 20%, to USD 3595 against USD 2995 on January 1, 2011. According to the National Bank of Belarus, over the last year USD 6.321 billion has been spent on servicing the external debt, accounting for 11.6% of the GDP, or 13.5% of exports of goods and services. Out of that amount, USD 5.405 billion was spent to repay the principal debt and USD 0.916 billion on interest payments.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.