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Too early for new EurAsEC Anticrisis Fund program for Belarus

MINSK, 29 August (BelTA) – The Eurasian Development Bank, which manages assets of the EurAsEC Anticrisis Fund, believes that it is not yet time to talk about a new Anticrisis Fund program for Belarus. The statement has been made via a press release of the Bank, which quoted the relevant remarks by EDB Deputy Chairman of the Board Sergei Shatalov, BelTA has learned.

According to Sergei Shatalov, it is necessary to analyze results of the current stabilization program first. It was launched in 2011 and has not been completed yet. The sixth tranche of the loan has yet to be transferred by the end of the year within the framework of the current program, provided the control parameters the program outlines are secured. In addition to evaluating the fulfillment of the sixth tranche’s parameters it will be necessary to assess the overall results of the stabilization program in association with the government and the National Bank of the Republic of Belarus.

According to the Deputy Chairman of the Board of the Eurasian Development Bank, the measures taken by the Belarus government and the central bank and backed by the current program of the Anticrisis Fund have produced obvious positive results. Foreign currency exchange rates have been unified, emission-based lending at the expense of resources of the central bank has been stopped, and preferential lending available via government programs has been noticeably reduced. “These measures in addition to improved conditions of trade in energy resources and the favorable foreign economic situation were the key factors that pulled the country out of the year 2011 balance of payments crisis and have helped tame inflation. The loan provided by the Anticrisis Fund has helped Belarus lay down the foundation for further stabilization of the economy. However, stabilization has not been completed and should be continued because it is vital for reaching key tasks the country faces – structural reforms, modernization and enhancement of the competitive ability of Belarusian enterprises on foreign markets,” said Sergei Shatalov.

The Eurasian Development Bank believes that the present situation in the Belarus economy is stable. The National Bank stays on top of the situation on financial markets and the banking system, the execution of the state budget shows a surplus for now. However, specialists are concerned about the heavy reliance on lending within the framework of government programs. At the same time the volume of preferential lending within the framework of government programs is now considerably lower than it was in H1 2011, before the stabilization program of the Anticrisis Fund was launched. “We welcome it because if such operations are excessive, they entail faster inflation and a weaker balance of payments,” stressed Sergei Shatalov. “It is also necessary to continue cutting down directive-based lending. What is the optimal level of lending to the economy as a whole is the top question, not only lending via government programs but market avenues as well”.

An increase in lending to the economy is a control indicator in accordance with the letter of intent, which determines stabilization guidelines for 2013 and has been approved by the government and the National Bank of the Republic of Belarus. The increase in lending has been limited to 1.5% per month, which seems to be sufficient for economy growth as well as further reduction of the inflation rate and the enhancement of the country’s balance of payments. “The former two goals are very important, they should be constantly monitored. The indicator has been approved by the Eurasian Development Bank, the Belarus government and the central bank on the basis of official macroeconomic projections,” stressed the source. In January-July 2013 the lending growth rate was above the limit and totaled an average of 1.98%. Concerns have been voiced about the increase in real salaries staying ahead of labor productivity, resulting in an increase in monetary overhang and pressure on international reserves.

“It is too early to make conclusions. We have yet to see the situation develop in Q3 and Q4 2013,” summarized Sergei Shatalov. “The Eurasian Development Bank stays in touch with the government and the National Bank for the sake of assessing the situation promptly”.