History repeats itself: Belarus seeking IMF financial support

Minsk is again striking the International Monetary Fund for a loan; the Belarusian authorities even created a joint working group to prepare a road map for ‘structural reforms’. The IMF will not grant a credit without guarantee of reforming anymore. Will Minsk start the movement in the direction of economic reforms?

Now we are facing the same situation as a four-year-old one, when the government was also negotiating with the International Monetary Fund.

“But later, in early 2017, Lukashenka clinched on a profitable oil and gas deal with Putin. Now the same may happen: if they manage to reach an agreement with Russia, the cooperation with the IMF will not start,” Andrey Yeliseyeu, a representative of the EAST Research Centre, believes.

The Fund will definitely not extend loans in exchange for promises. Notably, the West no longer calls on Belarus to conduct prvatisation; but it is necessary to put state-owned enterprises on a market footing.

“Let these state-owned firms operate in accordance with market rules; ministries should not hinder other players’ movements in this sector. To facilitate this, state property and its management should be separated,” economist Ales Alyakhnovich told Belsat.

But if independent managers take reins, what will make them raise wages, give all profits to the state treasury and support lossmaking collective farms?

“Of course, too radical measures will not affect all public enterprises. In theory, Belarus is gradually leaning towards this. The state budget for 2019 has provided for reducing subsidies to state-owned enterprises,” Andrey Yeliseyeu said.

What will happen if the reforms are not carried out? According to the recent IMF report, in this case, the country’s economy will stagnate. Even if Russia compensates for the rise in oil prices, the growth of the Belarusian economy will make only two percent next year. Paying back foreign loans will also come as a heavy burden upon the budget.

“Over the past five years, from 2014 through 2018, the Belarusian economy has not grown. Its cumulative increase amounted to less than one percent. Meanwhile, the economy of neighbouring Poland has been up more than 20 percent,” Alyakhnovich stressed.

Minsk has been introducing forced small market reforms for about 10 years. Within this period, it the role of small businesses was increased, while the state’s share in the economy fell by 10%; but it still equals to about 50%. However, if one continues at this pace, the Belarusian economy may become market only in 20 years or more. There is a chance that reforms will go faster – if the Kremlin does not grant money to Alyaksandr Lukashenka.

Alyaksandr Papko, belsat.eu

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