2012.03.19 | Belarus eager to pay off old debt with IMF’s $3.5bln loanBelarus would wish to draw from the International Monetary Fund (IMF) a $3.5 billion loan and use the money to pay back an old debt to the IMF.
Chief of Belarus’ National Bank Nadezhda Yermakova made a statement to that extent in an interview with BelTA news agency, the mouthpiece of the Belarusian government.
Belarus once borrowed from the IMF a stand-by loan of some $3.5 billion and has recently turned to the IMF for a new loan to the tune of $7 billion.
“We would like to gradually draw $3.5 billion to refinance the old debt,” Yermakova said.
The chance of getting a new loan from the IMF has a lot of political strings attached, the NBB chief said. “The IMF representatives, who visited the country, openly admit that, to a great extent, it is a matter of political issues and the willingness of IMF members to work with Belarus on a new programme,” the NBB chairwoman said.
It is a matter of image promotion for Belarus to draw a new IMF loan, Yermakova said. “Anyhow we can do without them, but we need to earn the money we owe to the IMF. However, there is a another issue of great significance – the country’s image,” Yermakova said. In her opinion, being an IMF partner is a boost to a country’s image. “However, I think there will be other international institutions to cone to Belarus: the World Bank and the EBRD.
The NBB chief said she disagreed with some of the recommendations of the latest IMF mission with focus on wage growth restrictions.
Although the mission appreciated the efforts of the National Bank to tackle the financial crisis in the country, their advice to restrain wage is out of tune with the government’s vision of proper welfare standards, Yermakova said. “How can one recommend worsening standards of living?” she said.
“Salaries in the government sector and in state-owned enterprises are classified as state expenditures. If we hold back those salaries, we will artificially produce a budget surplus. Why should we do that, if people need to get their salaries paid?” Yermakova said.
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