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Belarus will not receive the Eurasian credit. And Western money?

Беларусь не получит евразийский кредит. А западные деньги?

Three and a half years ago, Belarus has agreed with Eurasian Fund of stabilization and development of the second credit program to $ 2 billion. However, successfully completed its first credit program, failed. The last tranche of the Eurasian loan Belarus will not receive.

Conditions are met but no money

Eurasian Foundation stabilization and development established in 2009 by Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. The stated objective of the Fund is to Finance projects “in order to overcome the negative crisis consequences” in the Eurasian space and promote integration of the economies of the EAEU.

The first time the Belarusian authorities appealed to the Fund in 2011 to get the financial loan. In the end, was enclosed credit program at $ 3 billion, which Belarus was to receive six installments. The loan was granted with “the purpose of stabilization of the balance of payments and competitiveness of economy of Belarus”.

However, neither the first nor the second problem really wasn’t resolved. The Belarusian authorities, while continuing in 2012-2014 to stimulate domestic demand through wage growth and investment lending, threatened the balance of the balance of payments. Simultaneously, steps to improve the competitiveness of the economy (in particular, through privatization) was not done.

As a result, in 2014, the EFSR noted that 10 of the conditions of the loan program failed and closed the program. The sixth tranche of the loan of Belarus is not received.

According to BelaPAN, the same end and the second loan program, which Belarus signed with the EFSR.

In 2016-2018, Belarus received from the Eurasia Foundation, six of the seven tranches of the second credit program at $ 1.8 billion. Was the last, the seventh tranche of the loan ($200 million), negotiations on which were conducted this year.

However, not destiny. “The program closed with the EFSR, the seventh tranche will not be”, — told BelaPAN the source in financial circles.

The period of availability of credit was to expire at the end of June. The Belarusian side hopes that the Council will allocate EFSD or the seventh tranche, or prolong its availability. However, as it turns out, neither the first nor the second did not happen.

Why did this happen?

Declared that the primary purpose of the second loan programs with EFSR — Belarus to assist in creating conditions “for the country’s sustainable growth through improving the quality of economic policy and structural reforms”.

The fact was that any significant changes, apart from the fact that for the first time in the history of Belarus in 2015-2019 to ensure financial stability and low inflation in the economy.

However, most likely, this was not the reason why the Council EFSR refused to give our country the seventh tranche of the loan.

Western loan Belarus will receive is Eurasian?

After numerous adjustments to the conditions of the Eurasian program it was not an awkward position for the Belarusian authorities. Therefore, the conditions of the seventh tranche of Belarus, according to BelaPAN, complied, but the money was never received.

According to financial analysts, the reasons behind this development are political, not economic.

“EFSD is similar to an international financial institution, but at the same time, politically engaged. If the country that asks for money, there is a conflict with the main shareholder of Fund — Russia, financial matters are in limbo” — said in comments to the BelaPAN the senior analyst “Alpari” Vadim Iosub.

Between Moscow and Minsk for more than a year the conflict lasts, the reason for which was the tax maneuver in the oil industry. Belarus insists on compensation of negative consequences, and the Russian side does not agree. Minsk is seeking to reduce gas prices, but Moscow sees no grounds for this.

“Now we are working on a program for the deepening of integration with Russia. Only after its signing the Russian side is ready to move on to discussing other issues, including those relating to the provision of financing in Belarus”, — told BelaPAN the source in financial circles.

Against the background of difficult relations with Russia, Belarusian authorities once again drew attention to the possibility of receiving Western funding.

Formal negotiations about a new loan program with the IMF is not renewed, but actually meeting authorities monetary Fund and the world Bank are becoming more frequent.

In October the Belarusian delegation was at the autumn session of the IMF and world Bank this week in Minsk begins work mission of the Fund, and the beginning of next year is expected to have one.

“Terms start loan program with the IMF relate to the structural reforms, which involve unpopular decisions. It is therefore likely that the active phase of negotiations between Belarus and the IMF will start after the elections”, — said in comments to the BelaPAN the senior analyst of Forex Club Valery Polkhovsky.

According to the expert, in case to negotiate with Russia on key issues is not forthcoming, the probability of the start of reforms in Belarus, which without them tipped stagnation, high.

“It is clear that reforms are not always popular, but it is the moment when you need to pass through them, as the old model will not generate the desired growth rate of the economy. With this in mind, the prospect of an agreement with the IMF about a new loan program is quite realistic,” — says Polkhovsky.

The expert suggests that the government will seek to choose a cautious reform scenario, which will not lead to a sharp increase in social tension.

“The government will choose the scenario of reforms, which will not lead to shocks,” suggests Polkhovsky.

Another point of view, which gives financial analysts, is that the position of the Western creditors (the IMF and the world Bank) will not be accepted by the Belarusian authorities, and, consequently, to negotiate for funding will not succeed.

“Western creditors believe that the root of the problems of the Belarusian economy is the inefficiency of the public sector and if not addressed, the problems of economic growth will always be”, — said Iosub.

At the same time, he continues, the head of state the position of Western creditors have not yet shared.

“At the level at which decisions are made, yet sincere belief that the proposals of the Western creditors to the country needs. There is dissatisfaction with the slow pace of growth, but it is unknown how long it will take to make the economic situation has led to a change in the convictions of the authorities”, — concluded Iosub.

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