Belarus drafted a new letter of intent for the ACF of the EurAsEC

The Anti-Crisis Fund (ACF) of the EurAsEC received a new draft of a letter of intent from the Belarusian Government, approval of which is a pre-condition for the transfer of the third tranche (USD 440 million) of the USD 3 billion stabilization loan for Belarus.

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Following the visit of EDB experts to Minsk in January this year, the Belarusian government had to prepare an updated letter of intent concerning economic reforms in the country. It is important for Belarus to receive the next tranche from the ACF not only in financial terms, but also in image terms.

Accordingly, as anticipated, Belarus will seek a compromise with Russia about what and how to reform. In the near future, during a following visit of the ACF experts to Minsk, consultations with the Belarusian government concerning the adjustments of the stabilization program in 2012 will continue. Among the priorities of the updated programme the EDB names further reduction of inflation, balanced approach to reduction of interest rates, reduction of the current account deficit and increase of the international reserves. The content of the letter drafted by Belarus is not disclosed.

If approved, the Anti-Crisis Fund will determine the date of the meeting of the Council of the ACF, which could make the final decision about the allocation of the third tranche of the loan to Belarus.

Russia will provide financial support to Belarus however unlike in 2010, she will not allow for irresponsible economic policies. Fulfillment of the requirements set by the EurAsEC in monetary policy, privatization, and tariff policy will not allow the government “boosting” the economy to projected 5% GDP growth and increase nominal and real incomes.

The authorities will have to seek for new enemies, responsible for the failure of the good intentions of the government. Most likely, the government will try to avoid fulfilling its obligations within the ACF loan programme once again.