Success in Moscow, failure with the IMF
The International Monetary Fund (IMF) has no plans to negotiate another loan for Belarus before the end of 2011 due to the lack of progress in macroeconomic performance. For the time being the gold reserves of the country will cover the servicing of the debts and reduce the pressure on the currency market.
The International Monetary Fund will not enter into talks with the Belarusian authorities this year to discuss their request for a bailout loan, said the Belarusian representative of the IMF Natalya Koliadina. “While the authorities have implemented some measures which could help [in] achieving macroeconomic stability, we have not seen sufficient evidence of strong commitment, particularly at the highest level, to macroeconomic stabilization and structural reforms,” she said.
As anticipated, Lukashenko chose the less “dependent”, in his view, way of filling the funding gap.
The IMF loan could have been larger than the current revenues from Russia however it was preconditioned with economic and political requirements unacceptable for Lukashenko. Lukashenko is afraid that the implementation of the IMF requirements of structural reforms, fiscal and social policies will immediately reduce the dependence of the economic players from the President and will result in recession, unemployment and de-industrialization. At the same time, he believes that financial flows from Russia will strengthen his authority in the short term.
The sale of the “Beltransgaz” to “Gazprom”, lower prices and debt restructuring, a USD 1 billion loan secured by the shares of Novopolotsk refinery, the second tranche of USD 400 million of the ACF of the EurAsEC loan – all that replenished the gold and currency reserves to the level that allows to service debts and to reduce pressure on the foreign exchange. The leadership of the country has regained its control and in the short term will continue implementing its socio-political model to a large extent.
In 2012 or its first half one should expect stabilization with the inflation rate around 20-50% and gradual devaluation of 10-30%, depending on how far Luakashenko advisers will go in fulfilling his ambitious orders about the GDP growth. Regardless of all declarations about liberalization and de-bureaucratization, the economy will switch to manual management mode once again.
Nevertheless the spiral of inflation-devaluation in one way or another forces the Belarusian government to tighten monetary and social policy. Moreover, the loss of control over a strategic asset (Beltransgaz) leaves Lukashenko without a lever to pressure Russia for the “first aid” assistance and becomes a threat to the energy security of the country.
In the long term the presidential authority is bound to weaken due to commitments of Belarus to gain USD 2.5 billion annually from privation of assets during the three year-period, to reduce subsidies for agriculture, industry, housing, etc., to improve access of Russian goods to the Belarusian market.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.