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Medium-term prospects for emerging market economies are weaker, says the IMF

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IMF says no Belarus aid without reforms

MINSK, Sept 13 – The International Monetary Fund said Tuesday it would need to see a firm commitment to reforms from crisis-hit Belarus before it released a new lifeline to its authoritarian regime.

The fund’s Minsk mission chief Chris Jarvis told a conference call from Washington that his team would be returning to the republic next month for the first round of direct negotiations since June.

But he said that the two sides disagreed too much about future economic policies to discuss how much of the $8 billion requested by President Alexander Lukashenko Belarus could one day expect to receive.

“The fund will require a demonstrated commitment to strong policies and structural reforms,” Jarvis said.

“We did not talk about the size of a possible fund programme” during the previous visit.

His comments came one day before Belarus launches its second planned currency devaluation since May — a move the IMF has promoted.

The first measure resulted in a 36-percent drop in the value of the local ruble. The Moody’s ratings agency has predicted a decline of up to 50 percent from the latest measure.

Belarus has been forced to abandon the defence of its currency by a yawning budget deficit that emerged after the state went on a spending spree in the run-up to Lukashenko’s controversial re-election last year.

The government has attempted to limit the ruble’s decline by imposing an artificial exchange rate.

But the move only created conflicting exchange rates for various types of businesses and a booming black market currency trade.

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Jarvis said he welcomed the government’s decision to free-float the ruble at special currency trading sessions despite the social pain that this was likely to cause.

“It will be important that this is a genuinely free exchange rate,” Jarvis said.

“I hope it is a first step toward unifying the exchange rate completely because that is something that we would need to see as part of a programme that can be supported by the IMF.”

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