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MINSK, 5 March (BelTA) – Belarus should work out a consistent plan for the economy, said Chief of the IMF mission in Belarus Chris Jarvis on 5 March after the mission’s work in Belarus was completed.
Chris Jarvis said: “We believe the 5% economic growth target for 2012 does not meet the requirement to further reduce inflation. We believe it would be a mistake to considerably increase salaries while solid stability has not been secured”.
According to the IMF, in 2012 Belarus should focus on ensuring stability in the economy. To achieve it, it is necessary to stay in line with the approved budget and the lending plan, to tame salaries in the public sector and at state-run enterprises. It is also necessary to keep interest rates at a level above inflation expectations of the population so that people could be confident their savings will preserve their value.
Chris Jarvis remarked the comparative stability of the economy enables the government and the National Bank to pursue longer term goals. The government should determine a budget and taxation policy to keep the state debt stable for the next few years.
The National Bank should strive to keep inflation low while keeping the exchange rate flexible. The combination of economic policy measures will further reduce the current account deficit. The government should also determine a policy for structural reforms to boost productivity and fuel economy growth.
The IMF recommends liberalization of prices, more independence of the management of state enterprises, easier transition of workers from declining industries to growing industries, a more prominent role of the private sector. The latter should be achieved by the reformation of banks, privatization of enterprises, and accomplishment of measures to attract investments of foreign and Belarusian businessmen.
“We also recommend raising individual social benefits and unemployment benefits in order to enhance the protection of vulnerable population strata. These measures can be financed at the expense of more universal articles of expenditure,” said Chris Jarvis.
“What is the IMF place in these plans? The mission was supposed to get familiar with views of the authorities and other sides: trade unions, research institutes, businessmen. Our aim was to offer recommendations and explain economic changes and the policy of Belarus to IMF member states. For the next few years we will continue the practice of arranging such missions at least once every six months. We have also discussed Belarus’ request for financial support from the IMF,” remarked the head of the mission.
Asked whether the Belarusian economy can hit its five-year term targets, Chris Jarvis said: “I think a lot will depend on the policy the National Bank and the government of Belarus will pursue. If they manage to create a good base for preserving and enhancing stability in the economy via reducing inflation and the current account deficit, then they will be able to improve the economy performance via structural reforms. In turn, it will enhance the potential for further economy growth”.
“I would like to warn against aiming to hit all the targets set by Belarus’ five-year plan. The attempt to reach a very high economic growth in 2010 played its part in the 2011 year crisis. I am convinced the government and the National Bank would not like to make the same mistake twice,” said Chris Jarvis.
