Publication: Monitor Volume: 6 Issue: 179

Belarusan economic policymakers have begun once again to court the IMF with promises to restart economic reform. Minister of the Economy Vladimir Shimov announced recently that the country hoped to obtain credits from the IMF of US$350-$400 million to support the currency (Reuters, September 18). He rejected, however, the rapid reform prescriptions that the IMF had offered before its resident representative abandoned Minsk in frustration. Belarus deems it has now taken the step necessary to convince the international financial institutions to reinitiate credit programs to the hard-pressed country.

On September 14, the National Bank of Belarus at last moved to unify the exchange rate of the Belarusan ruble as the official exchange rate was set at 1,020 rubles to the dollar, nearly the same as that offered in commercial foreign exchange trading (Radio Free Europe-Radio Liberty, September 14). The bank, however, holds less than US$100 million in foreign exchange reserves compared with an average monthly level of imports of US$690 million in the first seven months of this year. The World Bank representative in Minsk, Serhy Kulik, has indicated that some renewed financing might become available with this precondition met (Reuters, September 14), but the IMF is certain to seek pledges that the sorts of state intervention in economic affairs seen under the Lukashenka regime will not be repeated if significant balance of payments support is to be extended.

A former head of the National Bank, Stanislau Bahdankevich (Radio Free Europe-Radio Liberty, September 14) welcomed the unification of the exchange rate. He warned, however, that a renewed bout of state regulation of the foreign exchange market could be expected if the government were to continue to set price controls, subsidize money-losing enterprises through soft credits from the banking system and orchestrate politically motivated attempts to quickly pay some portion of wage arrears. Parliamentary elections are to be held on October 15, albeit in an environment of strong-arm repression of the opposition. Lukashenka faces a re-election bid next year.

The more restrictive economic policies required to slow inflation and to prepare to unify the exchange rate exacerbated the nonpayments problems among enterprises. Lukashenka has now threatened to sack whoever is found responsible for the failure to comply with his September 1 deadline for clearing up wage arrears. Moreover, while the country’s grain harvest promises to be somewhat better than last year’s disaster, Lukashenka has been haranguing farm managers for their performance, citing failure to provide incentives for agricultural workers in the form of timely wages. In the past, the government has sought to improve results during the harvest and sowing by massive injections of credit to agriculture. The less than adequate harvest will also mean that Belarus will again require large-scale imports of grain to meet the country’s needs this year.