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IMF approves fourth loan tranche for Belarus

The Executive Board of the International Monetary Fund (IMF) has completed the third review of Belarus’ performance under an economic program supported under the IMF's Stand-By Arrangement and approved the immediate disbursement of $688 million for the country.

The Board approved "modification of the performance criteria on international reserves and net domestic assets for end-December 2009 and structural benchmarks for the remainder of the program," the IMF said in a statement on December 18.

The release of $688 million will bring total disbursements under the program to an amount equivalent to about $2.88 billion.

“Performance under Belarus’ Stand-By Arrangement has been strong, and the economy is beginning to emerge from the crisis,” Takatoshi Kato, the IMF’s deputy managing director and acting chair, said following the Executive Board's discussion on Belarus on Friday.

“Export volumes have stabilized, the exchange rate depreciation has improved competitiveness, and confidence appears to be growing among households,” Mr. Kato said. “At the same time, Belarus remains vulnerable to external shocks, requiring continued prudent macroeconomic policies as well as flexibility in the face of uncertainties. In this regard, the authorities’ commitment to take difficult measures to compensate for shortfalls and delays in external financing is commendable.”

Mr. Kato warned that the Belarusian authorities should base policies on realistic assumptions and agreed program objectives next year as “aiming for an unrealistically high growth rate would increase pressure on the current account and increase Belarus’ vulnerability to external shocks.”

He said that the authorities should pursue prudent credit and budget policies and made advances in structural reform, which would be “key to achieving high and sustainable growth.” “The authorities have already made progress in developing legal and institutional frameworks for privatization and in easing administrative controls. Further decisive progress in liberalizing the economy and increasing productivity will remain a priority to be sustained over the medium term,” he said.

In late 2008, the IMF agreed to lend Belarus $2.46 billion. Belarus requested the loan in October 2008, saying that it was needed for replenishing the country’s gold and foreign exchange reserves amid the global financial crisis.

The international organization made available some $787.9 million in January and said that “the remainder will be phased thereafter, subject to quarterly reviews.”

The IMF Executive Board on June 29 increased the amount of the loan for Belarus to about $3.52 billion, and approved the disbursement of the second tranche, $679.2 million, to the country.

The third loan tranche in the amount of $699.5 million was transferred on October 26.