English

Belarus will eat through $1 billion expected from EurAsEC Anti-crisis Fund

Belarus will eat through the $1 billion that may soon come from the Eurasian Economic Community (EurAsEC)'s Anti-crisis Fund, Stanislaw Bahdankevich, who headed the National Bank between 1991 and 1995, told BelaPAN on Friday.

"We need to stabilize the exchange market today, which means that we need loans to eat through them," Dr. Bahdankevich said.

Aleksei Kudrin, Russia’s deputy prime minister/finance minister, told reporters in Minsk on Thursday that Russia did not want Belarus to spend the money it would receive from the EurAsEC Anti-crisis Fund. "It should be used to increase the gold and foreign exchange reserves," he said. "The balance of payments deficit should decrease and the accumulated funds should become a safety cushion for the future."

Mr. Kudrin actually understands that Belarus cannot improve its balance of payments quickly at present, Dr. Bahdankevich said. "Since our imports exceed exports by $2.5 billion, how can we replenish out gold and foreign exchange reserves?" he said. "We need to pay for imports. That is why the money will go to Russia itself as payments for its gas, raw materials and spare parts and components."

Belarus may receive the first $1-billion installment of the $3-billion EurAsEC loan as early as June, considering that the finance ministers of the EurAsEC member countries are to discuss Belarus' loan application in Kyiv on June 4, Dr. Bahdankevich said.

He warned against using the loan to shore up the national currency and make its exchange rate "more acceptable." "The rate should be set on the basis of demand and supply," he stressed.

That is why the first stabilization measure should be to introduce an additional session at the Belarusian Currency and Stock Exchange to determine the market exchange rate of the rubel and to apply to the International Monetary Fund for a loan, Dr. Bahdankevich said.

As for Mr. Kudrin's statement that Belarus needs $3 billion in privatization proceeds to stabilize the national economy, "it will be impossible to sell assets quickly and at a good price in the current grim economic situation," Dr. Bahdankevich said.

Although privatization is necessary, the government should now try to increase foreign direct investment, he said.