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Decision on final tranche of EurAsEC loan to be made in November

 

The Anti-crisis Fund of the Eurasian Economy Community (EurAsEC) will decide in November whether to provide the sixth, final tranche of a $3-billion stabilization loan to Belarus as scheduled, Alisher Mirzoyev, head of EurAsEC’s social and economic policy department, told BelaPAN on Tuesday.

The decision will depend on the performance of the Belarusian economy between January and September, Mr. Mirzoyev said.

The Anti-crisis Fund's recommendation for Belarus to restrict lending will now be a condition for obtaining the final, $440-million tranche of the loan, he said. “Belarus obtained the fifth tranche even though it had not implemented the recommendation,” Mr. Mirzoyev said. “Now we have set a lending growth rate target. If the target is not met, Belarus will be less likely to get another $440 million from the Anti-crisis Fund.”

Belarus’ lending growth rate will be monitored as a key stabilization indicator on the initiative of Minsk, Mr. Mirzoyev said. This shows the importance of lending reduction for implementing the program and sends a signal to all economic entities, he said.

“If lending growth is not curbed, it will be impossible to manage domestic demand,” Mr. Mirzoyev explained. “If the demand soars, the balance of payments and macroeconomic stability in Belarus in general will be in danger.”

Approved by the board of the Anti-crisis Fund on June 4, 2011, the $3-billion stabilization loan for Belarus was aimed at supporting the country’s effort to improve its balance of payments. The 10-year loan was to be disbursed in six tranches within three calendar years. The loan has a grace period of three years and carries a floating interest rate set on the basis of the reference rates of the Russian Federation and Kazakhstan.

The first, $800-million tranche of the loan was made available to Belarus in June 2011. Another portion, $440 million, was provided in late December 2011. Belarus received the third tranche in mid-June 2012, the fourth one in January 2013 and the fifth one in April.

The Eurasian Development Bank (EDB), which administers the loan, reported last week that Belarus had failed to meet five indicative targets that it had agreed upon with the Anti-crisis Fund to receive the fifth tranche.

The failure to meet the targets “significantly diminished the effects of the stabilization program and may lead to a loss of its positive results,” the report said.

According to the EDB, the failure to meet some of the targets resulted from a loosening of monetary policy.// BelaPAN