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EurAsEC Anti-crisis Fund warns that Belarus’ GPD growth and inflation targets are incompatible

 

The Belarusian government’s GPD growth target of 8.5 percent for this year is incompatible with its intention to keep the inflation rate under 12 percent, Alisher Mirzoyev, head of the social and economic policy department of the Anti-crisis Fund of the Eurasian Economy Community (EurAsEC), told BelaPAN on Tuesday.

Even if Belarus’ GDP does grow by 8.5 percent this year, the inflation rate cannot possibly be limited to 12 percent, Mr. Mirzoyev said.

Attempts to boost GDP artificially would worsen the financial situation of companies and cause debt repayment problems, he warned.

“At the same time, if Belarus meets the monetary policy targets agreed upon with the Anti-crisis Fund, the 12-percent inflation target is quite realistic,” Mr. Mirzoyev said.

He expressed concern that Belarus’ actual lending growth rate was higher than the projected level. “However, the country still has time to reduce foreign currency lending,” Mr. Mirzoyev said. “The government tries to take some steps in that direction. We’re holding consultations on this issue.”

The Eurasian Development Bank (EDB), which administers the Anti-crisis Fund’s $3-billion loan for Belarus, reported last week that the Belarusian government and the National Bank had promised to limit the 2013 lending growth rate to 19 percent, or 1.5 percent a month.

In the event of a further deterioration in the current account balance and an increase in devaluation expectations, there may be a need for a more significant reduction of lending growth, the EDB said.

“The maintenance of tight monetary and budget policies would help stabilize the economy, curb annual inflation to one-digit figures, improve the current account balance and increase the gross international reserves to economically safe level,” the EDB said.// BelaPAN