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IMF suggests raising cost recovery of utility, transport rates to 100 percent

The International Monetary Fund (IMF) has suggested that the Belarusian authorities adopt a plan to increase the cost recovery of utility and transport rates to 100 percent.

"Decisive structural reform remains essential to raise potential growth and promote stability beyond the short term," the IMF's team says in a report.

Welcoming a joint action plan to conduct reforms, which was adopted by the government and the National Bank of Belarus in October 2013, the experts warn that a "more ambitious, comprehensive and frontloaded reform agenda is needed."

"Specific steps would include initiation of a time-bound plan to increase cost recovery of utility and transport tariffs to the full 100 percent, a detailed plan and significant initial steps for reducing the role of the state in the economy - including a rapid phase out of the system of mandatory targets for enterprises and credible privatization and enterprise restructuring - and a strengthening of social safety nets to protect the most vulnerable in society," says the staff report, prepared following consultations with Belarusian officials last fall.

Utility bills paid by households in Belarus at present are said to cover only 23 percent of the cost of utility services, with the rest being paid for out of the budget.

Speaking about the possibility of a new loan for Belarus during the consultations, the experts said that a "new Fund-supported program would require credible commitment, including at the highest level, to a comprehensive package of strong macroeconomic policies."

The report notes that the joint action plan by the National Bank of Belarus and the government envisages only partial reforms and its "implementation is uncertain." //BelaPAN