Belarus Needs Certainty in Economic Policy, IMF

The head of the International Monetary Fund in Belarus Natalia Koliadina believes that the economic situation in Belarus remains manageable, but the government and the National Bank should make things clear in economic policy for its stabilization. "We need a clear strategy: what and when should be done. It is necessary both for business and the population," said Nataliya Koliadina.

According to the IMF representatives, the authorities should tighten monetary policy to limit salary growth and establish a flexible exchange rate.

«If all this is done, I believe that the Belarusian economy will be able to quickly get out of this situation. And the problems in the foreign exchange market will not cover the entire economy,» said Natalia Koliadina.
 
One of the serious risks to Belarus, according to the IMF head, is a high level of inflation. «The fact is that inflation increases producers’ costs. Ungoverned or ill-governed inflation means that the increasing economic uncertainty. Enterprises are much harder to make decisions, sign contracts,» explained Natalia Koliadina.
 
In addition, the expert notes that inflation has a negative impact on the purchasing power of the population, especially in the less affluent segments of the population, reports «Komsomolskaya Pravda in Belarus.«

IMF Recommends National Bank Moving to Inflation Targeting
 
Natalia Koliadina considers it appropriate to move to inflation targeting, i.e. the National Bank shall regulate the price by raising or lowering interest rates, while maintaining the flexibility of the ruble. According to the IMF head in Belarus, it will allow businesses to more accurately predict the situation a few steps forward, as well as to lower costs.

Natalia Koliadina also stated that it would be much better to move to a unified exchange rates in all market segments in order to stabilize the foreign exchange market. Plurality of rates, she says, prevents the development of both exports and imports.

«Exporting companies sell their goods abroad and earn foreign currency, selling 30% of their revenue at the official rate. At the same time, they are forced to purchase components, raw materials at market prices or in the domestic market, where prices have increased significantly or abroad, gaining currency in the interbank market at higher costs,» said Nataliya Koliadina.
 
«On the other hand, the importers, buying foreign currency at the official rate, have less incentive to buy abroad. They expect that the exchange rate will rise in the future and try to purchase more goods in advance,» said the head of the IMF in Belarus.

Current Situation is Better than Crisis in 2008, Koliadina

However, according to Natalia Koliadina, the current economic situation in Belarus is more positive than the crisis in 2008. «The external environment is better: major economic partners of the country experience economic growth and this will certainly lead to an increase in demand for Belarusian goods and services. In addition, the Customs Union of Belarus has opened for unimpeded access to the Russian market,» said the head of the IMF in Belarus.