Experts of the International Monetary Fund (IMF) believes that the current account deficit, recently formed in the Belarusian economy, requires an immediate tightening of monetary policy. This was stated by the IMF Resident Representative in Belarus, Natalia Koliadina. According to her, the authorities need to slow down the credit growth in the country to reduce demand for foreign currency.
Natalia Koliadina noted that monetary and fiscal policy in Belarus was significantly weakened in 2010. However, a rapid increase in real wages led to an increase in deficit on current account transactions. As a result, a huge financing gap in balance of payments has been formed, while the demand for foreign currency has been exceeding its supplies, Prime-Tass.
«Last year, the government solved this problem by means of foreign borrowing and certain revenues from privatization. This year, authorities are planning to cut the deficit in international trade, though proceeds from privatization, as well as borrowings, are also assumed,» explained Natalia Koliadina.
IMF experts believe that the trade deficit reduction will need the country’s policy adjustment at the macroeconomic level.
«New foreign borrowings should help to increase foreign exchange reserves, which is possible only in case of the trade deficit’s shrinking. This can be achieved through tighter monetary policy and a more flexible exchange rate policy. In addition, foreign funding is not limitless, and depends on the situation in international financial markets, changing rapidly,» said Natalia Koliadina.
Permanent Representative of Belarus to the IMF has also noted that the corridor of fluctuations of the Belarusian ruble to a basket of currencies (+ / — 8%), set by the National Bank of the country in 2011, allows a flexible exchange rate policy.
At the same time, Natalia Koliadina stressed that the Belarusian authorities should also take measures to tighten fiscal policy along with the tightening of the monetary policy. According to the experts, it will have a positive impact on the economy in the longer term and free up some resources for private sector development.
Earlier, according to Telegraf, experts of Raiffeisen Bank pointed out in their research note that the Belarusian authorities will have to resort to devaluation of the Belarusian ruble and go for privatization to address the negative balance of foreign trade and to preserve the country’s reserves.
