Belarus officially requests IMF financial assistance

09:37, 23 October 2008
Ukraine
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The fund’ s mission will go to the country shortly

Belarus has made an official request to the International Monetary Fund (IMF) for assistance. The fund’ s mission will go to the country shortly. IMF Managing Director Dominique Strauss-Kahn noted in a statement for the press that the global financial crisis has negatively affected the Belarussian economy and its access to external financing. According to him, the changing trade conditions have negatively affected the country’s payment balance, according to Itar-Tass.

According to an IMF press release, “Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement today on the request by the authorities of the Republic of Belarus for Fund financial assistance: “The Belarusian authorities have requested financial assistance from the Fund under a programme that could be supported by a Stand-By Arrangement. The global financial crisis has adversely affected the Belarusian economy and its access to external finance. At the same time, changing conditions in trade have negatively affected the country`s balance of payments. A Fund mission will begin discussions with the authorities in the next few days on a programme. The amount of Fund financing under a Stand-By Arrangement has yet to be determined.”

IMF specialists say that the situation in Ukraine is also in the focus of the Fund’s attention. However, an IMF mission is continuing its work there and no final decision can be made until its return. It takes an IMF mission a week or even more as a rule to draft a report for the Fund’s Board of Directors upon return.

Besides, the IMF is already working on assistance requests that have been filed by Iceland, Hungary, Serbia and Pakistan.

In an press release of October 21, the IMF said it “Welcomes comprehensive European response to financial crisis, sees major downside risks averted, and calls for enhanced coordination of measures.”

“The International Monetary Fund (IMF) today said that even though the global financial crisis will cause a sharp deceleration of economic activity, the comprehensive crisis management actions being undertaken should allow Europe to avoid a worse outcome. In its October 2008 Regional Economic Outlook for Europe (REO), the IMF projects activity in advanced European economies to stagnate in the near-term with growth expected at 1.3% in 2008 and 0.2% in 2009. While these projections were finalized before the crisis reached systemic proportions in early October, they remain broadly valid, even though some of the downside risks have materialized.1 In particular, emerging European economies are now likely to grow at a somewhat slower pace than the 4.3% in 2009 anticipated in the report,” says the release.

It said “the IMF’s baseline scenario for Europe’s economic outlook relies on successful containment of the financial crisis. “Times are no doubt extraordinarily uncertain, but we are now seeing the concerted response that demonstrates policymakers’ awareness that the global crisis needs a global response. For Europe, this crisis provides a catalyst for improved cross-border coordination, and we encourage European leaders to follow up with bold steps on their recent commitment to concerted and coordinated action, to resolve this crisis swiftly,” said Alessandro Leipold, Acting Director of the IMF’s European Department.

Policies will also need to nurture the economic recovery. The IMF projects inflation to drop to levels below central bank objectives in most of Europe`s advanced economies in 2009. “With upside risks to inflation rapidly dissipating, the recent concerted easing of monetary policy was appropriate and there is scope for further easing going forward. Meanwhile, the provisions of the Stability and Growth Pact-which incorporate greater flexibility than is often thought-will allow fiscal policy to cushion the downturn,” said Leipold.

For their part, Europe`s emerging markets are also feeling the strain. They will need to respond quickly to any shortfall in capital flows that may arise, including by using reserves and strong fiscal positions when such buffers exist, according to the IMF press release. Contingency plans should be drawn up to deal with hard landings or to mitigate the adverse effects from the crisis on banks and firms. And, Leipold noted, “The Fund of course stands ready to help as needed.”

Itar-Tass

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