Today, the Executive Board of the IMF approved a 15-month Stand-By Arrangement to provide $2.46 billion in financial aid to Belarus in order “to facilitate an orderly adjustment to external shocks and to address pressing vulnerabilities.” Approximately $517.8 million will be made available to the Belarus government immediately, with the remainder of the financial package to be disbursed later, subject to reviews to be carried out on quarterly basis by the IMF. The Arrangement will provide “exceptional access to IMF resources, amounting to 418.8 percent of Belarus’s quota.” The IMF had announced its intention to provide a financial package to Belarus last month.
Mr. Takatoshi Kato, Managing Director and Acting Chairman of the IMF, stated that “[t]he authorities have a clear strategy to address the challenges they face. They have already adjusted the exchange rate and put in place tight fiscal and wage policies. The measures already taken and announced are strong, and with resolute implementation, will be sufficient to restore stability. Together with planned structural reforms in key areas, these measures should help return the economy to a higher growth path by 2010-11.” Mr. Kato further noted that “[f]iscal tightening will help to bring demand into line with external financing constraints.”
The Arrangement provides generally for the implementation of the following measures by the Belarus government:
- A new exchange rate regime policy, which will include “a devaluation to a new dollar parity, with a simultaneous switch to a currency basket that better reflects the structure of Belarus’s trade and financial flows”;
- Adoption of fiscal tightening measures “aimed directly at slowing investment and consumption”; and
- Adoption of structural policies that place an emphasis on “economic liberalization,”’ particularly “price liberalization.”
Also today, Mr. Dominique Strauss-Kahn, Managing Director of the IMF, announced the “signing of a Framework Agreement on a technical assistance partnership between the IMF and the European Commission.” The Framework Agreement entered into will build upon the commitments outlined in the Paris Declaration on Aid Effectiveness. Mr. Strauss-Kahn stated that the Framework Agreement will “mutually reinforce our efforts to promote global economic cooperation and strengthen institutions, the European Commission will finance IMF technical advice and training in the IMF’s core area of expertise, namely the promotion of financial sector stability, and in macroeconomic, fiscal, monetary and exchange rate polities, and in the enhancement of macroeconomic and financial statistics.” In addition, the Framework Agreement will “allow for greater information sharing on the substance of IMF technical advice and its implementation, as well as the coordination of technical assistance efforts.”