The Eurasian Development Bank (EDB), an Almaty-headquartered regional bank founded by Russia and Kazakhstan in 2006, has called on the Belarusian government to conduct a "realistic" economic policy and take more efforts to slow down inflation.
In a statement posted on its website, the bank, which administers a $3-billion loan granted by the Anti-crisis Fund of the Eurasian Economic Community to Belarus, says that last year’s policy by the National Bank of Belarus contributed to the country’s high inflation rate, and warns Belarus against policies leading to a deterioration in its balance of payments. In particular, the EDB cautions against stimulating economic growth through an increase in lending.
According to the bank’s analysts, economic figures from this past January and February are evidence that "a significant external imbalance persists," which they say poses a threat to the country’s general economic stability amid limited gold and foreign exchange reserves.
The EDB calls for a tighter monetary policy, which would include raising the National Bank’s base refinance rate and restricting lending to the economy, as a vital tool of curbing inflation that would have only short-term negative consequences for economic growth.
The analysts warn that the Belarusian government should not expect a significant and sustainable increase in activity in spheres such as trade and construction within at least the next one or two years, but suggest that export-oriented industries can report considerable growth.
Describing the country’s economic situation as "neither excessively unfavorable nor unmanageable," the statement concludes that a realistic policy by the government and the National Bank would allow the economy to restore stability and achieve moderate but sustainable economic growth within a year or two.
The EDB warns against "premature attempts" at restoring the pace of GDP growth to the previous decade’s levels, noting that they could trigger a recurrence of the 2011 economic crisis.