IMF Advises to Freeze Wages Growth

The International Monetary Fund recommends that the Belarusian authorities freeze the growth of wages and limit the amount of credit loans, the head of the IMF mission to Belarus Chris Jarvis said at the briefing on May 25 in Minsk.

"We are concerned about the rapid growth of Belarus’ credit debt and the government's plans to raise salaries", said the expert. "We believe that the increase should be based on an increase in Belarus’ productive capacity".

Otherwise, according to Chris Jarvis, there will be a threat to macroeconomic stability. The representative of the Fund mentioned, however, that the situation in the Belarusian economy had been improving since the beginning of the year.

"Rapid economic growth in the first quarter of the year suggests that the economy of Belarus is in a fair way to recovery. Inflation remains low, and the balance of payments deficit is also lower than in the first quarter of 2009. And it's a good sign", said the expert.

He mentioned that the IMF intends to review the assessment of economic growth in Belarus in 2010.

"According to our most recent assessment, economic growth in Belarus will be higher than it was expected in February (the IMF forecast was that GDP would grow by 2.4% in 2010 – UDF.BY)", - said C. Jarvis.

At the same time, C. Jarvis thinks that the final assessment requires further monitoring of the Belarusian economy and "during this process, it is extremely important to maintain stability – it is very important to hold a tight budgetary policy, wage policy, and policy of growth of the loan portfolio", said the head of the mission.

According to Mr. Jarvis, the IMF intends to continue negotiations with the Belarusian authorities on the feasibility of a new stand-by program in the early autumn this year.

"If the government and National Bank are interested in implementing the new programme, the IMF is ready to provide such support and develop the programme, including measures of economic policy", said the IMF representative.

It should be recalled that the President Alexander Lukashenka set the task for the government to bring the average salary in the country up to $500 by the end of the year. As of April, the figure was $370.