Updated at 17:11,20-07-2018

IMF sees no Belarus loan talks this year


The International Monetary Fund will not enter talks with crisis-hit Belarus on a loan deal this year, it said on Thursday, citing Minsk's failure to commit to reforms.

Belarus asked the Fund in June for a loan of up to $7 billion to help it weather the financial crisis that triggered sharp rouble devaluation and spiralling inflation this year.

But the Fund has said it wanted to see market reforms and a clear commitment to macroeconomic stabilisation first. Minsk has since taken steps such as raising interest rates and allowing free currency trading.

However, this month authoritarian President Alexander Lukashenko criticised the government for going too far with painful reforms and ordered it to focus on protecting people's well-being and achieving economic growth instead.

The Fund responded by warning Belarus such policies were not bringing it closer to a bailout deal.

"We do not expect to have programme negotiations this year," Natalia Koliadina, IMF resident representative in Belarus, told Reuters.

"While the authorities have implemented some measures which could help (in) achieving macroeconomic stability, we have not seen sufficient evidence of strong commitment, particularly at the highest level, to macroeconomic stabilisation and structural reforms."

Consumer prices in Belarus doubled in the first 10 months of this year after two rouble devaluations that have slashed its value against the dollar by about 65 percent.

The crisis was largely brought on by excessive government spending in 2010, when it raised public sector wages and pumped cheap loans into the economy as Lukashenko campaigned for a fourth term in office.

Lukashenko won the December 2010 vote which was criticised by Western observers as fraudulent and cracked down on subsequent public protests, prompting the European Union and the United States to introduce sanctions against his cabinet.

Poor ties with the West and the IMF's tough position prompted Minsk to seek help from Russia, which has agreed to less stringent lending conditions and is set to provide about $5 billion to Belarus this year in loans and investments.

However, Moscow also said this week it wanted Belarus to further tighten monetary policy by raising interest rates to the market level, a move that is certain to slow down economic activity.