(Adds IMF quotes, growth forecasts, background on economy)
MINSK, Sept 21 The International Monetary Fund
told Belarus on Wednesday to reduce industrial and energy
subsidies and clean up its banking sector which it warned was
under threat from a sharp rise in the number of non-performing
Belarus has asked the IMF for a $3 billion loan to refinance
its debt. A mission from the Fund is in Minsk to assess efforts
to shore up a recession-hit economy that has been run on
Soviet-style command lines since 1994 by President Alexander
"Directors noted the authorities' interest in a
Fund-supported program and underscored the importance of strong
commitment at the highest level to consistent macroeconomic
policies and deep, market-oriented reforms," the IMF said in an
It forecast Belarus's economy shrinking 3 percent in 2016
and 0.5 percent next year. Growth beyond 2017 will not exceed 2
percent per year unless Minsk follows IMF recommendations, in
which case the rate could double, it said.
"Deeper and faster reforms would initially push growth
lower, mainly due to lower domestic demand, but productivity
gains and rising domestic demand would then drive growth up to
4.5 percent during 2020-21," it said.
The mission named a rise in the number of non-performing
loans as a major risk, citing an over two-fold increase of bad
loans in January-July to over 14 percent of the total.
It recommended that the authorities continue to limit state
banks lending to loss-making industries.
As a result of a deep recession linked to a slump in oil
prices and contagion from an economic crisis in neighbouring
Russia, the IMF said Minsk did not immediately need to slash
government spending across the board.
The IMF's last loan to Belarus totalled $3.5 billion and was
disbursed in 2009-2010. It resumed talks on new financing in the
wake of a recent thaw in relations between Minsk and the West.
Belarus has to pay creditors $3.3 billion this year, but has
said it hopes to achieve this without additional borrowing. It
has received $800 million so far in 2016 from the Russia-led
Eurasian Fund and expects another $300 million before the end of
(Reporting by Andrei Makhovsky; Writing by Alessandra Prentice;
Editing by Richard Balmforth)