The International Monetary Fund approved a USD 700 million loan payment for Belarus and praised the former Soviet republic for policy steps including its currency devaluation and tighter fiscal and monetary policy, Bloomberg reports. Belarus, a conduit for a fifth of Russian gas exports to Europe, has received USD 2.23 billion under its bailout program, the IMF said in a statement Oct. 21. The Washington-based fund has agreed to lend the nation about USD 3.6 billion. The IMF, which has handed out more than USD65 billion to eastern European nations to fight the financial crisis and subsequent economic recessions, in August urged Belarus to sell assets, curb lending and raise utility prices to cope with the first contraction in output in more than a decade.
The IMF is considering creating a new program to discourage member countries from building up currency reserves, IMF First Deputy Managing Director John Lipsky said Oct. 19. "We are exploring the possibility of improving our existing facilities or adding other insurance-like facilities that would give our members greater confidence that they don't need to self insure by building up reserves," Lipsky said, as cited by Reuters. Developing countries like China have accumulated massive levels of foreign exchange reserves in recent years, which, among other things, serve as a kind of insurance against financial instability. Those reserves have also been blamed for contributing to the overabundance of liquidity in the global financial system prior to the crisis.