The World Bank's Board of Executive Directors on December 1 approved a $200-million Development Policy Loan (DPL) for Belarus.
The loan is intended to support the Belarusian government’s economic program aimed at addressing the social impact of the crisis and advancing the structural reforms to help enable a sustained economic recovery, the World Bank says in a statement.
The single-tranche loan has a maturity of 16 years, including a six-year grace period. The loan proceeds would be made available to the borrower "upon loan effectiveness."
The Board of Executive Directors discussed the DPL in the context of a mid-term review of the World Bank Country Assistance Strategy for Belarus for the period between 2008 and 2011, the statement says. The World Bank expanded the scope and size of its financial assistance planned under the Strategy and included budget support through the DPL in reflection of significant changes in the external environment and acceleration in the pace of structural reforms in Belarus, the statement says.
"Belarus established a good track record in the implementation of Bank Group activities to date,"Martin Reiser, head of the World Bank's office in Ukraine, Belarus and Moldova, is quoted as saying. "A window of opportunity has opened for the Bank to support deepened structural reforms in Belarus. We hope that the agreement reached with the authorities will serve also as a signal to private investors that Belarus is opening up."
The Development Policy Loan supports a program of reforms built around two pillars, the World Bank says.
According to it, the first pillar aims at strengthening social assistance programs by making them more targeted to the poor, who are likely to be most affected by the impact of the global economic and financial crisis on the Belarusian economy.
The second pillar supports the government’s liberalization program to promote private investment and job creation, including measures such as the inspections decree which would lift a significant burden from businesses, price liberalization measures, including the removal of restrictions of trade margins for most products, the gradual elimination of turnover taxes, and the preparation of key legislation to launch the privatization process, the World Bank says.
"Belarus has started to ease the constraints on businesses in recent years and this operation supports further steps in price liberalization, deregulation, and tax policy," says Pablo Saavedra, senior economist and task team leader of the Development Policy Loan. "The crisis made these reforms more urgent, but also highlighted the need to deepen reforms to ensure a sustained recovery."
Belarus joined the World Bank in 1992. Since then, it has borrowed $643 million for carrying out nine projects and received grant funds totaling $18 million for about thirty national programs. The World Bank currently finances four infrastructure projects in Belarus.
