Accessibility links

Breaking News

Belarus Seeks Credit From IMF

MINSK (Reuters) - Belarus has requested credit from the International Monetary Fund to uphold stability and economic growth rates amid global crises, the central bank said on October 22.

News reports said a loan of $2 billion was being sought.

The central bank confirmed the request a day after Russia's finance minister said Moscow would issue a $2 billion loan to Belarus while resuming negotiations on a proposed common currency between the two ex-Soviet neighbors.

"We confirm that we have approached the International Monetary Fund to provide credit to support financial stability, create a cushion of security, and maintain growth rates in the economy," central bank spokesman Mikhail Zhuravovich said. "The amount of the credit depends on the IMF," he told Reuters.

The bank's chief spokesman, Anatoly Drozdov, described the request as a "precautionary measure." "As the economies of our neighbors and trading partners are affected by the crisis to some extent, we are taking precautions to ensure their problems don't become ours," Drozdov said.

"Belarus has not suffered directly from the crisis," he added.

The IMF extended credits of $270 million to Belarus in the 1990s, but halted lending when the government failed to implement the fund's recommendations on reforms.

Belarus' economy is still largely state-controlled and plans for selective privatization have made little progress.

The government raised its inflation forecast for this year to 14 percent after Russia hiked gas prices, but growth rates remain high with a 2008 target of 8.5-9.5 percent.

Dmitry Gourov, an analyst with UniCredit Bank in Vienna, said the request was logical to cover all short-term government and corporate debt, which amounts to about 60 percent of total debt of $14 billion.

Minsk suspended its privatization program a week ago, saying there was little point selling state assets at discount prices. It has been unable to issue a debut Eurobond this year as planned.

"They are trying to prepare themselves for the worst case scenario. If they were to cover all this short-term debt on the government and corporate sides, they would need additional reserves," Gourov said. "Everyone is still predicting robust growth for next year, only a slight mark-down from this year."

Foreign reserves fell in September to $4.9 billion, covering about 40 percent of external debt, from $5.6 billion.

Russian Finance Ministry Alexei Kudrin on October 21 said the decision to grant the $2 billion loan was made last week -- with half to be issued this year and the other half next year. The terms of the loan were still under discussion.