BELARUS NEWS AND ANALYSIS

DATE:

02/01/2009

IMF gives tentative OK for US$2.5 billion loan to Belarus

WASHINGTON -- The International Monetary Fund said Wednesday it had given tentative approval to lend Belarus about US$2.5 billion to cope with the global financial crisis.

An IMF staff mission and the Belarus authorities have reached agreement on an economic program to be supported under a 15-month stand-by loan of about US$2.5 billion, IMF managing director Dominique Strauss-Kahn said in a statement.

The agreement is subject to approval by the IMF management and the executive board.

The IMF said the loan agreement could go before the executive board in mid-January, and Belarus would be able to draw on about 800 million dollars immediately after board approval.

"Belarus faces a difficult economic situation. Its economy has been growing at an impressive rate for several years but has recently shown signs of overheating. Belarus has also been hit hard by the global economic crisis," he said.

Strauss-Kahn noted that Belarus's international reserves had declined due to falling demand from trading partners amid the global economic slowdown and difficulties in accessing finance.

Strauss-Kahn said the agreement includes a strengthened monetary and exchange rate policy framework, cuts in public investment and directed lending by banks, public-sector wage restraint and an improved social safety net.

The central bank of Belarus, a former Soviet republic with a Soviet-style economy, revealed on October 22 that the country had sought an IMF loan of two billion dollars.

Belarussian President Alexander Lukashenko in mid-November threatened to quit the IMF if the loan request were rejected, saying such a refusal would be politically motivated.

The United States has dubbed Lukashenko's regime "Europe's last dictatorship" but the president has over the last months sought a cautious rapprochement with the West.

Lukashenko recently has outlined plans to privatize hundreds of companies and attract foreign investors.

But he also has emphasized that there will be no overnight shift from the country's Soviet-style economy to private ownership as happened in Russia, saying his country will follow the Chinese model instead.

In a report published in September, the World Bank said Belarus was "a global leader in regulatory reforms" and elevated the country's ranking as a good place to do business to 85th from 115th in 2007, higher than Russia's ranking.

Source:

http://www.chinapost.com.tw/business/europe/2009/01/02/190274/IMF-gives.htm

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