BELARUS NEWS AND ANALYSIS

DATE:

06/06/2009

Russia's Kudrin: Belarus Fincl Woes Due To 'Strategic Error'

St. PETERSBURG, Russia (Dow Jones)--Belarus made a "strategic error" in not accepting the ruble as its currency, a move that could have spared the country its current financial troubles, Russia's Finance Minister Alexei Kudrin said Saturday.

"If Belarus had accepted the ruble, it would not have to be taking credits right now," Kudrin told journalists during a briefing at the sidelines of Russia's main economic event, the St. Petersburg Forum.

Russia offered to let Belarus switch to ruble in 2005, Kudrin said, and the issue has been raised frequently since, but Belarus has refused. The former Soviet Republic has been promised some $3.7 billion in various loans, including a $2 billion stabilization loan from Russia and an $800 million facility from the International Monetary Fund to aid its ailing economy and currency.

The two neighbors and staunch allies have been in an emotionally charged spat recently after a dispute broke out over the issuing of the next $500 million tranche of a Russian loan to Minsk.

On a recent trip to Belarus, Kudrin said Belarus must take considerable efforts to stabilize its economic situation in order to receive the promised money. Kudrin also said that Belarus refused to accept the tranche in rubles.

Kudrin also warned during the visit that the Belarussian government and the economy as a whole could default even by the end of this year.

Belarussian President Alexander Lukashenko retaliated, saying his country doesn't need help from Russia. "We don't need to bow down. We don't need to whine and cry," according to a statement provided by Lukashenko's press service.

Kudrin said Saturday that Belarus needs Russia as it receives enormous subsidies for gas and gas transfers from Moscow, as well as investment from Russian companies. The country is also burdened by a virtual lack of gold and foreign-currency reserves that could serve as a safety cushion if the crisis prolongs, Kudrin said. It is also lacking exports with the potential to secure its own currency. "Belarus could not have another partner who would have supported it more than we have," Kudrin said.

Source:

http://online.wsj.com/article/BT-CO-20090606-700893.html

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