BELARUS NEWS AND ANALYSIS

DATE:

31/07/2007

Belarus's Credit History Continues

Belarusian Prime Minister Sergey Sidorsky tried to receive a credit for $1.5 billion yesterday in Moscow as he concluded negotiations with Russian Prime Minister Mikhail Fradkov. Belarus needs that money mainly to pay its bill to Gazprom and the meeting was held at Sidorsky's initiative. Fradkov explained that such questions are settled "not in an hour" and said they should "meet more often." Sidorsky left empty-handed.

No one in Moscow is against the granting of a credit to Belarus, which ran up a debt of $450 million to Gazprom. Russian Finance Minster Alexey Kudrin declared at the beginning of June that he had received "preliminary approval" from the government for such a credit. Then, on July 25, Belarusian President Alexander Lukashenko publicly disputed the agreement on natural gas prices reach3ed at the end of last year and criticized the Northern European Gas Pipeline, which bypasses Belarus.

Lukashenko expressed his irritation the week after negotiators were unable to reach an agreement with Gazprom on restructuring Belarus's debt at the corporate level. He had obviously rejected Gazprom's offer of a commercial credit through Gazprombank to finance the debt at 12-percent annual interest. A state credit from the Russian federal budget would be a cheaper alternative, but that too cost money. A Finance Ministry spokesman told Kommersant, "Russia does not grant subsidized loans and never has, not even to Belarus. We are only at the beginning of the road in developing so-called development aid credits." The ministry acknowledged, however, that a credit to Belarus may cost considerably less than the interbank credit rate.

Rumors have been circulating that Lukashenko is getting ready to replace Sidorsky with a more pro-Russian candidate. Sidorsky has been approached in negotiations about lowering the starting price in the privatization of the country's petrochemical enterprises, but has not been authorized to discuss it. Fradkov's refusal to grant the credit to Sidorsky may be seen as an indication that Russia is ready to discuss the credit with someone else.

Source:

http://www.kommersant.com/p791217/Belarus_natural_gas/