BELARUS NEWS AND ANALYSIS

DATE:

14/11/2008

Russia gives $2 billion loan to Belarus

The Associated Press

MINSK, Belarus -- Cash-strapped Belarus will receive a $2 billion loan from Russia to help stabilize its struggling, Soviet-style economy, the government said Friday.

The deal was signed Thursday in Moscow by the two countries' finance ministers, Belarus said in a statement. Belarus has also asked the International Monetary Fund for a $2 billion loan.

Minsk hopes the 15-year-loan will stabilize the former Soviet republic's economy, with a gross domestic product of $57 billion. Belarus has been badly hit by the global economic crisis.

But analysts say Moscow is luring Minsk into a debt trap to make sure Belarus, with its strategic location on the eastern borders of the European Union, remains firmly under Russia's thumb.

Belarus' centrally controlled economy is heavily dependent on cheap Russian oil and gas. In recent years, however, President Alexander Lukashenko has tried to reduce his dependency on Moscow, building ties with oil-rich countries like Venezuela.

He has also sought to mend fences with the European Union, which considers Lukashenko a pariah for his 14-year, iron-fisted rule of Belarus.

The huge outlay comes at a time of significant belt-tightening, with countries having their budgets slashed by falling oil prices. Both Russia and Belarus have taken huge chunks of their gold and foreign cash reserves to prop up their currencies.

In the past six weeks, Belarus has spent 10 percent of its $5.6 billion gold reserves in propping up its currency.

Source:

http://www.kentucky.com/473/story/591838.html

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