CORRECTED: Belarus will refuse Russia potash stake for loan: official

18th August 2011, Comments 0 comments

Belarus will refuse to hand Russia a 35 percent stake in its potash giant Belaruskali in exchange for a $2 billion rescue loan, the head of the state mining company said Thursday.

"I am sure that our government will not accept the loan on the conditions imposed by the Russian side. I am speaking of the 35% stake in Belaruskali as collateral," Belaruskali head Valery Kiriyenko said in televised comments.

The comments came two weeks after Russia's Sberbank chief German Gref announced that it had secured the 35% stake as collateral for a $2 billion (1.4 billion euro) loan it would extend to Belarus jointly with Deutsche Bank.

Belaruskali, a fully state-owned enterprise, is the country's main economic asset, providing 16 percent of the world's exports of potash, used in fertilisers.

"Things are not going so badly that we would accept that," Kiriyenko said of the loan's conditions at a televised news conference.

Belarus has struggled with a major economic crisis for several months triggered by a huge current account deficit. It has already devalued its currency by 36% and was forced to cap prices on basic goods.

The country's economy is unravelling at the same time as strongman President Alexander Lukashenko, in power since 1994, faces ostracism from Western countries for his post-election crackdowns on opposition and rights activists.

Russia and other partners from the former USSR in June agreed to loan Belarus $3 billion over three years, but Moscow demanded that Belarus in return open up its companies for privatisation.

Lukashenko in June valued Belaruskali at $30 billion and announced there would be "no freebies".

Belarus is also seeking a $8 billion rescue loan from the International Monetary Fund, and needs a total of about $7.5 billion to stabilise its public finances.

© 2011 AFP

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