Putin expected for talks in cash-strapped Belarus

19th May 2011, Comments 0 comments

Russian Prime Minister Vladimir Putin was on Thursday expected to visit cash-strapped Belarus whose increasingly isolated leader is pinning hopes on a bailout loan from Moscow.

Putin was due to meet the ex-Soviet republic's strongman leader Alexander Lukashenko and huddle with other prime ministers from ex-Soviet states who are organising a rescue package for Belarus.

Belarus hopes to secure a $3 billion (2.2-billion-euro) rescue loan from the Moscow-led economic union of ex-Soviet states known as the Eurasian Economic Community and comprising four republics besides Russia and Belarus.

But Russia's Finance Minister Alexei Kudrin has said that the economic alliance was only ready to issue the $3 billion dollars in equal installments over three years.

Lukashenko for his part said Moscow also intended to arrange a $3 billion advance payment for future food and other deliveries from Belarus.

Moscow officials said they would further insist on Belarus quickly following through on the sale of state assets under a programme that could see Moscow win control of the republic's key firms.

Belarus has been hit hard by an economic crisis that was sparked last year by a big jump in the price the country has to pay for Russian energy imports.

Its finances were hurt further by a wave of cheap loans and social benefits issued on the eve of Lukashenko's disputed re-election last year.

December's presidential election was followed by mass opposition protests and arrests. Belarus now faces sanctions from Europe and the United States and has no current programme with the International Monetary Fund.

The crisis also coincides with an April suicide bombing that killed 14 people and resulted in an even tougher government crackdown on the opposition.

Belarus took a series of incremental steps to devalue its currency in the past month before allowing the Belarus ruble to depreciate by 30 percent last week.

But economists predict further currency easing, an economic remedy that hurts people's savings and devalues their salaries.

Austria's Raiffeisen bank estimates the republic's financial gap for the year at $5 billion to $10 billion.

© 2011 AFP

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