Russia mulls economic rescue for Belarus

18th April 2011, Comments 0 comments

Russia on Monday hung out the prospect of delivering a rescue loan for crisis-hit Belarus if its neighbour abandons the Soviet-era economic policies favoured by President Alexander Lukashenko.

Finance Minister Alexei Kudrin's comments came as Belarus -- hit last week by a mystery metro bombing that killed 13 people -- faced the double economic threat of a debt default and another painful round of currency devaluation.

"I would like us to finish negotiations within a month," the RIA Novosti news agency quoted the Russian finance chief as saying while on a visit to Washington.

"But there may be certain difficulties with particular points," he added. "We are working on these issues every day."

Belarus last month was forced to effectively devalue it currency by 10 percent as its fiscal crisis mounted.

The International Monetary Fund reports that the country's foreign reserves have shrunk by more than a third since a high in October to $3.7 billion amid efforts to shore up the currency and deliver on Lukashenko's spending promises.

The veteran Belarus leader boosted state wages and unleashed a loose lending policy on the eve of a December presidential election in which his contested victory was followed by street protests and mass arrests.

The polls left the strongman leader in further international isolation and more reliant on historic ally Russia for economic relief.

But Moscow has thus far put stringent conditions on a new rescue package that includes an end to low-interest lending and state property sell-offs that could see Russia win control of some of its neighbor's most prized assets.

Two Moscow newspapers reported Monday that Belarus was now willing to part with its stake in the Beltransgaz natural gas pipeline operator -- already half-owned by Russia's monopoly Gazprom.

The Belarus loan negotiations concern a $3 billion package that include $1 billion in direct assistance from Moscow and the remainder from a loose economic alliance composed of six former Soviet republics.

© 2011 AFP

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