Ex-Soviet finance ministers agree $3-bn loan for Belarus

4th June 2011, Comments 0 comments

Ex-Soviet finance ministers on Saturday agreed on a $3 billion (two-billion euro) loan for crisis-hit Belarus, a spokesman for the Russian prime minister said.

The loan comes after Belarus on Wednesday asked the International Monetary Fund for a second bailout in two years, seeking up to $8 billion to tame a crisis that has seen the currency sharply devalued and stores emptied by panicked buyers.

Finance ministers of the Eurasian Economic Community (EAEC), a Russian-led economic grouping of ex-Soviet states, "agreed to extend a loan to Belarus of up to $3 billion over three years," spokesman Dmitry Peskov for premier Vladimir Putin was quoted as saying by news agencies.

The country would receive $1.2 billion the first year, $800 million the second, and $1 billion the third, he added.

Minsk's approach to the IMF reflects the severity of the economic crisis in the republic of 10 million people and represents a major U-turn by the country's leadership.

Authoritarian President Alexander Lukashenko last month demanded to know why he would subject his government to the stiff terms likely to be sought by the IMF and insisted he would never seek Western help.

The country's economic problems intensified after a disputed December election handed Lukashenko a victory so controversial it soured his relations with traditional ally Russia.

Moscow has since refused to offer direct assistance to Minsk and demanded that Lukashenko approve a privatisation programme that could see Russian firms take over large swathes of its neighbour's economy.

Interest rates were hiked last week by a stinging two percentage basis points to 16 percent and the government admitted that annual inflation would this year hit 39 percent under its optimistic forecast.

It has also slapped price caps on basic staples such as salt and vinegar to prevent hyperinflation as consumers seek to convert their depreciating currency into actual goods.

© 2011 AFP

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