BELARUS NEWS AND ANALYSIS

DATE:

02/01/2007

Belarus faces crisis as Russia cuts subsidies

MINSK, 01/02 - Long seen as the lifeblood of Belarus` command-style economy, subsidies on energy imports from Russia were effectively cancelled on Monday in a move observers believe could deal a body blow to the authoritarian regime of Alexander Lukashenko.

An end to duty-free oil imports announced by Moscow in December and a doubling of the price of gas deliveries to Belarus agreed minutes before midnight on New Year`s Eve both came into effect January 1 in a potentially disastrous development for the country`s economy.

"After Moscow`s latest decisions, Belarus` so-called economic miracle will break down", said Mechislav Grib, a former head of the country`s parliament, who now opposes President Lukashenko.

One Russian newspaper estimated Belarus would lose over 10 percent of its 15 billion dollar annual budget due the hike in oil duties alone.

With Russian help, the economy has been booming in recent years, with GDP growth of over nine percent in 2005, according to the World Bank.

Speaking after the gas deal was agreed on New Year`s Eve, Belarussian Prime Minister Sergei Sidorsky said Belarus must now "find reserves to develop its economy," but he offered no suggestion of how the resource-poor Soviet-style economy could quickly make up for the loss of the massive subsidies.

Source:

http://www.angolapress-angop.ao/noticia-e.asp?ID=498744

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