BELARUS NEWS AND ANALYSIS

DATE:

23/01/2009

Belarus forex reserves fall in Jan despite IMF loan

By Andrei Makhovsky

MINSK, Jan 23 (Reuters) - Belarus's foreign exchange reserves fell $100 million since Jan. 1 despite receiving $788 million as part of an IMF loan, an official said on Friday, indicating the central bank had spent almost $900 million on propping up its currency.

Belarus devalued its rouble by 20 percent on Jan. 1, partly to meet IMF conditions set on a $2.5 billion loan. It also cut salaries in the state sector, budget expenditure and raised rates for communal services and raised the refinancing rate.

Officials say they sought the IMF loan to create a cushion against the impact of the global financial crisis. While Russia and Ukraine have been suffering since September, Belarus's largely state-controlled economy had fared well.

There are now clear signs, however, that the crisis has hit Belarus -- officials expect zero percent economic growth in January against 8.3 percent growth a year ago.

The rouble has been under pressure despite the IMF loan because its exports have slumped. Prices for potash, of which Belarus is one of the largest exporters in the world, have dropped from historic highs.

The currency's rate was set at 2,695 per dollar for Friday, weaker than the original devaluation to 2,650/$ from 2,200/$.

'Taking into account the credit that was received, reserves now have been reduced by $100 million in comparison to Jan. 1,' Deputy Central Bank Chairman Pavel Kallaur told a news conference.

Source:

http://www.forbes.com/afxnewslimited/feeds/afx/2009/01/23/afx5958164.html

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