BELARUS NEWS AND ANALYSIS

DATE:

02/01/2009

IMF to Lend $2.5 Billion to Belarus

By TOM BARKLEY

The International Monetary Fund announced plans to lend Belarus $2.5 billion to help the Eastern European country cope with the global economic crisis.

If the fund's executive board approves the 15-month standby facility in a decision expected this month, Belarus would get immediate access to about $800 million of the financing.

Following news of the deal, the Belarus central bank said it will devalue its currency by 20% as of Jan. 2 and raise its key refinancing rate.

The Belarus economy, still largely in state hands, hasn't been hit as hard by the global financial crisis as have those of neighboring Russia and Ukraine, but the country has had to spend some of its reserves to maintain its currency above a floor of 2,200 rubles to the U.S. dollar.

As of Friday, the rubles rate will be 2,650 to the dollar. The central bank will raise its key refinancing rate to 14% as of Jan. 8, from 12%.

Belarus, facing a sharp drop in international reserves, is taking "strong actions" to restore economic stability, and the program deserves the support of the international community, he added.

As part of the IMF program, the government agreed to tighten fiscal policy through spending cuts for public investment and public-sector wage constraints. The social safety net also will be strengthened to protect the poor.

In November, Russia pledged a $2 billion stabilization loan to the former Soviet country.

Source:

http://online.wsj.com/article/SB123083529319447047.html

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