Kudrin warns Belarus of potential default

MINSK, May 29 (Itar-Tass) -- Russian Deputy Prime Minister and Finance Minister Alexei Kudrin warned Belarussian leadership on Thursday it may face a default on foreign debt payments if it continues to support the exchange rate of the national currency with gold and currency reserves.

Kudrin estimated Belarus had spent over two billion dollars of the reserves to maintain the exchange rate of the Belarussian ruble in the first quarter of 2009.

"As the exchange rate of the Belarussian ruble is supported at a certain level by gold and currency reserves, the reserves may be exhausted in the third quarter," Kudrin warned and said the replacement of market currency instruments by administrative levers "is a policy that leads nowhere, it is a deadend."

The finance minister said new credits to Belarus are doubtful because of such a policy and estimated the country will have to repay one billion dollars more in 2011 on already received credits.

"Gold and currency reserves have to service the current trade balance, which is already impossible, as there is a shortage of reserves, while new repayments will add in connection with already received loans," Kudrin said.

"That means potential insolvency. We have to agree on measures that will improve the situation, as it will be difficult if we continue to say that everything is okay, if we conceal and sugarcoat the situation," the minister said.

Kudrin said Russia proposed to Belarussian President Alexander Lukashenko to provide the last 500-million dollar tranche of the 2-billion loan in Russian rubles, however he rejected the proposal.



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