IMF says Belarus loans closes hole in '09 finances

* Belarus has enough loans to shore up finances this year

* May have problems if no $500 mln tranche from Russia

* Should privatise some banks this year

By Andrei Makhovsky

MINSK, July 17 (Reuters) - Belarus has enough loans to shore up its finances this year, but could run into trouble if a $500 million tranche from Russia does not materialise, the IMF's representative in Minsk, Natalya Kolyadina, said on Friday.

Kolyadina also said the ex-Soviet state, whose economy is still largely in state hands, should sell off some banks this year and prepare other companies for later privatisation when the global financial crisis is over.

Belarus this year received $1.5 billion from Russia, $1.5 billion from the IMF as part of a $3.5 billion deal and should receive a further $1.36 billion from the IMF, $200 million from the World Bank and the $500 million Russian tranche.

"Our forecasts at the moment show that the 2009 financial gap is closed," Kolyadina told Reuters in an interview. "If the economic situation remains as it is, then Belarus would be able to close the gap using the resources already identified."

"There will be complications however if Russia does not disburse the $500 million that Belarus planned to receive."

Russia delayed the $500 million loan to Belarus, the last tranche of a $2 billion credit, saying the country could go bankrupt as early as next year. [ID:nLS991683] [ID:nL51033548]

Minsk hit back, saying Russia had made the loan contingent on Belarus recognising the rebel Georgian regions of Abkhazia and South Ossetia -- a move which would undo a recent rapprochement with the European Union after years of isolation.

Kolyadina said creditors should have no doubts about Belarus' ability to service its debts.

"Belarus will be able to service its external debt in 2009 and 2010, by our calculations. They (the debts) are not at such levels as to have a significantly negative impact on the economy," she said.


The Belarussian export-driven economy has been hit by a slump in demand for its goods from Russia and Europe, its key clients. This has slowed economic growth, which averaged 10 percent annually in recent years, and hit the rouble currency.

Long-serving President Alexander Lukashenko has sought to move Belarus closer to Europe both politically and financially, after years of Western accusations that he quashed media freedom, rigged elections and imprisoned opposition activists.

The government has tried to liberalise the economy for the past two years and has sold to foreign investors select state assets -- several banks to Russia and two telecom firms to Austria and Turkey. [ID:nL9397047]

It wants to sell two controlling and two minority stakes in four large state banks but this process has been slowed down by the global financial crisis that has brought consolidation in the banking sector to a virtual standstill. [ID:nL1313483]

"Some stakes in banks -- either controlling or minority -- should be sold this year," Kolyadina said. She said this would help the banks receive more financial support although they are in a healthier state than others.

"The Belarussian financial sector has been less exposed to the crisis, and that is why it is less dependent on external financing. The Belarussian banking sector is in a better state than banking sectors in neighbouring countries."

Much of the industry -- agriculture, oil refining, chemical production and machine manufacturing -- is still in state hands, though Minsk has said it is ready to sell companies off.

"Many observers say that now is not the time for privatisation because the market conditions are not good enough. That may be true, but now is a good time to prepare assets in state hands for privatisation," she said.

She said the IMF had no recommendation as to when assets should be sold but urged the government to create favourable conditions, including the creation of a privatisation agency. (Writing by Sabina Zawadzki; Editing by Toby Chopra)



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