Belarus cbank to narrow FX band, cut rates in 2010

MINSK, Sept 26 (Reuters) - Belarus will set its currency trading band at 5 percent next year, reversing this summer's widening which was done to secure cash from the International Monetary Fund, the central bank chief said on Saturday.

The ex-Soviet economy has been hurt by a recession in neighbouring Russia, and is counting on a $3.5 billion credit line from the IMF to help it weather the crisis.

To meet IMF requirements, Belarus devalued its rouble by 20 percent at the beginning of the year and pegged it to a basket of currencies, originally in a band of plus/minus 5 percent. In June, it widened the corridor to 10 percent in either direction in a bid to secure the next tranche of IMF cash.

"The stability of the exchange rate of the national currency will be ensured by a corridor of fluctuations with limits of plus/minus 5 percent," central bank Chairman Pyotr Prokopovich told a government meeting on forecasts for next year.

On Friday, the official exchange rate against the basket of dollars, euros and the Russian rouble was set at 1,008.42 Belarusian roubles.

Prokopovich also proposed cutting the refinancing rate to 9-12 percent during 2010 from 14 percent currently.

The budget for next year, discussed at Saturday's government meeting, features economic growth of 2 percent and a deficit of 1.5 percent of gross domestic product.

The Finance Ministry wants to raise the value added tax to 20 percent from 18 percent to compensate for the planned scrapping of other levies.



Partners: Social Network