BELARUS NEWS AND ANALYSIS

DATE:

14/11/2008

Belarus Yielded Currency Independence

Belarus Finance Minister Andrei Kharkovets signed the so-called currency capitulation in Moscow yesterday. Belarus gets a new intergovernmental loan of $2 billion for 2008 and 2009 by agreeing to pay for Russia's oil and gas supplies in rubles starting from 2009. From now on, stability of Belarus economy will depend on Russia's ruble stability and the country will have to amass ruble reserves.

Belarus Finance Minister Andrei Kharkovets and Russia's Vice Premier, Finance Minister Alexei Kudrin signed an agreement yesterday to provide to Belarus a loan facility of $2 billion. For Belarus, the price of the deal was the consent to shift to the ruble settlement for oil and gas supplies. "It will be our impact in giving to ruble the status of regional reserve currency," Kharkovets announced at the signing ceremony.

More likely than not, the first tranche will be granted to Belarus in the nearest days and amount to $1 billion. Another $1 billion will go to it in the first half of 2009. The terms of the loan will be similar to the loan of 2007 that amounted to $1.75 billion, at least the first tranche will be granted for 15 years with the five-year grace period for the principal amount and at LIBOR+3 percent.

The parties concluded a few more agreements. Amid them are the understanding memorandum between the governments on coordinating the actions for improving competitive ability of national economies and the negotiating protocol between the delegations of Russia and Belarus to develop credit and financial cooperation.

Source:

http://www.kommersant.com/p1059051/Belarus_currency_/

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