BELARUS NEWS AND ANALYSIS

DATE:

18/11/2008

Belarus sees 1-2 pct growth at end-09, FX devaluation

* Reuters, Tuesday November 18 2008

By Carolyn Cohn

LONDON, Nov 18 (Reuters) - Belarus will see 1-2 percent economic growth by the end of 2009 and the country may spend its $2 billion loan from Russia to pay for energy supplies from its larger neighbour, its deputy economics minister said on Tuesday.

Separately, the deputy chief of the central bank chief said the Belarus rouble would be gradually devalued against its managed basket of currencies and that proposed bank privatisations would likely proceed next year.

The ex-Soviet state's 2009 economic growth will be significantly lower than the robust 8.1 percent it chalked up last year and the government's target of 8-9 percent this year.

"The recession might last for half a year. We suspect that after that time we might have GDP growth of 1-2 percent by the end of next year," Deputy Economics Minister Andrei Tour told reporters on the sidelines of an investment forum in London.

Tour said Russia would extend a $1 billion loan to Minsk by the end of this year and another $1 billion early next.

"We are thinking of spending it on energy resources from Russia," he said, speaking through an interpreter.

Last year, Belarus spent part of a $1.5 billion loan provided by Moscow to pay for Russian energy supplies.

Disputes over price have seen Russian gas giant Gazprom threaten previously to cut off gas supplies to Belarus.

A flare-up late 2006 saw the two ex-Soviet states agree that Belarus would pay market prices by 2011 -- a pact that Minsk has since called to be renegotiated.

Tour said the gas renegotiations were near completion.

"The agreement is ready but it's all about the pricing. By Christmas, we are going to have it settled," Tour said.

DEVALUATION

Belarus, under fire in the West for its poor human rights record, is also seeking a $2 billion loan from the International Monetary Fund for what officials say is a "precautionary" measure against the impact of the global financial crisis.

In a separate briefing, Belarus' Deputy Central Bank Chairman Vassily Matyushevsky said the central bank was planning a gradual devaluation of the Belarus rouble, which is managed against an undisclosed basket.

"Next year we are going to be more flexible. We are pursuing a devaluation of the currency, a smooth devaluation process," he said, speaking through an interpreter.

"We are keeping in touch with what's happening in Russia." Russia allowed its rouble to depreciate by 1 percent last week and there is speculation of more to come.

Matyushevsky also said there had been progress on the country's plans to privatise its banks.

"We are in an advanced stage of cooperation with highly respected partner financial institutions. We expect that in the next 3-4 months, we are going to disclose the terms and conditions of these deals."

Belarus has introduced reforms to open up its economy, including getting rid of a state golden share rule, simplifying the tax system and offering some state assets for sale. (Writing by Sebastian Tong, editing by Patrick Graham)

Source:

http://www.guardian.co.uk/business/feedarticle/8041378

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