BELARUS NEWS AND ANALYSIS

DATE:

20/12/2007

Russia to provide Belarus 1.5 billion dollar credit

Minsk - Russia will provide Belarus a 1.5 million dollar credit to be used for the purchase of energy supplies and balancing the national budget, the Interfax news agency reported Thursday. The low-interest, 15-year loan was part of a deal agreed between Minsk and the Kremlin earlier this year, after Russia hiked the price of oil and gas sold to the former Soviet republic.

The loan marked a dramatic departure by the Belarusian government from traditional policies of keeping the state budget in the black if possible. Russia's last loan to Belarus, for 150 million dollars, was in 2005.

The value of the new credit exceeds the entire gold reserves currently held by the National Bank of Belarus, said Nikolai Korbut, Belarus Minister of Finance.

The Kremlin is scheduled to transfer the principle to Belarus at the end of December. The money will go primarily towards covering a deficit in the Belarusian national budget, Korbut said.

Belarus' state budget is currently some 1.2 billion dollars in the red, an amount equivalent to some 2 per cent of Belarus' entire GDP.

Belarus' government books overall are even more in the arrears, once an external debt of 840 million dollars and internal debt estimated at some 3 billion dollars are accounted for.

Belarus' parliament on Thursday approved a national budget for 2008, shortly after announcement of the Russian loan.

The government plan calls for a continued deficit of 1.9 per cent of GDP, with expenditures equivalent to 24.4 billion dollars, and government income at a total projected 23.4 billion dollars.

Aleksander Lukashenko, Belarus' authoritarian leader, has struggled increasingly to raise government funds since the early 2007 Russian fuel price hikes.

Among unpopular cash-getting measures instituted this year by the former collective farm boss have been cancellation of government benefits for students and Chernobyl victims and increased taxation of private industry.

Source:

http://www.earthtimes.org/articles/show/162181.html