BELARUS NEWS AND ANALYSIS

DATE:

31/12/2008

IMF Agrees on $2.5 Billion Credit Line for Belarus

By Christopher Swann and Henry Meyer

Dec. 31 (Bloomberg) -- The International Monetary Fund agreed to provide a $2.5 billion credit line to Belarus to help the former Soviet nation cope with the global financial crisis.

"Belarus faces a difficult economic situation," said Dominique Strauss-Kahn, managing director of the fund, in a statement today. "Its economy has been growing at an impressive rate for several years but has recently shown signs of overheating. Belarus has also been hit hard by the global economic crisis."

Belarus is one of five European countries to tap the IMF for funding as the global financial crisis pummels emerging markets, currencies slump and economic growth skids. President Alexander Lukashenko, who has ruled Belarus for 14 years, has been trying to lift the isolation of his country by balancing ties to neighboring Russia with improved relations with the European Union and the U.S.

Belarus asked for assistance from the Washington-based lender to shore up the country's international reserves and provide a "safety-cushion" to stabilize the economy during the global financial crisis, the National Bank of Belarus said in a statement posted on its Web Site today.

"Reaching an agreement with the IMF is a major impetus for developing financial cooperation with leading international organizations, the European Union and other states," it said.

Russia has also pledged to lend Belarus $2 billion, granting half the loan this year and half in 2009. Reserves, at $4.47 billion, are less than half Belarus's target of $10 billion.

As world markets plunge, demand for Belarus's products such as potash and refined oil products has dried up and banks have lost access to financing because of the credit freeze.

Belarus sought the loan in October as exports slumped and investors withdrew capital amid the fallout from the global credit squeeze.

The country's credit outlook was cut to negative from stable by Standard & Poor's on Nov. 3, which said a deterioration of the country's terms of trade and falling demand for its exports in Russia and Europe will widen the current-account deficit.

Editors: Mark Rohner, James M. Gomez

Source:

http://www.bloomberg.com/apps/news?pid=20601085&sid=aclDdyDQ76nc&refer=europe

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