BELARUS NEWS AND ANALYSIS

DATE:

20/12/2007

Russia considering further US$2 billion credit for Belarus

The Associated Press

MOSCOW: Russia will consider extending a new loan to Belarus worth US$2 billion (?1.4 billion), Finance Minister Alexei Kudrin said Thursday.

Kudrin made the announcement after signing a deal to lend the ex-Soviet republic US$1.5 billion (?1 billion) to help it handle rising Russian energy prices.

The possibility of an additional loan will add to concerns among opponents of Belarusian President Alexander Lukashenko that he is driving the country into increasing dependence on energy-rich Russia, giving Moscow leverage over politics in the neighboring nation.

Kudrin and his Belarusian counterpart Nikolai Korbut signed an agreement on the US$1.5 billion loan, which Russian President Vladimir Putin announced after meetings with Lukashenko during his first state visit to Belarus in several years.

"There is an instruction from the presidents to study the possibility of providing a new credit," Kudrin said.

He suggested a decision was likely in about a year.

Russian news reports that Putin's visit would produce a deal allowing Putin to become leader of a merged state comprising Russia and Belarus were not borne out. But his announcement of the loan prompted concern in Belarus that Russia's influence could increase.

Belarus depends heavily on Russian energy to fuel its largely Soviet-style, centrally managed economy.

Following a dispute over energy prices at the beginning of the year, Russia forced Belarus to accept a doubling of gas prices this year, to US$100 (?70) per thousand cubic meters, and Russian gas monopoly OAO Gazprom said Saturday that Belarus would pay US$119 (?83) in 2008.

Under the deal, prices are to rise to market levels_ minus the transit cost and export duties - by 2011, the year the next presidential election is scheduled in Belarus.

The authoritarian Lukashenko, in power since 1994, pushed through a referendum in 2004 scrapping presidential term limits.

According to Russia's state-run RIA-Novosti news agency, Belarus will receive the US$1.5 billion loan in 2007-2008 and will not have to begin paying off the principal before 2012.

Source:

http://www.iht.com/articles/ap/2007/12/20/business/EU-FIN-Russia-Belarus.php