Europe

Home page

Europe

Belarus wants $3 bln loan from Russia to prop up currency

17 May 2011 20:45 (UTC +04:00)

Baku-APA. Belarus hopes Russia will provide a $3-billion loan in exchange for goods to avert a looming currency crisis, President Alexander Lukashenko said on Tuesday, APA reports quoting RIA Novosti.

"We are in talks with the Russian Federation on a stabilization loan to support the Belarusian ruble," Lukashenko told the Belta news agency. "They seem to be ready ... to respond."

A Kremlin source said however Moscow was only prepared to give a $1-billion loan and added that Russian energy giant Gazprom remained highly interested in gaining control over Belarus’s transit pipelines leading to Europe.

Russian Finance Minister Alexei Kudrin said earlier that Russia would not provide the loan from its own coffers, adding that it would be up to the anti-crisis fund of the Eurasian Economic Community countries (Belarus, Russia and Kazakhstan).

Belarus had applied for a $1-billion loan from Russia and a $2-billion loan from Eurasec to stabilize the currency market suffering from acute foreign currency deficit.

"In total, this will make at least $6 billion, which will be enough this year not only to stabilize but also to gain substantial gold and currency reserves," he said.

The Russian Finance Ministry declined to comment, though Kudrin previously recommended that Lukashenko turn to the IMF or other countries for loans as the Eurasec money would not be enough to stabilize the foreign currency market.

In the first quarter of this year, Belarus’s gold and currency reserves shrank by 25% on rumors about the possible devaluation of the Belarusian ruble, which caused acute demand for foreign currency.

Then the president banned the National Bank from supplying foreign currency and instructed it to build up the reserves by the end of 2011 to equal three months’ imports (an equivalent to about $9-10 billion). In April, Belarus’s gold and currency reserves rose by 0.8% to $3.794 billion.

The black currency market now has the dollar rate at 5,500 Belarusian rubles while the official National Bank rate is about 3,100 Belarusian rubles.

Kurdin said negotiations on the $3-billion Eurasec loan to Belarus would be completed in the next few days. Lukashenko and President Dmitry Medvedev had a telephone conversation on Tuesday and agreed that Belarus was ready to receive the loan and the terms and conditions had been accepted, which means negotiations would be completed in the next few days.

He also said Belarus would put on sale a number of state companies worth a total of $3 billion.

"A few assets will be privatized to maintain the balance of payments. Belarus will decide itself which assets and when," Kudrin said.

It remains unclear whether Beltransgaz, which owns Belarus’s Europe-bound pipelines, will be among these assets.