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RUSSIA DANGLES A $3 BILLION LOAN AT BELARUS, INSISTS ON "CERTAIN PRIVATIZATION" IN RETURN
Associated Press
Thursday, May 19, 8:38 PM
( Sergei Grits / Associated Press ) - Russian Prime Minister Vladimir
Putin, center, Belarusian Prime Minister Mikhail Myasnikovich, left,
and Armenian Prime Minister Tigran Sarkisyan walk to pose for press
photographs prior to a meeting of the EurAsEC Interstate Council at
the level of heads of government in Minsk, Belarus.
MINSK, Belarus - Russia's finance minister is dangling a $3 billion
loan in front of Belarus, saying Thursday that the cash hinges on
the crisis-hit neighbor selling off certain national assets.
Belarus is facing a severe downturn, with hard currency reserves
plunging 20 percent in the first five months of the year to less
than $4 billion, and staple foodstuffs vanishing from stores. Trading
restrictions were lifted on Belarusian ruble last month, leading to
a 300 percent devaluation against the U.S. dollar.
At a meeting of government of former Soviet nations in the Belarusian
capital on Thursday, Russian Finance Minister Alexei Kudrin said his
country will decide early next month whether to approve the loan of
$3 billion over three years.
"We have a condition," Kudrin said. "In the next three years a certain
privatization should be carried out."
Russia is thought to be seeking to capitalize on Belarus' vulnerability
by acquiring major stakes in energy assets such as Beltransgas,
the state-owned gas pipeline network that supplies domestic homes
and forwards the gas to Europe.
Kudrin said talks on Beltransgaz were imminent, and shot a veiled
warning that Belarus is in no position to turn Russia down. Kudrin
said if Belarus isn't able to raise up to $9 billion via selloffs,
it would be forced to turn to the International Monetary Fund, which
has loan conditions that Belarus is ill-equipped to meet.
Independent analysts say to save its economy, Belarus is in urgent
need of at least $8 billion.
"The authorities need to admit that the politics of recent years were
flawed," said Stanislav Bogdanovich, former head of the country's
central bank.
Last month, the authorities gave permission to banks to buy and sell
the ruble at a rate determined in open trading.
Banks initially responded by raising the U.S. dollar exchange rate for
retail transactions by 30 percent, from some 3,000 Belarusian rubles
to 4,000 rubles against the dollar. It has since risen to 8,000 rubles
to the dollar, giving rise to miles-long lines at currency exchange
booths as desperate locals try to squeeze the rapidly diminishing
value out of their rubles.
Belarus uses different exchange rates, depending on whether it is
banks, private individuals or state companies that are buying the
foreign currency. At times the difference between those rates can be
up to 30 percent.
For most of his 17 years in power, President Alexander Lukashenko
has relied on Russia - Belarus' main sponsor and ally - to maintain
a quasi-Soviet economy complete with a social safety net that helped
maintain his popularity.
But the Russian subsidies have dwindled recently as Moscow pushes
for control over Belarus' most prized economic assets, such as oil
refineries and chemical plants, in exchange for more loans.
Associated Press
Thursday, May 19, 8:38 PM
( Sergei Grits / Associated Press ) - Russian Prime Minister Vladimir
Putin, center, Belarusian Prime Minister Mikhail Myasnikovich, left,
and Armenian Prime Minister Tigran Sarkisyan walk to pose for press
photographs prior to a meeting of the EurAsEC Interstate Council at
the level of heads of government in Minsk, Belarus.
MINSK, Belarus - Russia's finance minister is dangling a $3 billion
loan in front of Belarus, saying Thursday that the cash hinges on
the crisis-hit neighbor selling off certain national assets.
Belarus is facing a severe downturn, with hard currency reserves
plunging 20 percent in the first five months of the year to less
than $4 billion, and staple foodstuffs vanishing from stores. Trading
restrictions were lifted on Belarusian ruble last month, leading to
a 300 percent devaluation against the U.S. dollar.
At a meeting of government of former Soviet nations in the Belarusian
capital on Thursday, Russian Finance Minister Alexei Kudrin said his
country will decide early next month whether to approve the loan of
$3 billion over three years.
"We have a condition," Kudrin said. "In the next three years a certain
privatization should be carried out."
Russia is thought to be seeking to capitalize on Belarus' vulnerability
by acquiring major stakes in energy assets such as Beltransgas,
the state-owned gas pipeline network that supplies domestic homes
and forwards the gas to Europe.
Kudrin said talks on Beltransgaz were imminent, and shot a veiled
warning that Belarus is in no position to turn Russia down. Kudrin
said if Belarus isn't able to raise up to $9 billion via selloffs,
it would be forced to turn to the International Monetary Fund, which
has loan conditions that Belarus is ill-equipped to meet.
Independent analysts say to save its economy, Belarus is in urgent
need of at least $8 billion.
"The authorities need to admit that the politics of recent years were
flawed," said Stanislav Bogdanovich, former head of the country's
central bank.
Last month, the authorities gave permission to banks to buy and sell
the ruble at a rate determined in open trading.
Banks initially responded by raising the U.S. dollar exchange rate for
retail transactions by 30 percent, from some 3,000 Belarusian rubles
to 4,000 rubles against the dollar. It has since risen to 8,000 rubles
to the dollar, giving rise to miles-long lines at currency exchange
booths as desperate locals try to squeeze the rapidly diminishing
value out of their rubles.
Belarus uses different exchange rates, depending on whether it is
banks, private individuals or state companies that are buying the
foreign currency. At times the difference between those rates can be
up to 30 percent.
For most of his 17 years in power, President Alexander Lukashenko
has relied on Russia - Belarus' main sponsor and ally - to maintain
a quasi-Soviet economy complete with a social safety net that helped
maintain his popularity.
But the Russian subsidies have dwindled recently as Moscow pushes
for control over Belarus' most prized economic assets, such as oil
refineries and chemical plants, in exchange for more loans.