Belarus Devalues Currency to Get IMF Loan

MINSK -- Last week's sharp devaluation of the Belarussian currency was a condition of a $2.5 billion IMF loan, President Alexander Lukashenko said Friday.

The devaluation has sent people rushing to buy goods before prices go up, and some say it could shake faith in the rule of Lukashenko, who had insulated the population from world market turbulence by keeping much of the economy in state hands.

In a measure of the scale of the world economic turmoil, even Belarus has felt the effects and has been forced to seek a $2.5 billion loan from the International Monetary Fund.

"There were two demands: not to raise salaries or pay in Belarussian rubles, because people will change them into dollars," Lukashenko said.

"The second demand was that we devalue the [Belarussian] ruble by 20 percent."

Freeing up the currency system, cutting social spending to balance budgets and imposing wage controls are common conditions set by the IMF for its loans to help rebalance ailing economies.

On Dec. 31, Minsk agreed to the IMF loan, and on New Year's Day it devalued the ruble to 2,650 per dollar from 2,200.