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. Last Updated: 07/27/2016

IMF Will Consider Loan to Belarus

MINSK -- An International Monetary Fund mission will visit Belarus from Oct. 27 to Nov. 6 to examine the country's request for a loan, the fund's office in Minsk said Thursday.

The office gave no further details of the mission, announced a day after Belarus acknowledged that it was seeking the loan.

IMF Managing Director Dominique Strauss-Kahn announced the imminent dispatch of the mission in a statement issued in Washington on Wednesday.

"The global financial crisis has adversely affected the Belarus economy and its access to external finance," Strauss-Kahn said. "At the same time, changing conditions in trade have negatively affected the country's balance of payments."

The amount of funding, he added, still had to be determined.

News reports say $2 billion of lending was being sought.

"The amount of the credit depends on the IMF," said Belarussian central bank spokesman Mikhail Zhuravovich.

He said the money was needed to support financial stability, create a cushion of security and maintain growth rates in the economy.

Belarus is the latest in a string of countries to seek IMF help as emerging markets are hammered by growing fears that the world economy is headed for a deep recession.

In recent weeks Hungary, Iceland, Ukraine and Serbia have turned to the IMF to help stabilize their economies.

In Moscow, Finance Minister Alexei Kudrin said earlier this week that Russia would issue a $2 billion loan to Belarus while resuming negotiations on a proposed common currency between the countries.

Kudrin said the decision to grant the loan was made last week -- with half to be issued this year and the other half next year. The terms of the loan were still under discussion.

Another Belarussian central bank spokesman, Anatoly Drozdov, described the loan as a "precautionary measure."

"As the economies of our neighbors and trading partners are affected by the crisis to some extent, we are taking precautions to ensure their problems don't become ours," Drozdov said. "Belarus has not suffered directly from the crisis."

The IMF extended credits of $270 million to Belarus in the 1990s but halted lending when the government failed to implement the fund's recommendations on reforms.

Belarus' economy is still largely state controlled, and plans for selective privatization have made little progress.

The government has raised its inflation forecast for this year to 14 percent after Russia hiked gas prices, but growth rates remain high with a 2008 target of 8.5 percent to 9.5 percent.

Dmitry Gourov, an analyst with UniCredit Bank in Vienna, said the request was logical to cover short-term debt, which amounts to about 60 percent of the total debt of $14 billion.

Minsk suspended its privatization program this month, saying there was little point selling state assets at discount prices. It has been unable to issue a debut eurobond this year as planned.

"They are trying to prepare themselves for the worst-case scenario. If they were to cover all this short-term debt on government and corporate side, they would need additional reserves," Gourov said. "Everyone is still predicting robust growth for next year, only a slight mark down from this year."