Belarus Prepares for Tough IMF Bailout Talks

Crisis-hit Belarus wants to secure an IMF bailout package of up to $8 billion on the same terms as a smaller loan from Russia agreed last week, officials say, but analysts say talks with the Fund will be far from easy.

A Russian-led regional fund has agreed to lend Belarus $3 billion over three years after the former Soviet republic lost a quarter of its foreign currency reserves and devalued its rouble by 36 percent.

Officials on both sides acknowledge the loan will not be enough to plug Belarus's large current account gap which has led to a surge in inflation and panic buying of food staples as well as rising public discontent.

However, talks to secure further credit from the IMF are overshadowed by President Alyaksandr Lukashenka's spat with the West.

He has been ostracised by the United States and the European Union over his crackdown on the opposition following a mass protest against his re-election last December in a vote Western observers have called fraudulent.

On Monday, Belarussian Deputy Prime Minister Syarhei Rumas met a visiting IMF mission which is staying in Minsk until June 13 to assess the economic situation as a follow-up to the IMF programme Belarus ran in 2009-2010.

"We would like to find common ground ... (and find out) to what degree the IMF supports the measures we have agreed with the (Russian-led) anti-crisis fund," Rumas said in front of journalists before going into a closed-doors meeting.

As a key condition of the Russian loan, Belarus must privatise state assets worth $7.5 billion within the next three years, some of which, analysts say, could be snapped up by Russian companies.

It has also halved its 2011 budget deficit target to 1.5 percent of GDP and pledged to reduce it to 1 percent by 2013.


However, analysts say the IMF is likely to put forward more requirements and its Western members may be reluctant to support Lukashenka's government.

In the second half of 2010, immediately after completing its last IMF programme, Lukashenko's government raised public sector wages by 40 percent and increased spending on other items in the run-up to the December 2010 presidential election.

"Given Belarus's record in going off-track in the previous programme, the IMF is likely to require a tough set of prior actions before recommending a programme, and the IMF board will likely subject a Belarus programme to a high level of scrutiny," Morgan Stanley said in a note on Monday.

Lukashenko secured a fourth term in office last December but hundreds of thousands of opposition supporters rallied on Minsk's central square to protest at the result, prompting a police crackdown in which hundreds of people were detained.

A number of them, including several former presidential candidates, have since been convicted of offences such as organising public disturbances. The United States and the EU have responded by introducing a travel ban on Lukashenka and his senior officials as well as targeted sanctions against Belarusian companies.
Kyiv Post