IMF gives Belarus 700 million dollars, praises Lukashenko

Oct 22, 2009, 10:36 GMT

Minsk - The International Monetary Fund (IMF) loaned Belarus 700 million dollars, with fund managers praising the planning skills of the country's authoritarian leader Aleksander Lukashenko, the Belapan news agency reported Thursday.

The IMF credit was the second tranche of a total 3.63-billion- dollar credit programme approved last year by the fund for the former Soviet republic.

The IMF' announced loan terms include a controlled float of the Belarusian currency, the rouble, tied to a basket of Western currencies, a one-time 20-per-cent devaluation of the rouble, and reductions in wage hikes for government employees, among other market reforms.

Lukashenko, a former collective farm boss, put the IMF-suggested reforms into effect by presidential fiat.

Kato Takatoshi, IMF lead manager for the loan programme to Belarus, praised Lukashenko for solid macroecomomic management limiting the effects of the world financial crisis in Belarus.

'Notwithstanding the substantial reduction of export volumes, the economic contraction (in Belarus) has been limited in comparison with other nations,' Takatoshi said, in comments reported by Belapan.

'A change to the exchange rate (of the Belarusian rouble) was supported by tough fiscal policy, and a shortage of government revenues was compensated by reduction of expenditures.'

Takatoshi praised Belarus' 'improved business climate' and 'support to the private sector' as evidence of Lukashenko's effective management.

Lukashenko in a Friday speech to members of the Minsk diplomatic corps said Belarus 'has no other option' but to tighten its relations with western nations, because of reduced export revenues and other economic pressures caused by the world financial crisis.

Belarus has long been a pariah state with most western governments and major loan agencies because of Lukashenko's poor human rights record, limiting foreign investment to a trickle.

A programme initiated in May by the European Union to improve relations with Belarus has seen some success, with Lukashenko allowing minor liberalisations of the economy and civil society, in order to receive badly-needed foreign money.