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National Bank head says that $2-billion loan "promised" by Russia will go toward economic modernization

The $2-billion loan that has been "promised" by Russia will be spent for the modernization of the Belarusian economy and not the replenishment of the nation`s gold and foreign exchange reserves, Nadzeya Yermakova, head of the National Bank of Belarus (NBB), said during a news conference in Minsk on April 2.

There is no need to replenish Belarus` international reserves, Ms. Yermakova said.

Belarus was expected to request the new loan during a session of the Supreme State Council of the Belarusian-Russian Union State near St. Petersburg on March 15. It was not clear after hours-long talks held by Alyaksandr Lukashenka and his Russian counterpart, on that date how Russia had reacted to Belarus` request. Messrs. Lukashenka and Putin lavished praise on the state of bilateral relations but made no mention of the $2-billion loan.

Speaking to reporters on Tuesday, Ms. Yermakova said that the Anti-crisis Fund of the Eurasian Economy Community (EurAsEC) might release the next, fifth tranche of its $3-billion loan to Belarus in April. "There is hope, common sense should prevail," she said. "Tomorrow if not today."

The expert council of the Anti-crisis Fund made no specific decision on the matter during a meeting on April 1, Ms. Yermakova said. Belarus disagrees with the views expressed by the Fund`s experts on Monday, she said, without elaborating. "Let`s not talk prematurely," she explained. "We`ll wait for the decision."

Belarusian Finance Minister Andrey Kharkavets said on March 27 that the Belarusian government expected to receive the fifth tranche of the EurAsEC Anti-crisis Fund`s loan in April, BelaPAN said.

According to Mr. Kharkavets, the expert council of the Anti-crisis Fund is to hold a meeting on March 28, during which it is expected to decide on recommending the disbursement of the tranche, but it is not known yet when the Fund`s board will make its decision on the matter. "So the process is going on but, unfortunately, it is behind the agreed schedule," he said.

In a statement issued a few days later, the Eurasian Development Bank (EDB), which administers the $3-billion, called on the Belarusian government to conduct a "realistic" economic policy and take more efforts to slow down inflation.

Last year`s policy by the National Bank of Belarus contributed to the country`s high inflation rate, the bank said, warning Belarus against policies leading to a deterioration in its balance of payments. In particular, the EDB cautioned against stimulating economic growth through an increase in lending.

Approved by the board of the Anti-crisis Fund on June 4, 2011, the $3-billion stabilization loan for Belarus was aimed at supporting the country’s effort to improve its balance of payments. The 10-year loan was to be disbursed in six tranches within three calendar years.

The loan has a grace period of three years and carries a floating interest rate set on the basis of the reference rates of the Russian Federation and Kazakhstan.

The first, $800-million tranche of the loan was made available to Belarus in June 2011. Another portion, $440 million, was provided in late December 2011. Belarus received the third, $440-million tranche in mid-June 2012, and the fourth, $440-million tranche in in January 2013.

Ms. Yermakova said in late December 2012 that the disbursement of the fifth and the sixth, final tranche would depend on Belarus` performance on its fiscal and monetary policy commitments.