Financial Times: Belarus Seeks Big IMF Loan

Belarus appealed to the International Monetary Fund for a loan of as much as $8 billion, a signal of the authoritarian president's growing desperation to stave off the country's most serious financial crisis since the fall of the Soviet Union.

But Mr. Lukashenko has hurdles to pass with the West before any deal with the IMF. Until last month, he had lambasted Western leaders for meddling in the internal affairs of Belarus, where he has jailed political opponents in the aftermath of his tainted re-election last year.

With Belarus's currency plunging and prices rocketing, the normally sleepy capital of Minsk is beginning to see stirrings of social unrest. Belarus's traditional sponsor, Russia, has refused a substantial bailout package as it pushes President Alexander Lukashenko to sell it some major state-owned assets.

Mr. Lukashenko's prime minister confirmed Wednesday that Belarus is turning to the IMF, and seeking a low-interest loan of between $3.5 billion and $8 billion -- a sum that struck some analysts as unrealistically high. But they say $8 billion might be the minimum needed to right the economy, in part because of a raft of wage and pension increases Mr. Lukashenko ordered just before last year's elections.

The aid request comes at an awkward time for Mr. Lukashenko, who has for most of his 17-year rule managed to balance East and West, hinting that he might soften his rule in order to lure Western financial aid and wean his economy from its dependence on Moscow.

The balancing broke down in December with a brutal crackdown on protesters who called his election rigged. Afterward, the European Union slapped asset freezes and travel bans on top Belarus officials.

Last month, a Minsk court sentenced three rival presidential candidates to lengthy prison terms, and afterward the U.S. and the EU threatened tougher sanctions at a Group of Eight meeting in Poland, where Mr. Lukashenko faced tough criticism. "All in all, it seems that it would have been much easier for Belarus to get this loan six months ago, before they crushed protests and jailed opposition members," said Julia Tseplaeva, chief economist at BNP Paribas in Moscow.

Analysts said Belarus's finances have been drained by a nagging trade deficit, and worsened by higher fuel prices from Russia, its main trade partner.

Belarus had hoped to get a lifeline this year from Russia in the form of an immediate $3 billion loan, but that never materialized. Russian investors traveled to Minsk to meet with Mr. Lukashenko and discuss buying stakes in major Belarus companies, including Belaruskali, a giant potash producer. Talks broke down as Russia said Minsk's price demands were too high, and Mr. Lukashenko accused Moscow of trying to get assets on the cheap. Russia now says it will disperse the $3 billion over three years.

"The Belarus economy is living beyond its means; we need loans to make a relatively painless transition," said Stanislav Bogdankevich, former Belarus National Bank chief.

Now Mr. Lukashenko must decide whether it will be more painful to cut a deal with Russia or the IMF, experts say.

Like Russia, the fund will likely demand that Mr. Lukashenko privatize state-owned companies. But Alexander Klaskovsky, a Minsk independent political analyst, said Mr. Lukashenko might find an IMF deal more palatable, because the fund will at least set out "clear conditions, and there won't be any imperial connotations" to the discussion.

If Moscow oversees the privatizations, "Russians might buy everything standing," Mr. Klaskovsky said.