Belarus on Wednesday asked the International Monetary Fund (IMF) to bail it out of a growing economic crisis that has seen a currency devaluation and consumer panic empty the ex-Soviet country’s stores.
“The Belarus government and the National Bank of the Republic of Belarus on May 31 2011 sent an application to the IMF for the extension of a stabilisation loan,” the Belarus government said in a statement.
Prime Minister Mikhail Myasnikovich said he expected the level of help to be $3.5-billion to $8-billion over three to five years.
The approach to the IMF underlines the severity of the economic crisis in Belarus and represents a major U-turn by the country’s authorities.
Authoritarian President Alexander Lukashenko last month demanded to know why he would subject his government to the stiff terms likely to be sought by the agency and denied he would ever seek Western help.
But the diplomatically isolated government — now expecting a smaller bailout package from ex-Soviet countries than it had hoped — said it would like to see the IMF loan approved by the time the talks end on June 14.
Government officials said they were expecting to have to agree to draconian terms that could result in social pain and heavy political damage for Lukashenko.
“The IMF will recommend we lift the recently-imposed price freezes, once again sharply raise the main refinancing rate, and of course step up the privatisation programme,” a government source told the Interfax news agency.
The source said the loan figure may only be announced after the IMF decides to approve the recovery programme — a potentially controversial move at a time when Lukashenko has been isolated by the West.
The country’s economic problems intensified after a disputed December election handed Lukashenko a victory so controversial it even soured his relations with traditional ally Russia.
Moscow has since refused to offer direct assistance to Minsk and itself demanded that Lukashenko approve a privatisation programme that could see Russian firms take over large swathes of its neighbour’s economy.
Lukashenko appeared to be running out of options and increasingly blaming his domestic problems on foreign foes.
He promised to kick the Russian media out of Minsk and demanded that a better work ethic be introduced at the country’s state-run enterprises.
But a series of dramatic economic decisions betrayed a sign of panic among Lukashenko allies never seen during his nearly 17-year rule.
Lukashenko agreed to devalue the local ruble by 36% last month after repeated vows to defend it.
Interest rates were hiked last week by a remarkable 200 basis points to 16% and the government admitted that annual inflation would this year hit 39% under its optimistic forecast.
It has also slapped price caps on basic staples such as salt and vinegar to keep them from being swept off the shelves by consumers who are seeking to convert their depreciating currency into actual goods.
Belarus has no current programme with the fund after receiving its last IMF credit in March 2010.
The IMF issued a scathing assessment of the government’s economic management after its last visit to Minsk in March and urged it to take some “difficult decisions”.
Lukashenko’s troubles at home have been compounded by a still-unclaimed bomb blast that killed 15 people on the Minsk metro in April and sparked another wave of detentions by the Belarus police. — AFP