IMF to lend Belarus $2.5 billion

WASHINGTON: The International Monetary Fund will lend Belarus $2.5 billion to help it deal with the effects of the global financial crisis, the head of the fund said on Wednesday.

Dominique Strauss-Khan said the 15-month stand-by arrangement would be subject to the approval of the IMF board, which would discuss the issue in January. If the board approves, Belarus would have access to $800 million immediately.

Stand-by arrangements form the core of the IMF's lending policies. A stand-by arrangement provides assurance to a member country that it can draw up to a specified amount, usually over 12 to 18 months, to deal with a short-term balance of payment problem.

``The fund-supported program will help Belarus achieve an orderly adjustment to the external shocks that it is facing and offer protection against its most pressing vulnerabilities,'' Strauss-Kahn said.

``Adverse terms of trade movement, falling demand from trading partners and difficulties in accessing trade and other external finance have led to a decline in Belarus' international reserves,'' he said.

An IMF loan usually opens the door to a country obtaining additional financial resources from its sister institution, the World Bank, and from bilateral lenders.

Several countries, including Pakistan, Iceland and Hungary, have sought help from the IMF to weather the global financial credit crunch.

Belarus recently announced a $2 billion loan from Russia to help stabilize its Soviet-style economy. The government has spent its gold reserves in a furious effort to support the Belarusian ruble.

The United States and European Union have criticized President Alexander Lukashenko for his 14-year iron-fisted rule of Belarus.