Russian-Led Fund to Disburse Belarus $440 Million Next Month

Belarus won approval to get the second tranche of a bailout from the Eurasian Economic Community fund three days after striking a gas pricing deal with Russia and agreeing to sell its pipeline network to OAO Gazprom.

The payment of $440 million from the Russian-led group’s anti-crisis fund will be disbursed next month after “serious steps” taken by the former Soviet republic to combat its economic turmoil, acting Russian Finance Minister Anton Siluanov told reporters in Moscow today.

Belarus is seeking foreign currency after the country’s widening current-account deficit eroded international reserves, forcing the authorities to devalue the ruble by two-thirds since January. The $10 billion fund set up three years ago by former Soviet states that also include Kazakhstan, Kyrgyzstan and Tajikistan sent $800 million to Belarus on June 21 with another $2.2 billion due in five further installments over the next three years.

Russia agreed to cut prices for natural gas supplies to Belarus in a deal that sees Gazprom, the Moscow-based exporter of the fuel, acquire full ownership of the neighboring country’s pipeline network, according to a Nov. 25 accord. Gazprom will buy the 50 percent of pipeline operator Beltransgaz it doesn’t already own for $2.5 billion.

As a condition to receive the second payout, Belarus also agreed to narrow the difference between the central bank’s benchmark refinancing rate and market borrowing costs, Siluanov said today.

Policy makers raised the refinancing rate to 40 percent from 35 percent earlier this month in the 11th increase this year. Wedged between Russia and European Union member Poland, Belarus has also sought a bailout loan of as much as $7 billion from the International Monetary Fund.

Siluanov said the fund may also consider issuing a $106 million loan to Kyrgyzstan early next year after discussing the credit facility at a meeting today.

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