Belarus to get $2.5bn IMF loan

The IMF said Belarus's government deserved support

The International Monetary Fund (IMF) has given initial approval to a $2.5bn (£1.7bn) loan to Belarus to help it cope with the financial downturn.

The IMF said Belarus faced a "difficult economic situation", and its actions to cope with crisis "deserve the support of the international community".

President Alexander Lukashenko threatened Belarus would leave the IMF if its loan request was rejected.

The agreement still has to be formally approved by the IMF's executive board.

The IMF said the loan agreement could go before its executive board in mid-January, and Belarus would be able to draw on about $800m immediately after the loan was given the go-ahead.

'Orderly adjustment'

IMF managing director Dominique Strauss-Kahn said: "Belarus faces a difficult economic situation. Its economy has been growing at an impressive rate for several years but has recently shown signs of overheating."

"Belarus has also been hit hard by the global economic crisis," he said.

The IMF said that Belarus's foreign currency reserves had declined due to falling demand from its trading partners amid the global economic slowdown.

"The Fund-supported programme will help Belarus achieve an orderly adjustment to the external shocks that it is facing and offer protection against its most pressing vulnerabilities," it said in a statement.

The central bank of Belarus, a former Soviet republic with a Soviet-style economy, said on 22 October that it was looking for an IMF loan.

The US has dubbed Belarus "Europe's last dictatorship", but Mr Lukashenko has sought to reach a deal with the West in recent months.

The president recently outlined plans to privatise hundreds of companies and attract foreign investors.

But he has also emphasised that there will be no overnight shift from the country's Soviet-style economy to private ownership as happened in Russia, saying his country will follow the Chinese model instead.