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Belarus sees free floating ruble by May

22 april 2011, 16:59
Belarus hopes to introduce a single floating exchange rate next month after it receives an emergency bailout loan from Russia which could help overcome its fiscal crisis, a top official said on Friday, AFP reports.

The announcement was made as Belarus pursues painful negotiations with Russia over a multi-billion dollar loan. This could result in the former Soviet republic cede control of its main natural gas company.

"We are relying on foreign borrowing," National Bank of Belarus currency controls chief Anatoly Moroz told reporters.

"This issue will be resolved by May. And then we will have a single exchange rate," Moroz said.

Belarus has struggled through a deepening fiscal crisis which began last year when Russia raised the price it charges for energy.

The National Bank has since adopted a complicated gradual easing policy involving the introduction of multiple exchange rates.

Banks were permitted this week to set their own exchange rate in lending operation they conduct between themselves.

But Belarus has imposed an artificial rate in cash operations between the state and "privileged" organisations that import medicine and other vital supplies.

The state also regulates the rate at which banks buy and sell dollars and euros to regular clients, although black market rates now deviate from the artificial one by about a third.

Belarus hopes to secure a $1.0-billion-loan (686-million-euro) from Russia and up to $2 billion more from a loose Moscow-led economic union of former Soviet republics.

Russian Finance Minister Alexei Kudrin, who has previously opposed unconditional lending to President Alexander Lukashenko, said this week that the negotiations could be completed by May.

But Kudrin also noted several outstanding differences amid reports in Moscow that Russia was pressing for control of key energy enterprises in exchange for the loan.

Russian media reports said that Belarus was now willing to part with its stake in the Beltransgaz natural gas distribution company -- already half-owned by Russia's monopoly Gazprom -- in exchange for help.

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