The Russian government is preparing a 500 billion ruble ($86 million) state credit for Belarus within the framework of the newly-approved Russia-Belarus Union. (Russian news agencies, June 13) The credit was announced by Russian Finance Ministry representative Viktor Mezhurutsky on June 13 at the first session of the joint Russian-Belarusan parliament, held in Brest. According to Mezhurutsky, the agreement for the credit has already been signed by Russian first deputy finance minister Aleksei Kudrin, and now awaits Prime Minister Viktor Chernomyrdin’s signature. Because the credit does not exceed $100 million, it does not need to be ratified by the Russian Duma. The credit is likely to be formally extended next month.
Although neither the source of the funds for the credit nor the target expenditures have been announced, the credit may be devoted to servicing the debts incurred by Belarusan energy importers to Gazprom and Russian oil firms for Russian energy exports. As such, these funds will help ease the pressure on Belarus’s foreign exchange reserves, and thereby finance Belarus’s energy needs.
While the timing may be coincidental, it is striking that this credit appeared within a month of the IMF’s mid-May decision to release a $697 million tranche of Russia’s $10.1 billion Extended Fund Facility for 1996-1998, as well as the World Bank’s decision in late May to supply Russia with $800 million in credits for social security reform. In effect, some of the funding supplied by these international financial institutions — intended, among other things, to pay off Russia’s pension debts by July 1 — is implicitly going to finance Russia’s political integration with (some would day absorption of) Belarus.
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