Belarus has requested aid from the IMF, joining Iceland, Pakistan, Hungary and the Ukraine in asking for assistance in weathering the global financial crisis.
“The global financial crisis has adversely affected the Belarusian economy and its access to external finance,” IMF managing director Dominique Strauss-Kahn said in a statement released in Washington on Wednesday.
Some emerging economies are strapped for cash as a worldwide credit shortage disrupts trade, making it difficult to service foreign debt. Iceland’s economy collapsed this month after its weakening banking system froze its foreign-exchange market, making it harder to pay for imports.
“It is a very challenging time for emerging markets,” said Joseph Tan, chief economist for Asia at Credit Suisse Private Banking in Singapore.
Countries that have asked for aid have “very small foreign exchange reserves and it isn’t sufficient to ride them through this whole process,” he said.
Belarus has US$4.19 billion in foreign reserves and Iceland had US$3.64 billion, IMF data show.
Discussions with Belarus will start in the “next few days” and the amount of the assistance hasn’t been decided. Belarus requested assistance that could be supported by a stand- by arrangement, or line of credit that doesn’t necessarily have to be used.
Belarus applied for a US$2 billion loan and may also seek funds from central banks and commercial banks in other countries, Interfax reported on Wednesday, citing the Belarusian central bank.
Ukraine said this week it might sign a loan worth as much as US$15 billion with the IMF next week as it seeks to inject cash into domestic banks. Pakistan is also seeking money after the credit crunch depleted its foreign reserves and inflation at a 30-year high.
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