Oct. 22 (Bloomberg) -- Belarus requested aid from the International Monetary Fund, 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 today.
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.”
Belarus has $4.19 billion in foreign reserves and Iceland had $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’ current account deficit widened to $986 million in the second quarter from $424 million in the first three months of the year, according to the National Bank of the Republic of Belarus, the nation’s central bank.
$2 Billion Loan
The former Soviet state applied for a $2 billion loan and may also seek funds from central banks and commercial banks in other countries, Interfax reported Oct. 22, citing the Belarusian central bank.
Ukraine said this week it may sign a loan worth as much as $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 is smothering economic growth.
Belarus has a Ba2 rating from Moody’s Investors Service, two levels below investment grade. The Belarus ruble has declined 1.8 percent against the dollar in the past year.