Russia warns Belarus to lift barriers or lose aid

Russia threatened on Saturday to retaliate against Belarus, which is struggling to keep its currency stable, for considering trade restrictions to conserve scarce foreign currency reserves. Belarus undertook obligations to agree import restrictions with its partners in a three-country customs union, Kazakhstan and Russia, starting this year.
But the country's dire need to conserve its central bank reserves prompted President Alexandrer Lukashenko on Friday to say the country could halt all but the most essential imports. "This is the crudest possible violation of all the agreements we achieved within the customs union," Russia's Deputy Economy Minister Andrei Slepnyov told reporters on Saturday.
"We understand the difficulties faced by the Belarussian side, and for some time we have waited in hope. But no decisions are under consideration that take into account our interests, so we have sent a request for formal consultations."
Belarus secured a $3 billion multi-tranche support programme from a Russian-led regional bailout fund this month. But the government says it needs more funds and is seeking loans of up to $8 billion from the International Monetary Fund.
Finance Minister Alexei Kudrin said the transfer of a first loan tranche, worth $800 million, was being prepared for payment. A second $440 million tranche due for payment by the end of the year could be withheld, however. "It's not ruled that we could raise such a question if trade with Russia is significantly restricted," Kudrin told a news briefing.
Belarus has been struggling for months to pull out of a balance of payments crisis - largely fuelled by Lukashenko's populist economic policies - which has led to a 36 percent devaluation against the dollar. Imported goods such as medicines are scarce. The government has frozen the price of some foodstuffs, but ordinary Belarussians continue to hoard staples such as sugar and cooking oil. Consumer prices rose by a third year-on-year in May and inflation is set to accelerate even further.
The IMF has urged Minsk to abandon its multi-tiered system of foreign exchange rates and allow the rouble to float freely. It has also recommended that public sector wages be frozen and interest rates raised.