MINSK, Jan 1: Belarus will devalue its rouble currency by 20 per cent as of Jan 2 and raise its key refinancing rate, its central bank said on Thursday, a day after the country struck a deal with the IMF for a $2.5 billion loan.

The Belarussian economy, still largely in state hands, has not been hit as hard by the global financial crisis as have those of neighbouring Russia and Ukraine, but the country has had to spend some of its reserves to maintain its currency above a floor of 2,200 to the US dollar.

As of Friday, the rouble’s rate will be 2,650 to the dollar. The central bank will raise its key refinancing rate to 14 per cent as of Jan 8 from 12 per cent.

The devaluation is not as sharp as the fall in Ukraine’s hryvnia currency which at one point last month had lost half its value against the dollar since September, nor the Russian rouble which has lost about 30 per cent against the dollar since the summer.

“The Belarussian rouble has proved to be more stable in comparison to currencies in other ex-Soviet states,” a central bank spokesman said.

Belarus has said it would make some changes to its monetary and fiscal policies as it was negotiating the loan agreement with the International Monetary Fund.

Long-serving President Alexander Lukashenko said in December he was willing to devalue the currency, predicting a rate of 2,600. Authorities have said they would also cut budget spending and have already started recapitalising banks.

Lukashenko, striving to improve diplomatic and economic ties with the West while remaining a close ally of Russia, has talked of greater economic liberalisation and selective privatisation.

The country received its maiden ratings from international agencies in August 2007 and had hoped to issue its first Eurobond, though was unable to do so as emerging market debt issue ground to a halt due to the global crisis.

Foreign investor interest has been piqued in the past 12 months or so. Austria Telekom and Turkcell have both entered the market and authorities hoped to sell a large stake in one bank to Commerzbank.—Reuters