China backs Belarus with $1bn loan

China has given cash-strapped Belarus a loan of one billion dollars and a grant of some 11 million, the Belarus parliament said Saturday, quoting the head of the Chinese National People's Congress. A statement said Wu Bangguo also announced agreements to build a communications satellite, a paper factory and a hotel in Minsk in a meeting with leading members of the Belarus parliament. "The Chinese government has taken the decision to accord Belarus a preferential loan of one billion dollars for the realisation of joint projects, as well as a grant of 70 million yuans," the statement quoted Wu as saying. He also said China gave Alexander Lukashenko's iron-fisted regime full backing for its stance on domestic and international questions and its resistance to foreign meddling. The isolated ex-Soviet country saw its economy thrown into crisis this year by a yawning budget deficit that emerged after the state went on a spending spree in the run-up to Lukashenko's controversial December re-election. On Wednesday the Belarus ruble lost nearly 40 percent of its value as Minsk floated its currency for the second time in a year in the face of rapidly dwindling reserves. Inflation has soared by 53.6 percent since December, according to the central bank while trade ground to a halt as firms hoarded foreign currency and refused to perform basic market operations at the exchange rate set by the state. The government has applied for an eight billion dollar loan from the International Monetary Fund, while Russia and other partners from the former Soviet Union have offered three billion dollars over three years. But the IMF wants structural reforms to the highly-centralised economy while Russia has demanded privatisations -- which would enable Russian firms to lay their hands on state assets. Lukashenko, who is under US and European sanctions for his crackdown on the opposition in the wake of the elections, has accused the West and the IMF of trying to strangle his country by demanding political liberalisation as a condition for economic aid. There was no mention of any Chinese conditions in Saturday's statement, which quoted Wu as saying Minsk and Beijing had close if not identical views on many issues including human rights. "We seriously support the internal and foreign policies of your country, all your efforts to defend your sovereignty, your independence and your fight against foreign interference," he said.