Russia halves Belarus power supply over unpaid bills Published duration 9 June 2011

image caption People have been selling goods in the streets in Minsk to make ends meet

Moscow has halved electricity supplies to Belarus over unpaid bills, piling on pressure for it to privatise lucrative assets.

A source at Russia's energy export monopoly said supplies - which account for 10% of the country's needs - might stop completely on 19 June.

Confirming the cut, Belarus said it owed $54m (£33m).

Gripped by an economic crisis, it is seeking a Russian-led $1.2bn bail-out which Moscow is tying to reform.

It has also asked the IMF for an emergency loan of up to $8bn.

The country, with its Soviet-era command economy, is grappling with its most severe balance of payments crisis since the collapse of the USSR.

It has announced it is raising its main interest rate from 14% to 16%, and is freezing prices on a number of staple foods until 1 July, amid panic-buying of goods by its citizens as prices soar.

'Certain problems'

Moscow is traditionally the country's main ally but has been linking aid to a privatisation drive.

The Russian power network operator confirmed that supplies had been more than halved overnight to 200 megawatts from 460 megawatts.

A source at Inter RAO IUES.MM, the export monopoly, told Reuters news agency: "If Belarus doesn't pay, supplies will be shut off entirely on June 19."

The government in Minsk said it hoped to resolve the matter "as quickly as possible".

"However, it is important to note that the country has certain problems with its currency," an energy ministry spokeswoman said.