New banknote for Belarus

Belarus issued a new higher-domination ruble note on Monday to deal with the inflation which continues to have a grip on the former Soviet republic. The 200,000-ruble banknote is worth less than 20 euros ($26) under the official exchange rate.

Last year, Belarus fought a severe economic crisis with an inflation rate standing at 108 percent. The central bank in Minsk at one time raised its interest rate to 45 percent.

"The new banknotes will solve the challenges we're facing," the deputy head of the Belarusian National Bank, Vladimir Senko, said in a statement. "Events took place which demanded a new banknote," he added.

Previously, the highest-domination note was 100,000 rubles, but the new one may not be the last response to inflation in Belarus. The National Bank said that it wouldn't rule out a 500,000-ruble note in the not-too-distant future.

Russia to the rescue

The inflation rate in the country eased slightly at the start of the current year, but the month-on-month rate was still 1.5 percent in February. Interest rates now stand at 38 percent, following a two-step decrease earlier this year in a bid to stimulate stalled economic growth.

Economists have blamed the economic crisis in the country on what they call the authoritarian rule of President Alexander Lukashenko whose tight state control and big subsidies are believed to have created a massive current account deficit.

But Belarus is getting billions of euros in financial aid and cheap energy from neighboring Russia in exchange for Moscow's complete control over the domestic natural gas pipeline system.

hg / mll (AFP, Reuters)