RIA Novosti quoted Ms Natalia Kolyadina International Monetary Fund envoy to Belarus said the Belarusian economy has been heavily hit by the introduction of duties for the reexport of Russian oil.

She said "This was a shock for Belarus's economy, which has been estimated at about USD 2 billion this year, while the current account deficit accounted for 13% of GDP."

Russia exported more than 21 million tonnes of oil to Belarus last year, but only 5 million tonnes to 6 million tonnes was for domestic consumption. The rest was re-exported, some after passing through one of the country's two oil refineries.

Mr Igor Sechin Russian First Deputy Prime Minister suggested in December that Belarus could import the domestic volumes duty free, citing the brotherly relations between the two countries leaving the remaining 15 million tonnes subject to export duties.

Moscow and Minsk faced off at the start of the year over tariffs on imports of Russian oil which Belarus said should be completely duty-free in the Customs Union.

The IMF official said "An increase in oil prices has caused a significant decline in oil refineries' profitability. In connection with this, oil export has significantly decreased, adding that the Belarusian government had taken steps to decrease the impact of the shock on the country's economy.”

The introduction of oil export duties forced Belarus to halve crude oil exports in the first half of 2010. Export of petroleum products has lowered by 40% and the output of Belarus oil industry by 30%.

(Sourced from RIA Novosti)