1. This statement reports on key developments since the staff report was finalized. The new information does not alter the thrust of the staff appraisal.

2. On the basis of preliminary data, the performance criteria for end-September appear to have been met. Based on preliminary data, NIR exceeded the adjusted target by $150 million, and NDA was 494 billion rubels below the adjusted target. The adjusted target for the fiscal deficit is also likely to have been met based on the revenue and expenditure pattern in recent months.

3. The authorities took several actions in recent weeks in accordance with their Letter of Intent:

• The Presidium of the Council of Ministers decided on October 14 to suspend the adoption of new government lending programs through end-2009 (prior action).

• The Board of the NBRB adopted a resolution on September 23 to bring loan classification and provisioning requirements in line with the FSAP recommendations (end-September structural benchmark).

• The draft decree on establishing a Privatization Agency was submitted to the Head of State on September 30 (end-September structural benchmark). The draft Privatization Law incorporating comments from the World Bank staff was sent to the Parliament on the same day.

• The Presidium of the Council of Ministers approved on September 27 the draft 2010 budget with a deficit capped at 2.7 trillion rubels. The draft budget proposes an increase in the VAT rate from 18 to 20 percent.

4. World Bank and EU financing for 2009 is proceeding as expected, with a change proposed in the composition of other official financing.

• The authorities are on track to receive $200 million from the World Bank. They adopted the draft decree on control (supervision) on October 16, thereby meeting a prior action under the World Bank’s policy Development Loan.

• Discussions on the authorities’ request for Macro-Financial Assistance from the EU in the amount of about $290 million are proceeding as planned.

• The Russian authorities recently proposed to replace the final $500 million tranche of a $2 billion bilateral loan with a loan of the same amount from the Eurasian Economic Community’s anti-crisis fund. Parliamentary ratification of Belarus’s participation in this fund is expected in early November. The Belarusian authorities have indicated that if at the time of discussions on the third review of the SBA in early November there is evidence that securing a loan from the anti-crisis fund is likely to be delayed beyond the end of 2009 they would be prepared to take contingency measures beyond those identified in the Letter of Intent to close the financing gap during the remainder of the program. The authorities have indicated that they are prepared to take a package of measures including selling national assets to increase official reserves and realizing fiscal savings (the authorities have used both of these measures already to meet the end-September performance criteria notwithstanding the delay in disbursement of the Russian loan) and allowing greater exchange rate flexibility within the current band. The staff estimates that these measures could produce savings of about $500 million over the remainder of the program period, though as not all of these would materialize by end-December a small modification of the end-December NIR and NDA performance criteria might also be proposed at the time of the next review.

5. Recent economic data are consistent with the analysis in the staff report. GDP declined by 0.3 percent year-on-year in the first nine months. Twelve-month CPI inflation fell further to 11.7 percent in September. Incoming data suggest an improvement in the export volume, providing support that could result in slightly higher output than projected in the staff report. However, the external current account will remain weak, reflecting a further fall in export prices, as well as other developments elaborated in the staff report. The outlook for 2010 is broadly unchanged from the projection in the staff report.