The European Bank for Reconstruction and Development (EBRD) announced on Wednesday an unprecedented deal with Belarus to participate in privatising a state-owned bank in the ex-Soviet republic whose economy remains largely state-controlled.

A preliminary deal providing for the Belarus government to sell its controlling stake in the country's fourth-largest bank, Belinvestbank,  by 2020 was struck during EBRD's annual meeting in the Georgian capital Tbilisi.

"This pioneering agreement marks a bold change in official policy and could open a new chapter in the history of the country's banking system, 65 per cent of which is currently owned by the state," the EBRD said in a statement

It said it was "ready to make pre-privatisation funding available" under the condition that Belinvestbank's "independence as a commercial entity free from political influence" is guaranteed.

Dominated by the state, the economy of Belarus -- a former Soviet republic ruled for the past two decades by strongman President Alexander Lukashenko -- is heavily dependent on Moscow, and was badly hit by Russia's economic and currency crisis.

The International Monetary Fund has long urged Minsk to liberalise its economy in order to boost resilience to external shocks.