Key developments and challenges

Belarus - one of the Bank’s least reformed countries of operation - made some progress recently in structural reform, with some improvements in the environment for small and medium-sized enterprises, the streamlining of taxation, limited price liberalisation and selected privatisation.  However, the state continues to dominate the economy and the private sector continues to face significant administrative and regulatory burdens.

The transparent privatisation of state-owned enterprises remains a major challenge. The authorities released a long list of enterprises to be privatised in 2011-13, but are yet to make firm decisions on privatisation of several real and banking sector firms. However, the authorities’ commitment to privatisation is in question as the political environment deteriorated after the presidential elections. Pinskdrev, a privately owned company, was taken over by the state after an industrial incident.

A new five year plan backed up by a presidential directive, approved in December 2010, are intended to encourage private sector development and FDI inflows. If implemented, the reforms should help support economic growth and mitigate significant macroeconomic vulnerabilities. However, the authorities' commitment to significant structural reforms remains in question. The highly centralised municipal utilities and infrastructure sectors need to undergo commercialisation and modernisation.