Belarus overview

Cityscape at night

The European Bank for Reconstruction and Development has adopted a new four-year strategy for Belarus, which outlines the Bank’s investment priorities in the country.

The strategy notes that in the recently changed regional geopolitical environment Belarus has engaged in greater international openness and become more willing to discuss domestic political developments, including the human rights situation in the country.

These positive developments, as well as the international response to these steps, have created a new political context for the Bank’s operations in the country and provide an opportunity for enhanced engagement with the Belarusian authorities.

In Belarus we focus on:

The EBRD is prepared to support concrete reform initiatives of the government with investments and technical assistance to develop the private sector, promote privatisation and enhance the sustainability of public infrastructure through commercial solutions. The strategy identifies the following strategic areas:

  • Enhancing the competitiveness of the real economy: The EBRD will seek to provide long-term debt and equity financing to local and foreign investors as well as support small and medium-sized business (SME) lending through the development of a sustainable commercially oriented banking sector. It will continue providing advice to SMEs to strengthen their competitiveness. The Bank will also promote the privatisation of state-owned enterprises by strategic investors, which can provide capital and know-how to improve competitiveness and productivity.
  • Enhancing the sustainability and service quality of public infrastructure: The EBRD will encourage private sector participation in the provision of public infrastructure services. The Bank will also seek to support well-defined reform initiatives of the government in the municipal, transport, power and energy sectors through its investments and technical assistance. Implementing these directions consistent with the Bank’s Green Economy Transition (GET) approach, the EBRD will also seek to assist Belarus’ transition to a low carbon economy, where public and private investments are made in a way that minimises the impact of economic activity on the environment.

As well as being a country where the EBRD works, Belarus is also a donor and a beneficiary of the Northern Dimension Environmental Partnership (NDEP) and benefits from investments in water supply and wastewater treatment.

The EBRD’s latest Belarus strategy was adopted on 7 September 2016

GDP forecast for Belarus’s Real GDP growth in 2016 -3.0 per cent

Belarus’s economy shrank by 3.9 per cent in 2015 after 19 years of positive growth. All main sectors contracted – mining, manufacturing, construction and agriculture. Recession in Russia and the depreciation of regional currencies exacerbated Belarus’s external imbalances. International reserves declined from US$ 3.9 billion in October 2014 to US$ 2 billion in March 2016 (approximately 1.5 months of imports). Against a backdrop of low international reserves and limited borrowing options, the authorities attempted external and internal adjustments. The Belarus rouble depreciated against the US dollar by 36 per cent in 2015 and by a further 8 per cent in the first quarter of 2016. General government fiscal policy is reasonably tight, although there are contingent fiscal liabilities related to state banks and state-owned enterprises. In the first quarter of 2016, GDP contracted by 3.6 per cent year-on-year, with gross value added in manufacturing – the largest sector of the economy – falling by 4.4 per cent and with construction output falling by 23.6 per cent year-on-year. In March 2016, the Eurasian Fund for Stabilisation and Development approved a US$ 2 billion loan for Belarus, to be disbursed in tranches in 2016-2018 (a first tranche of US$ 0.5 billion was disbursed in March). Taking Belarus’s trade linkages with Russia into account, as well as the structure of the economy, imbalances and refinancing risks, we expect Belarus’s economy to shrink by 3 per cent in 2016 before growing by 1 per cent in 2017.

Belarus in the EBRD’s 2015-16 Transition Report