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 Eastern Europe Energy Efficiency and Environment Partnership Fund (E5P).

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

GDP forecast for Belarus’s Real GDP growth in 2019 2.0%

GDP forecast for Belarus’s Real GDP growth in 2020 1.8%

Real GDP growth in Belarus rose from 2.5 per cent in 2017 to 3.0 per cent in 2018. Growth was driven by an expansion of domestic demand and exports, although net exports were actually negative. A strong increase in real disposable income, underpinned by 11.6 per cent growth of real wages, boosted the acceleration of private consumption growth to 8.3 per cent. Fixed capital formation grew by a solid 4.9 per cent, slightly below the previous year’s rate. Exports and imports continued to recover from the slump in 2016, though both remain substantially below pre-crisis level. At the same time, strong net improvements in exports of goods and services as well as secondary income, the latter due to rising transfers of duties on energy resources in line with the agreement with Russia, brought the current account nearly to balance in 2018. As a result, the exchange rate remained stable and average inflation was 4.9 per cent in 2018. According to preliminary estimates, the economy grew by 0.8 per cent in the first two months of 2019. Without profound structural reforms, the economy has limited potential to build up on the recovery in the last two years and on the stable environment created by prudent macroeconomic policies. Having in mind such developments, GDP growth is forecast to slow down to 2.0 per cent in 2019 and further to 1.8 per cent in 2020. Risks to the outlook have increased. The new energy taxation system being introduced by Russia, the so-called “tax manoeuvre”, could significantly reduce revenues of Belarus’ oil refining industry, thus affecting the fiscal balance and reducing economic and export growth.

Belarus in the EBRD’s 2018-19 Transition Report