Belarus overview

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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 1.3%

GDP forecast for Belarus’s Real GDP growth in 2020 1.2%

The GDP growth rate decelerated to an estimated 0.9 per cent year on year in the first half of 2019. Disruptions in the supply of oil from Russia to Belarusian refineries in the second quarter of 2019 caused stagnation in the manufacturing sector and negatively affected the volume of exports. The growth of private consumption slowed but remains solid at close to 6 per cent year on year, driven by the continued robust growth of disposable income (up by 7 per cent in the same period).

The current account deficit increased slightly in the first half of 2019 but remained relatively low at around 1.3 per cent of the estimated annualised GDP. The trade balance surplus shrank as a consequence of a deepening deficit in the goods balance that was only partially offset by a rising surplus in the balance of services. Substantial improvements in debt finance inflows contributed to an increase in international reserves during 2019 by US$ 1.7 billion to US$ 8.8 billion as of 1 October 2019, but coverage remains relatively low at just 2.6 months of imports.

These developments led to a broadly stable exchange rate in the first nine months of the year. Inflation fell below 5 per cent in 2018 for the first time since independence but has since risen to 5.3 per cent in September 2019 on the back of increases in regulated prices and tariffs. Economic growth is expected to slow to 1.3 per cent in 2019 and 1.2 per cent in 2020, but the growth outlook depends on the prospects for Belarus to receive compensation for the new taxation system being introduced by Russia, known as the “tax manoeuvre”, the implications of which remain unclear.

Belarus in the EBRD’s 2019-20 Transition Report

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