Belarus: Economic background
September 29, 2006
Belarus: Economic background. Check it out:(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY BACKGROUND
FROM THE ECONOMIST INTELLIGENCE UNIT
Main economic indicators, 2005(Actual unless otherwise indicated)Real GDP growth (%)9.2Consumer price inflation (av; %)10.3Current-account balance (US$ m)469.1Exchange rate (av; BRb:US$)2,153.8Population (m)9.8Source: Economist Intelligence Unit, CountryData.The government's intrusive economic policies continue
The president, Alyaksandar Lukashenka, pursues a policy of pervasive state involvement in the economy. He has by and large followed this course since the early years of his presidency in the mid-1990s, when he announcedas the paramount goal of his administrationthe return to a Soviet-style economic system as seen in the late 1980s. Unlike in most other transition economies in the region, MrLukashenka has not encouraged any sort of restructuring of the state-dominated system, or promotion of the private sector. Instead, the Lukashenka administration bases its economic policy on consistent support for and preservation of large and obsolete state-controlled enterprises.
The government's emphasis on full employment and its resistance to large-scale privatisation have prevented the expansion of non-traditional sectors. Instead, small-scale privately owned enterprises are either forced to the margins or else pushed into the shadow economy, which is estimated to equal 15-20% of official GDP. This is nevertheless less than in many other former Soviet countries. The poor business climate in Belarus has led entrepreneurs to concentrate their efforts in retail trade, where sunk costs, and thus potential losses, are relatively low. They have largely avoided investment in manufacturing, where they are more vulnerable to unpredictable changes in official policies at the central and local levels.
In agriculture, collective and state farms are kept afloat by government subsidiesdespite their abysmal performance. Collective farms (and state-controlled industrial enterprises) are supported for political rather than economic reasons, as the president and his entourage understand that independent private producers are unlikely to add to the regime's power base. Nevertheless, even though private farms are virtually non-existent, collective farm workers cultivate small plots of land in their spare time and supply a disproportionately large share of total agricultural produce.
Privatisation continues to be resisted
Despite periodic Russian pressure on Belarus to sell its key industrial sector assets, Mr Lukashenka continues to resist anything more than limited privatisation. He originally indicated that major petrochemical enterprises would be sold in 2003, but then refused to agree to sales terms that prospective buyers would accept. Russian oil and gas companies are in theory interested in the acquisition of oil refineries and pipeline networks to control all stages of the export of their products to Europe. However, they refuse to agree to the restrictive terms on offer, including the acceptance of only minority stakes and wage and job guarantees for employees.
Even enterprises in which the government owns less than a majority stake are still technically subject to state intervention. The latter can be exercised through a "golden share" rule, which gives the government majority voting rights in decision-making, even if it owns only a small number of shares. In 2004 MrLukashenka extended the golden share to include even those enterprises in which the government had no ownership claim at all. Based on a vaguely worded presidential decree, the government can now justify intervening in the affairs of any privatised enterprise. This is likely to have further exacerbated the hesitancy of private investors.
Comparative economic indicators, 2005Belarus(a)Russia(a)Poland(a)Lithuania(a)Ukraine(a)GDP (US$ bn)29.6763.6303.225.682.9GDP per head (US$)3,0325,3477,9437,481(b)1,773GDP per head (US$ at PPP)7,67010,89412,752(b)14,313(b)6,802Consumer price inflation (av; %)10.312.72.12.713.5Current-account balance (US$ bn)0.583.6-4.3-1.82.5Current-account balance (% of GDP)1.610.9-1.4-7.03.1Exports of goods fob (US$ bn)16.1243.695.811.835.0Imports of goods fob (US$ bn)-16.6-125.3-98.5-14.7-36.2External debt (US$ bn)4.4(b)214.8(b)105.5(b)11.9(b)25.9(b)Debt-service ratio, paid (%)2.0(b)14.2(b)21.5(b)20.2(b)13.6(b)(a) Actual. (b) Economist Intelligence Unit estimates.Source: Economist Intelligence Unit, CountryData.
Copyright 2006 Economist Intelligence Unit
Related Tags: economist intelligence, current account, account balance, enterprises government, economic, government
Cosmos
Del.icio.us
Slashdot
Digg
BoingBoing
Furl
Spurl
Listed below are links to sites that reference Belarus: Economic background:
Trackback Pings
TrackBack URL for Belarus: Economic background:
http://blog.tmcnet.com/cgi-bin/mt3/mt-tb.fcgi/28609Previous blog: BNE hires consultant to boost results
VoIP for Enterprise Home PageComments to Belarus: Economic background
