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International Monetary Fund

This 2009 Article IV Consultation highlights that Belarus has so far escaped a significant fall in output, despite a sharp fall in external demand. GDP declined 0.5 percent year over year in the first eight months of 2009, comparing favorably to Belarus’ main trading partners. Economic activity has been bolstered by strong domestic demand, especially for housing construction financed under government programs. Executive Directors have applauded the authorities’ commitment to a tight fiscal policy, with revenue shortfalls being offset by spending restraint while protecting priority social spending.

International Monetary Fund

Belarus was experiencing an economic crisis after the expiration of a Stand-By Arrangement in March 2010. Its policies were loosened significantly, and consequently the account deficit increased and pressure on reserves intensified. The authorities agreed with the Eurasian Economic Community’s Anti-Crisis Fund (ACF), which announced measures including tightening of macroeconomic policies and structural reforms. Executive Directors urged the authorities to restore external stability through further fiscal and monetary policy tightening. Directors stressed that the financial support will require demonstrated commitment to strong policies and structural reforms.

International Monetary Fund

The staff report on Belarus’ Third Review under the Stand-By Arrangement is examined. Belarus is beginning to emerge from the crisis. Output loss has been limited relative to neighbors, inflation has fallen, the foreign exchange market has stabilized, and de-dollarization is under way, which is likely a sign of returning confidence. However, the economy remains vulnerable to external shocks. The current account deficit remains high and reserves low, despite substantial support, including from the IMF. The authorities have taken measures to close a financing gap during the program period created by a shortfall in external financing.

International Monetary Fund

This 2003 Article IV Consultation states that Belarus made noticeable progress in some areas of economic reform over the past several years, but overall macroeconomic performance in 2002 was mixed. Inflation in 2002 was the lowest since Belarus became independent, yet it remains the highest in the Commonwealth of Independent States. Under current policies, the outlook for 2003 is broadly similar to the outcome for 2002. Inflation is expected at about 27 percent, and real GDP growth is likely to slow modestly to about 4 percent.

International Monetary Fund. European Dept.

This 2016 Article IV Consultation highlights that the economy of Belarus contracted by 3.9 percent in 2015, with a similar performance in the first half of 2016. The exchange rate depreciated sharply during 2015 and part of 2016. Real wages are down substantially relative to 2014, and corporate losses are up. Unemployment has risen somewhat, though it remains relatively low. The economy is expected to contract further in 2016 and in 2017, reflecting still-weak balance sheets and structural impediments. A subdued recovery is expected in 2018, but over the medium term, potential growth is expected to increase only to about 1.75 percent, limited by negative demographic developments and low productivity growth.

International Monetary Fund. European Dept.

KEY ISSUESContext: Attempts to boost activity with policy stimulus, in lieu of much-needed structural reform, have failed to raise growth and contributed to large external imbalances. Adverse developments in the region further cloud the outlook. High financing needs and low buffers leave Belarus highly dependent on external financial support. The risk of disorderly adjustment remains high.Challenges: Mitigating immediate risks and facilitating external adjustment through a sharp change in macroeconomic policies. Advancing the transition to a market-based economy to raise sustainable growth.Policy recommendations:• Halt wage increases and reduce subsidized lending to slow demand growth;• Reduce foreign exchange interventions and tighten monetary policy to facilitate external adjustment;• Enhance market orientation of the economy through a rapid phase-out of price controls and mandatory targets and by privatization of state-owned enterprises.

Mr. Mark J Flanagan and Mr. Felix Hammermann
Panel estimates based on 19 transition economies suggests that some central banks may aim at comparatively high inflation rates mainly to make up for, and to perhaps exploit, lagging internal and external liberalization in their economies. Out-of-sample forecasts, based on expected developments in the underlying structure of these economies, and assuming no changes in institutions, suggest that incentives may be diminishing, but not to the point where inflation levels below 5 percent could credibly be announced as targets. Greater economic liberalization would help reduce incentives for higher inflation, and enhancements to central bank independence could help shield these central banks from pressures.
International Monetary Fund. External Relations Dept.

The Web edition of the IMF Survey is updated several times a week, and contains a wealth of articles about topical policy and economic issues in the news. Access the latest IMF research, read interviews, and listen to podcasts given by top IMF economists on important issues in the global economy. www.imf.org/external/pubs/ft/survey/so/home.aspx

International Monetary Fund

This report reviews the Observance of Standards and Codes on Fiscal Transparency for Belarus. Belarus meets the requirements of the fiscal transparency code in some important areas. There is a comprehensive legal and administrative framework for management of budget resources. The Budget systems law contains an explicit commitment to an open and transparent budget process, and budget coverage improved considerably with the inclusion of five major extrabudgetary funds into the budget in 1998. Budget execution mechanisms are quite effective, and budget execution reports are of consistent quality.