Economy of Belarus

Economy - overview: Belarus has seen little structural reform since 1995, when President Lukashenko launched the country on the path of "market socialism." In keeping with this policy, Lukashenko re-imposed administrative controls over prices and currency exchange rates and expanded the state's right to intervene in the management of private enterprise. In addition to the burdens imposed by high inflation, businesses have been subject to pressure on the part of central and local governments, e.g., arbitrary changes in regulations, numerous rigorous inspections, and retroactive application of new business regulations prohibiting practices that had been legal. Further economic problems are two consecutive bad harvests, 1998-1999, and persistent trade deficits. Close relations with Russia, possibly leading to reunion, color the pattern of economic developments. For the time being, Belarus remains self-isolated from the West and its open-market economies.

Economy--in greater depth: As part of the former Soviet Union, Belarus had a relatively well-developed industrial base; it retained this industrial base following the breakup of the U.S.S.R. The country also has a broad agricultural base and a high education level. Among the former republics of the Soviet Union, it had one of the highest standards of living. But Belarusians now face the difficult challenge of moving from a state-run economy with high priority on military production and heavy industry to a civilian, free-market system.

After an initial outburst of capitalist reform from 1991-1994, including privatization of state enterprises, creation of institutions of private property, and entrepreneurship, Belarus under Lukashenko has greatly slowed its pace of privatization and other market reforms, emphasizing the need for a "socially oriented market economy." About 80% of all industry remains in state hands, and foreign investment has been hindered by a climate hostile to business. The banks, which had been privatized after independence, were renationalized under Lukashenko.

Economic output, which declined for several years, revived somewhat in the late 1990s, but the economy remains dependent on Russian subsidies. Until 2000, subsidies to state enterprises and price controls on industrial and consumer staples constituted a major feature of the Belarusian economy. Inflationary monetary practices, including the printing of money also has been regularly used to finance real sector growth and to cover the payment of salaries and pensions.

Peat, the country's most valuable mineral resource, is used for fuel and fertilizer and in the chemical industry. Belarus also has deposits of clay, sand, chalk, dolomite, phosphorite[?], and rock and potassium salt. Forests cover about a third of the land, and lumbering is an important occupation. Potatoes, flax, hemp, sugarbeets[?], rye, oats, and wheat are the chief agricultural products. Dairy and beef cattle, pigs, and chickens are raised. Belarus has only small reserves of petroleum and natural gas and imports most of its oil and gas from Russia. The main branches of industry produce tractors and trucks, earth movers for use in construction and mining, metal-cutting machine tools, agricultural equipment, motorcycles, chemicals, fertilizer, textiles, and consumer goods. The chief trading partners are Russia, Ukraine, Poland, and Germany.

The massive nuclear accident (April 26, 1986) at the Chernobyl power plant, across the border in Ukraine, had a devastating effect on Belarus; as a result of the radiation release, agriculture in a large part of the country was destroyed, and many villages were abandoned. Resettlement and medical costs were substantial and long-term.

In 2000, Belarus managed to unify its currency exchange rates, tightened its monetary policy, and partially liberalized the foreign currency market. These developments led to the conclusion of a staff-monitored program in cooperation with the International Monetary Fund, addressing, among other topics price and wage liberalization, a widening of privatization, fiscal reform, the adoption of international accounting standards in the banking sector, and the repeal of several egregious laws and decrees to improve the investment climate. The program was conducted between April and September 2001, with relatively disappointing results.

The World Bank is currently considering a new country assistance strategy for Belarus, focusing on areas such as targeted social assistance, AIDS/HIV and tuberculosis prevention, environmental protection, Chernobyl-related damage, and small and medium enterprise development. In June 2001, the World Bank approved a loan of $22.6 million to finance repairs in over 450 schools, hospitals, and homes for orphans, the elderly and the disabled throughout Belarus.

Environmental Issues
Belarus has established ministries of energy, forestry, land reclamation, and water resources and state committees to deal with ecology and safety procedures in the nuclear power industry. The most serious environmental issue in Belarus results from the accident at the 1986 Chernobyl nuclear power plant. About 70% of the nuclear fallout from the plant landed on Belarusian territory, and about 25% of the land is considered uninhabitable. But government restrictions on residence and use of contaminated land are not strictly enforced. As noted, the government receives USA assistance in its efforts to deal with the consequences of the radiation.

GDP: purchasing power parity - $55.2 billion (1999 est.)

GDP - real growth rate: 1.5% (1999 est.)

GDP - per capita: purchasing power parity - $5,300 (1999 est.)

GDP - composition by sector:
agriculture: 23%
industry: 28%
services: 49% (1998 est.)

Population below poverty line: 22% (1995 est.)

Household income or consumption by percentage share:
lowest 10%: 4.9%
highest 10%: 19.4% (1993)

Inflation rate (consumer prices): 295% (1999 est.)

Labor force: 4.3 million (1998)

Labor force - by occupation: industry and construction NA%, agriculture and forestry NA%, services NA%

Unemployment rate: 2.3% officially registered unemployed (December 1998); large number of underemployed workers

Budget:
revenues: $4 billion
expenditures: $4.1 billion, including capital expenditures of $180 million (1997 est.)

Industries: metal-cutting machine tools, tractors, trucks, earth movers, motorcycles, television sets, chemical fibers, fertilizer, textiles, radios, refrigerators

Industrial production growth rate: 8% (1999 est.)

Electricity - production: 21.893 billion kWh (1998)

Electricity - production by source:
fossil fuel: 99.89%
hydro: 0.11%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 28.66 billion kWh (1998)

Electricity - exports: 2.3 billion kWh (1998)

Electricity - imports: 10.6 billion kWh (1998)

Agriculture - products: grain, potatoes, vegetables, sugar beets, flax; beef, milk

Exports: $6 billion (f.o.b., 1999)

Exports - commodities: machinery and equipment, chemicals, metals, textiles, foodstuffs

Exports - partners: Russia 66%, Ukraine, Poland, Germany, Lithuania (1998)

Imports: $6.4 billion (c.i.f., 1999)

Imports - commodities: mineral products, machinery and equipment, metals, chemicals, foodstuffs

Imports - partners: Russia 54%, Ukraine, Germany, Poland, Lithuania (1998)

Debt - external: $1.1 billion (1998 est.)

Economic aid - recipient: $194.3 million (1995)

Currency: Belarusian rubel (BR)

Exchange rates: Belarusian rubels per US$1 - 730,000 (15 December 1999), 139,000 (25 January 1999), 46,080 (2nd qtr 1998), 25,964 (1997), 15,500 (yearend 1996), 11,500 (yearend 1995)

Fiscal year: calendar year

Reference Much of the material in this article comes from the CIA World Factbook 2000 and the 2003 U.S. Department of State website.

See also : Belarus