Belarus

Politics:

• Analysis

  Belarus politics: Opposition's focus shifts abroad

  The most prominent opposition figure, Andrei Sannikau, has recently been given political asylum in the UK. He probably intends to continue his political activities against Mr Lukashenka's regime from abroad. In November most of the other leaders of the Belarusian opposition decamped to Vilnius, the capital of Lithuania and the symbolic birthplace of Belarusian national awareness, to sign a document of co-operation. However, Mr Sannikau did not attend, and instead subjected the document to withering criticism. This suggests that, as in the past, developing a concerted approach among the country's disparate political forces to counter Mr Lukashenka's rule may prove a challenge.

  In early November Mr Sannikau, the leading opposition presidential candidate in the flawed 2010 election, was granted political asylum in the UK. In 2011 Mr Sannikau had been handed a five-year sentence by the Belarusian authorities for his part in the protests that followed the presidential election, which was rigged in favour of the country's long-time leader, Mr Lukashenka. After serving more than one year of the sentence, Mr Sannikau was released in April 2012, but remained under surveillance and was forbidden to engage in political activity. He said that his decision to seek asylum had been prompted by a desire to escape the incessant invasion of his privacy by the Belarusian authorities, as well as fear of re-imprisonment.

  Mr Sannikau's family remains in Belarus. However, he does not appear to be planning to retire from political life and may be looking to renew his leadership position among Belarusian dissidents. His departure from Belarus has coincided with a spike of opposition activity abroad. Mr Sannikau still enjoys widespread support among the opponents of the Lukashenka administration and has good contacts in the West. It is possible that the opposition, hemmed in and demoralised at home, might do better working from abroad, and that Mr Sannikau could help in this.

  Opposition decamps to Vilnius to pledge co-operation

  Also in early November, a group of influential leaders of the Belarusian opposition met in Vilnius to sign a memorandum stating their intention to co-operate in maintaining Belarusian sovereignty, which they perceive the Lukashenka regime to have compromised by selling Belarusian assets to Russia and joining regional organisations that Russia dominates. The list of signatories reads like a directory of Belarusian opposition parties and movements, old and new, left and right. Among the veteran politicians represented were Vintsuk Vyachorka of the Belarusian Rukh movement, Stanislau Shushkevich of the Belarusian Social Democratic Hramada (not to be confused with the Belarusian Social Democratic Party "Hramada"), Zianon Pazniak of the Conservative Christian Party (CCP) , and Alexander Dabravolski of the United Civic Party (UCP). But a new generation was also represented. This includes Uladzimir Nyaklyayeu of the "Speak the Truth" movement, Vitali Rymasheuski of the Belarusian Christian Democracy, Alexander Milinkevich of the movement "For Freedom", and Alexei Yanukevich of the Belarusian People's Front (BPF).

  One purpose of the memorandum was to counter the (often accurate) impression that the opposition is perennially unable to work together for any length of time. The memorandum also has strong symbolic connotations, since, for many nationally minded Belarusians, Vilnius is regarded as the birthplace of Belarusian political and cultural nationalism. Also attending was Ivonka Survila, chair of the Council of the Belarusian People's Republic, a symbolic government in exile that represents continuity with the original independent Belarusian state of 1918, which was soon subsumed into the Bolshevik project. This does not mean that all the parties and movements whose leaders signed the memorandum are planning any joint political action. Rather, they probably intend to signal their renewed commitment to the broad common cause of a democratic Belarus, independent from Russia's interference and ready to be accepted in Europe. A conspicuous absence from the gathering, however, was Mr Sannikau, who heads the "European Belarus" movement.

  Mr Sannikau delivers some stinging criticisms

  There has been some controversy over the reasons for Mr Sannikau's absence. He says that he wanted to attend but was not invited. Some participants of the meeting have said otherwise. However, Mr Sannikau has called the opposition memorandum "dangerous and damaging", and described those who wrote it as incompetent. Speaking to Radio Free Europe/Radio Liberty in mid-November, he argued that the memorandum paid insufficient attention to the plight of political prisoners in Belarus. He criticised it for portraying Belarus's increasing isolation from the international community as a negative development, whereas in his view, this is positive, because it means the isolation of the politically oppressive government. The memorandum's demand for guarantees of Belarus's independence also drew Mr Sannikau's criticism because, according to him, Belarus had received such guarantees in 1994, so that no new guarantees were needed. The failure of the document to label the Lukashenka regime as totalitarian was another sore point.

  As the full text of the opposition document has not been published, it is impossible to tell whether Mr Sannikau's criticisms are warranted. As it stands, his criticism seems quite harsh for a potentially important document that has been backed by most leading opposition figures. It may be that Mr Sannikau aspires either to leadership of a united opposition or else seeks to establish his "European Belarus" as a distinctive political force in its own right. The re-creation of his movement in exile is feasible, as at least five of Mr Sannikau's close associates are now living abroad. Under the Lukashenka administration, the opposition's ability to participate in politics has been reduced to the equivalent of that of the dissidents of the late Soviet era. However, it is too early to tell whether other oppositionists will follow Mr Sannikau's lead and attempt to establish a political base outside Belarus.

  November 16, 2012

• Background

  Belarus: Key figures

  Alyaksandar Lukashenka

  Formerly a low-ranking Soviet apparatchik, Mr Lukashenka rose to prominence in post-independence Belarus as head of the Supreme Soviet's anti-corruption committee, a position he exploited at the expense of his opponents. He first secured the presidency in 1994 on an openly populist platform. He has remained in power ever since, helped by the active repression of his opponents and tight media control. Nevertheless, the populist appeal of his policies and his personal charisma should not be underestimated. Even independent polls suggest that he won the 2006 presidential election by a considerable margin. In Belarus he is commonly referred to as bat'ka (father).

  Alyaksandar Milinkevich

  Mr Milinkevich, a professor of physics, became involved in opposition political activities in 2001 in his home city of Hrodna. He was selected in October 2005 as the presidential candidate of a "coalition of democratic forces"—which included the United Civic Party (UCP) and the Belarusian Popular Front Revival (BPF), but not the Belarusian Social Democratic Party "Hramada" (BSDP). Mr Milinkevich quickly proved himself as a national-level politician able to work with a coalition of diverse political forces and generate strong international support for democratic change in Belarus. He was defeated at the poll in March 2006. Since then Mr Milinkevich has chosen to promote his own popular movement, "For Freedom", as an alternative to what he sees as divisive party politics.

  Anatol Lyabedzka

  Chairman of the UCP since April 2000, Mr Lyabedzka has played an active role in opposition politics since his election to the Supreme Soviet in 1995. A professional politician, Mr Lyabedzka is credited with raising the public profile of the UCP and making it the most prominent opposition force in Belarus. Mr Lyabedzka's negotiating skills were instrumental in uniting his party behind Mr Milinkevich's presidential candidacy in 2005, although the two have reportedly had a number of disagreements since then.

  Vintsuk Viachorka

  A veteran politician, Mr Viachorka organised the first street protests by nationalist university students in the mid-1980s. He was among the founding members of the BPF and one of its principal leaders throughout the 1990s. When the strongly nationalist wing of the party split from the BPF in October 1999, Mr Viachorka became chairman of the remaining faction (which retained the BPF name). Mr Viachorka has generally accepted the need to co-operate with other opposition parties, although opposition politics as a whole remains fractious.

  Alyaksandar Kazulin

  Formerly a minister in the Lukashenka administration, Mr Kazulin has headed the BSDP since April 2005. He has attempted to reinforce the party's left-of-centre orientation and make it an independent centre of opposition politics separate from the coalition of democratic forces headed by the UCP and the BPF. Mr Kazulin stood as the BSDP candidate in the presidential election of March 2006. His participation in peaceful street protests following the election provided the authorities with a pretext for his arrest. In July 2006 Mr Kazulin was sentenced to five-and-a-half years in prison.

  The judiciary

  The Supreme Court is the highest court in the country. Other senior courts include the Economic Court and the Constitutional Court, which for a while acted as the main centre of opposition to Mr Lukashenka. However, since November 1996 the judiciary on the whole has proved neither independent nor objective by international standards. Independent lawyers were barred from practising in 1997.

  The legislature

  Political power in Belarus lies with the presidency rather than the parliament. The president enjoys sweeping powers as a result of constitutional amendments introduced in 1996. Under the terms of the amended constitution, the president appoints half of the members of the Constitutional Court, the chairman of the National Bank of the Republic of Belarus (NBRB, the central bank), the state prosecutor-general, the heads of the supreme, economic and constitutional courts, and the head of the Central Electoral Commission. The constitution invests executive power in a government (Council of Ministers) controlled by the president, who appoints the prime minister with the consent of the House of Representatives (the lower house of the National Assembly). Although local government comprises a system of councils, the members of which are elected for four-year terms by popular vote, the heads of these local councils and other regional administrations are appointed by the president.

  In addition to increasing the powers invested in the presidency, the 1996 referendum also paved the way for the dissolution of the Supreme Soviet and its replacement with a bicameral National Assembly. The lower chamber of the National Assembly, the House of Representatives, comprises 110 members. The upper house, the Senate—also known as the Council of the Republic—consists of 60 members, six of whom are appointed directly by the president, with the remainder elected by popular vote. The bicameral legislature has limited powers and, although it can sometimes voice an opinion if it disapproves of the president's policies, does little more than rubber-stamp presidential decrees. The regime has progressively limited the political participation of opposition parties, which have not been represented in legislative bodies.

  Media services

  Freedom of the press and other media is regulated by legislation first enacted in 1995, which provided the state with a firm legal basis for suppressing independent public opinion. Amendments in 1999 and 2006 widened the range of activities subject to government regulation and further limited the scope for publishing dissenting political views. Foreign publications are regulated by the byelaws of the Ministry of Information and their distribution can be stopped if their content is found to infringe government regulations. Television and radio are controlled exclusively by the government, which owns all television and radio facilities in the country. Belarusian Television and Belarusian Radio are the state-owned broadcasting channels. Russia also used to play an important broadcasting role, but the audience of the major Russian television and radio broadcasters in Belarus has dropped significantly in recent years.

  The system of government control over the media places independent political expression at a serious disadvantage. The information ministry has the power to issue warnings to media outlets for even minor breaches of the media laws and regulations. Any media outlet that receives three such warnings faces a three-month suspension and possible closure. According to the Organisation for Security and Co-operation in Europe (OSCE), such warnings and suspensions are used almost exclusively against independent newspapers. The pressure faced by the independent press has kept down circulation numbers; one of the main opposition newspapers, Narodnaya Volia ("People's Will"), has a daily circulation of barely 30,000, whereas Sovietskaya Belarus ("Soviet Belarus"), an official daily newspaper, reaches 400,000 readers.

  Democracy index (for methodology, see Appendix)

  The Economist Intelligence Unit's 2008 democracy index ranks Belarus 131st out of 167 countries, putting it among the 51 countries considered authoritarian regimes. This designation includes five other former Soviet states: four in Central Asia—Kazakhstan, Tajikistan, Turkmenistan and Uzbekistan—and Azerbaijan. Belarus ranks above all of these countries apart from Kazakhstan, which ranks 127th. However, it fares poorly when compared with its immediate neighbours: even Russia, the lowest-ranked of the five states that border Belarus, at 106th, is classed as a hybrid regime; the other four—Latvia, Lithuania, Poland and Ukraine—are all classed as flawed democracies.

  Belarus scores particularly poorly in the electoral process and government functioning categories. None of the four elections that the Organisation for Security and Co-operation in Europe (OSCE) has monitored since 2000 (sometimes in a limited capacity owing to official obstruction) has been found to be free or fair. Public mistrust of state officials and the rubber-stamp nature of the legislature contribute to the poor score for the government functioning category. Civil liberties are constrained by a lack of media freedom and a court system that is far from independent. Belarus achieves its highest score in the political culture category, which attempts to capture popular attitudes as to the desirability of democratic institutions and practices. However, even this score is lower than in most other countries in the transition region, as many Belarusians appear happy to accept a loss of democratic rights in return for the reasonable standards of living that the president, Alyaksandar Lukashenka, has so far been able to provide.

  Democracy index
  	Overall score	Overall rank	Electoral process	Government functioning	Political participation	Political culture	Civil liberties	Regime type
  Belarus	3.34	131	2.58	2.86	3.33	4.38	3.53	Authoritarian
  Overall and component scores are on a scale of 0 to 10; overall rank is out of 167 countries.

  Download text file (csv format)

  July 08, 2008

• Structure

  Belarus: Political structure

  Official name

  Republic of Belarus

  Legal system

  The constitution adopted in March 1994 was amended by referendum in November 1996 to increase presidential power and set up a bicameral parliament

  National legislature

  Bicameral parliament (National Assembly): upper house, Council of the Republic, with 64 members; lower chamber, House of Representatives, with 110 members

  National elections

  September 23rd 2012 (legislative); December 19th 2010 (presidential); the next legislative election is due in 2016; the next presidential election by 2015

  Head of state

  President, currently Alyaksandar Lukashenka, elected to a third consecutive term in December 2010 with 71% of the popular vote

  National government

  The president appoints the Council of Ministers and has extensive executive powers

  Main political parties

  The Communist Party of Belarus (CPB) supports Mr Lukashenka; the right-wing opposition consists of the United Civic Party (UCP) and Belarusian Popular Front Revival (BPF); other opposition parties include the Belarusian Social Democratic Party "Hramada" (BSDP) and the For Freedom movement; the main nationalist party is the Christian Conservative Party (CCP), which was formerly a faction in the BPF

  Council of Ministers

  Prime minister: Mikhail Myasnikovich

  First deputy prime minister: Uladzimir Semashko

  Deputy prime ministers:

  Anatoly Kalinin

  Anatoly Tozuk

  Mikhail Rusy

  Key ministers

  Agriculture & food: Leonid Marinich

  Defence: Yury Zhadobin

  Economy: Mikalai Snapkow

  Education: Syarhei Maskevich

  Finance: Andrei Kharkovets

  Foreign affairs: Uladzimir Makei

  Industry: Dmitry Katerinich

  Interior: Anatoly Kuleshov

  Labour & social security: Marianna Shchetkina

  Trade: Valyantsin Chekanaw

  Transport & communications: Anatol Sivak

  Central bank governor

  Nadezhda Yermakova

  December 01, 2012

Economy:

• Background

  Belarus: Economic background

  Gross domestic product by sector
  (% of total)
  	2003	2004	2005	2006	2007
  Agriculture	10.2	10.3	9.5	9.2	8.7
  Industry	38.7	40.9	41.2	41.7	40.5
  Services	51.1	48.8	49.3	49.1	50.7
  Source: Economist Intelligence Unit estimates.

  Download text file (csv format)

  July 08, 2008

• Structure

  Belarus: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (BRb bn)	129,791	136,790	162,964	274,282	465,996
  GDP at market exchange rate (US$ bn)	60.8	49.0	54.7	55.1	55.8
  Real GDP growth (%)	10.2	0.1	7.7	5.3	2.0
  Consumer price inflation (av; %)	14.8	12.9	7.8	53.3	68.0
  Population (mid-year; m)	9.5	9.5	9.5	9.5	9.4a
  Exports of goods fob (US$ m)	32,805	21,361	25,405	41,410	45,933
  Imports of goods fob (US$ m)	-39,042	-28,318	-34,483	-45,126	-46,837
  Current-account balance (US$ m)	-4,988	-6,178	-8,278	-5,775	-1,646
  Reserves excl gold (US$ m)	2,687	4,831	3,431	6,011	5,543
  Exchange rate (official; av; BRb:US$)	2,136.4	2,793.0	2,978.5	4,974.6	8,355.6
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origin of gross domestic product 2011	% of total	Components of gross domestic product 2010	% of total
  Industry	31.7	Private consumption	55.5
  Trade & catering	12.5	Public consumption	16.3
  Construction	6.8	Gross fixed capital formation	39.2
  Agriculture	8.6	Increase in stocks	2.0
  Transport & communications	7.2	Net exports of goods & services	-13.9
  Principal exports 2011	% of total	Principal imports 2011	% of total
  Mineral products	35.5	Mineral products	42.7
  Chemicals & rubber	21.0	Machinery, equipment & vehicles	23.1
  Machinery, equipment & vehicles	19.7	Chemicals & rubber	11.7
  Food & agricultural raw materials	7.6	Metals	10.0
  Main destinations of exports 2010	% of total	Main origins of imports 2010	% of total
  Russia	39.4	Russia	51.8
  Netherlands	11.3	Germany	6.8
  Ukraine	10.1	Ukraine	5.4
  Latvia	3.7	China	4.8

  Download the numbers in Excel

  Download text file (csv format)

  December 01, 2012

• Outlook

  Belarus: Country outlook

  Belarus: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The conduct of a heavily managed parliamentary election has not improved the democratic credentials of the president, Alyaksandar Lukashenka, who nevertheless remains likely to hold on to power in the 2013-14 forecast period. Despite post-election efforts by opposition groups to unify against Mr Lukashenka, they do not have a strong record on this. The main threat to the regime is the prospect of another policy-induced economic deterioration. The regime is likely to pursue short-term policy tightening, not least to try to obtain additional external financial assistance, but will pursue only such limited structural reforms as do not require it to relinquish central control. Ties with the EU will remain fraught and a new lending programme from the IMF looks unlikely, making good relations with Russia an economic and political necessity. Severe cuts in investment have undermined domestic demand and the Economist Intelligence Unit estimate economic growth of just 2% in 2012. Slack domestic demand and weak external conditions will see growth rise only modestly in the forecast period. The current-account deficit probably narrowed quite markedly in 2012, but is forecast to expand again in 2013-14.

  DOMESTIC POLITICS: In a heavily managed election, on September 23rd, no opposition candidates were elected to the House of Representatives, the lower chamber of parliament. The election was not deemed free and fair by any credible international election-monitoring institution. Nonetheless, the event did not provoke large-scale demonstrations. Domestically, the election confirms the administration's ability to control the political process and emphasises for many Belarusians the potentially heavy personal cost of stepping out of line. There remains a real possibility of political destabilisation. Primarily, this stems from the loosening of economic policy ahead of the election, which was designed to shore up support for the regime. The measures taken were similar to those that led to the financial and economic crisis of 2011, and which presented the greatest threat to Mr Lukashenka's rule since he came to power in 1994. However, even a second phase of economic destabilisation so soon after the first may not prove a decisive threat to the president's rule. This is because the public finances, although under pressure, appear to be in better shape than they were in early 2011. In addition, the authorities have experience of dealing with similar crises and have recourse to a range of tools to counter the causes of financial instability, including a return to high real interest rates, as well as price and currency controls. A second factor favouring the administration's survival is that Mr Lukashenka's regime of personal rule is grafted onto solid institutional structures inherited from the Soviet past-in particular, a relatively efficient and extensive state security service. Additionally, the police have routinely arrested, intimidated and mistreated opposition figures, making it impossible for the opposition to contest the legislative election effectively. In November most of the leading opposition organisations decamped to Vilnius, the capital of Lithuania, to sign a joint statement on protection of Belarusian sovereignty, which they see Mr Lukashenka as having undermined. Nonetheless, the opposition does not have a good history of working in concert for any length of time. Finally, western Europe is undergoing its second recession in three years-now set to drag on into 2013-and any reform movement in Belarus will find it harder than in the past to promote free-market democracy as a political and economic ideal. Our main scenario is that Mr Lukashenka is likely to stay in power over the forecast period. However, the onset of another phase of policy-induced economic deterioration would make this outcome less certain. Growing dissatisfaction with Mr Lukashenka could prompt members of the elite to conclude that their interests would best be served by replacing him. The recent reshuffles within the government, and in the defence and security apparatus, may in part be motivated by a desire to pre-empt this. A second potential threat to the regime is external. The large urban protests in Russia, prompted by the perception that election results had been falsified, represent an unprecedented development in contemporary Russian politics. The domestic political institutions on which Mr Lukashenka's rule rests, with Russian support, could be shaken if Russian leaders were unable to respond effectively to these new challenges. A third potential threat to Mr Lukashenka-albeit a relatively unlikely one-is that the Russian leadership looks to replace him with someone more straightforward to deal with.

  INTERNATIONAL RELATIONS: Relations with the EU and the US will remain poor, following the imposition of sanctions on Belarus in the wake of the post-election violence against opposition demonstrators in 2011. Sanctions were extended in late February 2012, to include more officials involved in the political trials against the opposition. In March the hasty execution of two young men for a bomb attack on the Minsk metro in April 2011 reinforced in the West the image of Mr Lukashenka as a rigid and cynical authoritarian. In July Swedish campaigners flew into Belarusian air space and dropped toy bears carrying messages in support of liberal political rights. This publicity stunt produced a rapid deterioration in diplomatic relations with Sweden. In late August the foreign minister was replaced by Uladzimir Makei, who is subject to an EU travel ban. Relations with Russia have improved following Russia's decision to lend Belarus US$3bn in June 2011, and further since November 2011, when deals on integration into Russian-dominated structures were agreed.

  POLICY TRENDS: At the end of October 2012 the Fund called on the government to put tackling inflation and ensuring financial stability ahead of the pursuit of faster economic growth. For most of 2011 it seemed that the problems besetting the economy and state finances might spin out of control. Eventually, the authorities took steps that started to stabilise the macroeconomy. However, with the worst of the crisis over and the parliamentary election in view, the authorities loosened economic policy substantially. The National Bank of the Republic of Belarus (the central bank) slashed the refinancing rate and real wages rose rapidly. These policies are similar to those that triggered the balance-of-payments crisis in 2011, and have helped to keep month-on-month inflation in 2012 above the medium-term average. However, a massive cut in investment has kept the growth of domestic demand-and so import growth-in check, even as the trade surplus erodes. Although this has also prevented the boost to wages from lifting economic activity overall, it has not staunched downward pressure on the currency, and reserves continue to be depleted. The Fund recommends a curb on government lending and wage growth, as well as increased exchange-rate flexibility. Fiscal tightening and the squeeze on wages could aggravate popular disillusionment with the president and his administration. However, some of the longer-term structural measures that the Fund proposes are unlikely to happen as they would amount to dismantling the institutional structures on which the president's rule has come to depend. As part of the crisis of 2010-11, public debt rose rapidly, to more than 50% of GDP. The additional financial aid offered by Russia since November 2011 will help to ease debt financing pressures. Over the longer term, more state assets will be sold to Russian firms to keep the public coffers topped up. In contrast, the successful conclusion of a Fund lending programme seems unlikely. In 2011 the general government budget ran a surplus of BRb8.3trn (US$1.7bn), equal to around 3% of GDP. A balanced budget was originally planned for 2012, but the target has been raised to a small surplus. A reduction in the price paid for Russian natural gas has contained growth of subsidies for residential heating and helped to support revenue. In January-September 2012 the budget surplus came to BRb7.2trn (around 2% of nominal GDP for the period). High inflation and deep cuts in capital spending may help to keep the budget in surplus in 2012, but a weak recovery and slowing inflation are likely to lead to a return to shallow deficits in the forecast period, despite greater fiscal constraint.

  ECONOMIC GROWTH: Despite a severe financial crisis, real GDP grew by 5.3% year on year in 2011, according to the National Statistical Committee. Industrial production rose by a respectable 9.1% and fixed investment by 11.1%. Agriculture grew by 6.6%. The economy grew by around 3% year on year in the first half of 2012, as the boost to industrial exports from currency devaluation, and the net benefits of the establishment of the customs union with Russia and Kazakhstan, was offset to some degree by the impact of economic contraction in the EU and a modest slowdown in Russia. However, growth has decelerated again in the second half, reflecting steep falls in investment and construction. In January-October 2012 real GDP growth slowed to 2.2% year on year, according to the statistical committee. Elsewhere, economic performance has remained remarkably robust. Industrial output was up by 6.6% year on year in January-October 2012, boosted by sales of machinery to Russia and refined oil to western Europe. Agricultural production rose by 5.2% over the same period. Retail sales grew by more than 12%, supported by an engineered burst of real wage growth. Nevertheless, the expected boom in domestic demand growth has been undermined by drastic cuts in investment. We now estimate real GDP growth at just 2% in 2012. In 2013 continuing high (albeit slowing) inflation and policy tightening will see domestic demand remain subdued. Although external prospects look weak, Russia, a key market for Belarusian goods, will continue to grow solidly, supported by high oil prices. Alongside the impact of depreciation, this should strengthen Belarusian growth modestly. A slightly stronger external recovery will do the same in 2014. Full-scale macroeconomic destabilisation is still a risk, although tempered by the fact that the financial position of the government is not yet as desperate as in early 2011, giving the government a short period in which to adjust its economic policies, if it so chooses.

  EXTERNAL ACCOUNT: The current-account deficit narrowed to 10.5% of GDP in 2011 from 15.1% in 2010. This was primarily owing to a large contraction in the trade deficit, linked to the series of currency devaluations. Nonetheless, the current-account deficit was kept large by the rapid growth in current transfers debits, which rose to US$4.4bn in 2011, from just over US$600m in 2010. This was linked to the transfer back to Russia of export duties on refined oil. In the first half of 2012 a large trade surplus was recorded, which is unusual for Belarus. The main factors behind this were currency depreciation and high oil prices. However, high inflation has undermined the real exchange rate, alongside continued weakening demand in foreign markets. In addition, a dispute with Russia over sales of refined products contributed to a year-on-year contraction in export earnings in the third quarter, even as oil prices on international markets rose again. This took the cumulative trade surplus for the year from a peak of US$2.3bn in July down to US$1.3bn in September. Despite a quickening of the pace of depreciation following the election, the impact of the government's pre-election policies will reduce the cumulative trade surplus over the remainder of the year, probably pushing it back into deficit for the year as a whole. Nevertheless, in 2012 the trade and current-account deficits will be smaller than we originally envisaged, partly because an expected boost to imports from pre-election rises in real incomes was offset by swingeing cuts in investment spending. We forecast a narrowing of the current-account deficit to around 3% of GDP in 2012 and an average of just over 4% in the forecast period.

  November 29, 2012

View detailed map

Country Briefing

Land area

207,600 sq km

Population

9.48m (end-2010)

Main towns

Population in '000 (end-2006):

Minsk (capital): 1,729

Gomel: 480

Mogilev: 369

Vitebsk: 350

Grodno: 321

Brest: 320

Climate

Continental

Languages

Belarusian and Russian are the official national languages

Weights and measures

Metric system

Currency

Belarusian rubel (BRb), introduced in May 1992, redenominated at a rate of 1,000 old rubels = 1 new rubel on January 1st 2000. BRb1 = 100 kopeks

Time

Two hours ahead of GMT

Fiscal year

Calendar year

Public holidays

January 1st (New Year's Day), January 7th (Orthodox Christmas), March 8th (International Women's Day), March 15th (Constitution Day), April 24th (Radaunitsa), May 1st (Labour Day), May 9th (Victory Day), July 3rd (Independence Day), November 2nd (Remembrance Day), November 7th (October Revolution Day), December 25th (Christmas)

September 01, 2012