Key Facts: Belarus

by World Grain Staff
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Capital: Minsk

Population: 9,648,533 (July 2008 est.)

Religions: Eastern Orthodox 80%, other (including Roman Catholic, Protestant, Jewish, and Muslim) 20% (1997 est.).

Location: Eastern Europe, east of Poland.

Government: Republic in name, although in fact a dictatorship. Chief of state: President Aleksandr Lukashenko (since July 20, 1994); head of government: Prime Minister Sergey Sidorskiy (since Dec. 19, 2003).

Economy: 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 enterprises. Since 2005, the government has renationalized a number of private companies. In addition, businesses have been subject to pressure by central and local governments (e.g., arbitrary changes in regulations, numerous rigorous inspections, retroactive application of new business regulations, and arrests of "disruptive" businessmen and factory owners). A wide range of redistributive policies has helped those at the bottom of the ladder; the Gini co-efficient is among the lowest in the world. Because of these restrictive economic policies, Belarus has had trouble attracting foreign investment.

Nevertheless, government statistics indicate GDP growth has been strong in recent years, reaching more than 8% in 2008, despite the roadblocks of a tough, centrally directed economy with a high rate of inflation. Belarus receives discounted oil and natural gas from Russia, and much of Belarus’ growth can be attributed to the re-export of Russian oil at market prices. Trade with Russia — by far its largest single trade partner — decreased in 2007-08, largely as a result of a change in the way the Value Added Tax (VAT) on trade was collected. Russia has introduced an export duty on oil shipped to Belarus, which will increase gradually through 2009, and a requirement that Belarusian duties on re-exported Russian oil be shared with Russia (80% was slated to go to Russia in 2008, and 85% in 2009). Russia also increased Belarusian natural gas prices from $47 per thousand cubic meters (tcm) to $100 per tcm in 2007, and increased to $128 per tcm in 2008, and plans to increase prices gradually to world levels by 2011. Russia’s recent policy of bringing energy prices for Belarus to world market levels may result in a slowdown in economic growth in Belarus over the next few years. Some policy measures, including improving energy efficiency and diversifying exports, have been introduced, but external borrowing has been the main mechanism used to manage the growing pressures on the economy. Belarus felt the effects of the global financial crisis in late 2008 and reached agreement with Russia in November for a $2 billion stabilization loan and with the IMF for a $2.5 billion standby agreement in January 2009. In line with IMF conditionality, Belarus devalued the ruble approximately 20% in January and has tightened some fiscal and monetary policies. Belarus’ economic growth is likely to slow in 2009 as it faces decreasing demand for its exports and will find it difficult to increase external borrowing if the credit markets continue to tighten.

GDP per capita: $11,800 (2008 est.); inflation: 15.5% (2008 est.); unemployment: 1.6% officially registered unemployed; large number of underemployed workers (2005).

Currency: Belarusian ruble (BYB/BYR). 2,823 Belarusian rubles equals 1 U.S. dollar (April 17, 2008).

Exports: $31.81 billion f.o.b. (2008 est.): machinery and equipment, mineral products, chemicals, metals, textiles, foodstuffs.

Imports: $36.64 billion f.o.b. (2008 est.): mineral products, machinery and equipment, chemicals, foodstuffs, metals.

Major crops/agricultural products: Wheat, potatoes, vegetables, sugar beets, flax; beef, milk.

Agriculture: 8.4% of GDP and 14% of the labor force.

Internet: Code. .by; 68,118 (2008) hosts and 6 million (2007) users.