More reform needed to reduce external deficits
Overview:
Belarus’s statist economic model has delivered a solid growth performance throughout the global financial crisis although at the cost of a high current account deficit, rising inflation and an increasing share of bad loans. Efforts to reform the economy and improve productivity have been necessitated by the rising import bill for Russian oil. This process and maintaining economic stabilisation during the crisis have been supported by an IMF program. This has now expired and a successor arrangement has not been requested. Belarus must, though, continue the economic restructuring drive it has started if large current account deficits are to be eliminated in the long-run. Moreover, fiscal and monetary policy must be tightened and directed lending and wage increases restricted to stop devaluation pressures in the short-run.