The first signs of economic stabilisation emerge
Overview:
Belarus has suffered a major balance of payments crisis as a result of the extremely loose economic policies used to ensure Lukashenko’s smooth re-election as president in December 2010. As FX reserves ran out the central bank had to devalue the currency dramatically unleashing shortages and spiralling inflation. The situation is just about coming back under control. A massive hike in interest rates and tighter fiscal and credit policies have allowed the currency to stabilise. This should help inflation to fall. These restrictive policies and economic uncertainty choked off growth in the second half of 2011. A return to modest growth is expected this year. Meanwhile, the FX reserve position and the balance of payments outlook have been improved massively by the sale of key assets to Russia in return for cheaper gas.