World Bank in favor of structural reforms in Belarus

MINSK, 22 October (BelTA) – Structural reforms will allow raising the competitive ability of the Belarus economy and improving social outcomes for the country. The statement was made by World Bank Country Director for Ukraine, Belarus and Moldova Qimiao Fan at the presentation of the World Bank Economic Update for Belarus on 22 October, BelTA has learned.

In line with the report in January-September 2013 Belarus saw a significant slowdown of the real GDP growth (down to 1.1% in January-September). The situation is attributed to a combination of weak external demand and internal factors. Inflation pressure remains in place and external misbalances have re-emerged. This year the World Bank projects the GDP growth to be around 1% while Belarusian experts place their expectations as high as 8.5%. The current account deficit is expected to widen to 9% of the GDP and a small fiscal deficit will re-emerge. In 2013 Belarus’ GDP is expected to rise by 1.5%. The World Bank believes that in 2013 inflation in Belarus will exceed 15% while Belarusian experts believe that inflation will be 12% at most.

For the sake of stabilizing the Belarus economy and preventing yet another crisis of the balance of payments the country needs a consistent macroeconomic policy coupled with profound structural reforms, noted World Bank representatives. According to Qimiao Fan, many of the necessary reforms are already part of the joint action plan that the government and the National Bank have compiled to reform the structure and raise the competitive ability of the economy. Pursuing a consistent macroeconomic policy is central to reducing the inflation pressure, containing external misbalances, and preventing another macroeconomic crisis, stressed Qimiao Fan.

The structural reforms should enable the transition to a new growth model driven by a considerable increase in productivity, believes World Bank representatives. It can be achieved by stronger market stimuli and the creation of a more favorable investment climate for all kinds of business. The comprehensive reform system should include liberal prices, the restructuring of state-run enterprises, transparent privatization, and the creation of a steady financial sector based on market principles.

“Structural reforms are the key to addressing the underlying causes of macroeconomic instability and kick starting growth in a sustainable way. They are also important for preserving the excellent gains made by Belarus on its social outcomes,” stressed Qimiao Fan. “The World Bank Group stands ready to support Belarus in designing and implementing comprehensive structural reforms.”

The World Bank’s current investment lending portfolio in Belarus includes five operations for a total amount of $547.5 million. Since Belarus joined the World Bank in 1992, commitments to the country have reached $955 million. In addition, grant financing as large as $23.7 million has been provided to about 30 programs including those with civil society organizations.