Belarus seems to be basing its economic program for 1998 on the assumption that the capital inflows needed to finance the country’s trade deficit can come only from Russia. First Deputy Prime Minister Petr Prokopovich said on November 6 that, because Belarus has "no prospects" for borrowing on international capital markets or from Western governments, it will have to rely on funds provided by Russian banks and other CIS investors to finance its trade deficit. Prokopovich described the deficit as "already exceeding $1 billion dollars" for 1997. According to official prognoses, this deficit will fall to $740 million in 1998. (Russian agencies, November 3)
Because, as Prokopovich put it, "Russian banks are much stronger than Belarusan banks" (Russian agencies, November 6), Belarus’s need for Russian credits — required largely to finance the import of Russian energy and raw materials — could make it increasingly difficult for Minsk to deviate from the economic policies and reforms adopted in Moscow. Officials at a recent cabinet meeting, for example, agreed that the Belarusan National Bank will have to coordinate its foreign-exchange policies with the Russian Central Bank in order to guarantee the mutual convertibility of the Belarusan and Russian rubles for current-account transactions. Likewise, the need to develop a common Russian-Belarusan policy vis-a-vis entry to the World Trade Organization was acknowledged. If serious, such an approach could herald a far-reaching liberalization of Belarus’s foreign trade regime.
Whether such changes will in fact be forthcoming remains to be seen. Minsk’s need for funds to finance its trade deficit does suggest that it will face increasing pressures to sell off assets to Russian buyers.
Belarusan "Charter 97" Launched.