Publication: Monitor Volume: 3 Issue: 104

The recent signing of the Russia-Belarus Union Charter may be overshadowing an increased willingness in Minsk to consider reformist solutions to the country’s economic problems. Belarusan prime minister Syarhey Linh on May 21 called for the introduction of reforms as part of the Council of Minister’s "action program" for the economy. These "reform" measures, however, have not attracted the support of the IMF or World Bank, and seem unlikely to have much of an impact on the Belarusan economy. (Belapan, May 21)

According to a speech Linh delivered to parliament on May 21 and remarks made at a press conference a day later, the government will increase both its support for entrepreneurship and its emphasis on privatizing and restructuring state enterprises. (Interfax-Zapad, May 22) These enterprises are to be categorized as either "budget" or "commercial" enterprises: the latter group is supposed to function according to the principles of market competition, while the former are to receive "temporary" state subsidies in order to get a "strong push out of the gate". In addition, "anti-crisis command centers" are to be established in unprofitable firms, in order to oversee restructuring initiatives; and steps are to be taken to ensure that small firms can develop in a "stable" environment.

While the official line continues to be that Belarus’s economic boom (with rapid growth in GDP, investment, and consumption) is powering along, Linh’s new-found interest in reform is another indication that the economic situation is in fact much less rosy than the official portrait would indicate. The 28.3 percent inflation rate recorded during the first quarter (which corresponds to an annual rate of 171 percent) is one of the highest in the CIS, and sausage is reported to have disappeared from the shops in Minsk. (Minsk zvyazda, May 16) But while the need for reform initiatives are perhaps becoming increasingly apparent, the government remains a prisoner to its own neo-socialist instincts. The extensive regulation of prices will continue, Linh says, in order to prevent "monopolization" and the appearance of pricing "disparities" and "spontaneous price races."

The ultimate course of these "reforms" should not be prejudged, but it is difficult to be optimistic about their prospects. The recentralization of economic management and the persecution of private entrepreneurs conducted by President Aleksandr Lukashenko during the past two years mean that official calls for privatization, restructuring, and market competition are likely to fall on deaf ears. The international financial community was clearly not impressed: IMF representative Richard Haas remarked that "the present economic policy of Belarus is not a policy the IMF may support" (Interfax, May 19), while the World Bank is transferring many of its Belarus operations from Minsk to Kiev. (Belapan, May 20)

…and Reintroduces Beriozkas.