Sus­tain­abil­ity Through Bal­ance

Economy of Belarus - - CONTENTS -

Be­larus re­mains com­mit­ted to its so­cially ori­ented mar­ket econ­omy model. De­spite nu­mer­ous ex­ter­nal shocks of the re­cent decade, the do­mes­tic econ­omy has been demon­strat­ing re­mark­able growth. How­ever, all economies of the world have their ups and downs caused by eco­nomic cy­cles, with shifts over time be­tween a pe­riod of rapid eco­nomic growth and a pe­riod of stag­na­tion. This year Be­larus has faced new threats to its sus­tain­able de­vel­op­ment that re­sulted in the currency mar­ket fluc­tu­a­tions, de­val­u­a­tion of the Be­laru­sian ru­ble and high in­fla­tion.

“The coun­try’s achieve­ments over these years would serve as a safety cush­ion against in­evitable mis­bal­ances in the fu­ture. How­ever, when we were about to reap the ben­e­fits of our ef­forts, the global cri­sis of 2008-2009 broke out. Al­most all our gains were eroded by the cri­sis. When the global econ­omy col­lapsed, Be­larus man­aged to keep the econ­omy go­ing with­out cut­ting down on so­cial spend­ing…. How­ever, any achieve­ment has its price. Our price was a for­eign trade deficit which reached 14% of GDP in 2010,” Be­larus Pres­i­dent Alexan­der Lukashenko said at a meet­ing on so­cio-eco­nomic de­vel­op­ment in late Au­gust. This is­sue of the Econ­omy of Be­larus Mag­a­zine is opened by an ar­ti­cle “A roadmap to sta­bil­ity” which re­views the re­sults of the meet­ing where the head of state un­veiled an ac­tion plan to sta­bi­lize the fi­nan­cial and eco­nomic mar­ket worked out by the Govern­ment and the National Bank.

The year 2012 should mark the start of a bal­anced eco­nomic growth. The Govern­ment and the National Bank will fo­cus on elim­i­nat­ing the ex­ist­ing macroe­co­nomic dis­pro­por­tions and struc­tural vul­ner­a­bil­ity and se­cur­ing sus­tain­able eco­nomic growth. There­fore, bal­ance and sta­bil­ity be­came the key­note of this is­sue of the mag­a­zine.

In his ar­ti­cle, Econ­omy Min­is­ter of Be­larus Niko­lai Snopkov out­lines the ba­sic tasks Be­larus will have to ful­fill to reach the ex­ter­nal and in­ter­nal bal­ance. The tasks in­clude a struc­tural bal­ance of the econ­o­my­bymean­sof di­min­ish­ing govern­ment’s in­ter­fer­ence in the re­dis­tri­bu­tion of fi­nan­cial flows. To this end, the govern­ment will re­duce emis­sion of money for govern­ment pro­grams and rechan­nel re­sources into high-tech and ex­port-ori­ented projects. The sec­ond pri­or­ity goal is achiev­ing an in­ter­nal eco­nomic bal­ance by means of mak­ing salaries com­men­su­rate with la­bor ef­fi­ciency, and re­duc­ing ma­te­rial and en­ergy in­ten­sity of pro­duc­tion. And the third task is reach­ing a for­eign eco­nomic bal­ance by means of shift­ing a fo­cus from the do­mes­tic mar­ket to the over­seas mar­ket with ex­port grow­ing faster than im­port.

The bal­anced eco­nomic growth and high liv­ing stan­dards are un­der­pinned by sta­ble and pre­dictable de­vel­op­ment of the fi­nan­cial sec­tor. At the end of Au­gust, Be­larus made a de­ci­sion to bal­ance out the for­eign ex­change rate. An ex­tra trad­ing ses­sion opened at the Be­laru­sian Currency and Stock Ex­change in mid Septem­ber. All those will­ing to buy or sell for­eign currency are able to do it at the currency ex­change. The ex­change rate is shaped purely by the mar­ket. The cur­rent strate­gic goal of the National Bank is to make the of­fi­cial and the mar­ket ex­change rates con­verge at the point of equi­lib­rium in the cur­rent eco­nomic con­di­tions. Be­sides es­tab­lish­ing a uni­fied ex­change rate in all the seg­ments of the currency mar­ket, the National Bank seeks to se­cure the longterm sta­bil­ity of the mar­ket. To sta­bi­lize the ex­change rate and curb in­fla­tion, the National Bank em­ploys a wide range of mone­tary pol­icy in­stru­ments. Chair­per­son of the Board of the National Bank of Be­larus Nadezhda Yer­makova re­veals the de­tails of the govern­ment ef­forts to sta­bi­lize the currency mar­ket in an in­ter­view to the mag­a­zine.

For an open econ­omy like Be­larus, it is vi­tal to be able to build solid eco­nomic links with for­eign part­ners. The ar­ti­cle fea­tur­ing For­eign Min­is­ter of Be­larus Sergei Mar­tynov an­a­lyzes the for­eign trade sta­tis­tics of Be­larus in H1 2011 and con­cludes that Be­larus’ ef­forts to build up ex­port and tighten the mone­tary and fis­cal pol­icy re­sulted in some en­cour­ag­ing trends in for­eign trade.

Im­port sub­sti­tu­tion is an­other im­por­tant in­stru­ment to achieve a sus­tain­able eco­nomic growth. In line with Be­larus’ so­cio-eco­nomic de­vel­op­ment pro­gram for 2011-2015, the coun­try’s ex­port should ex­pand faster than im­port in or­der to nar­row the for­eign trade gap. It is par­tic­u­larly rel­e­vant amidst the global fi­nan­cial and eco­nomic cri­sis. This is the cen­tral theme of the ar­ti­cle fea­tur­ing In­dus­try Min­is­ter of Be­larus Dmitry Katerinich. The min­is­ter tells about sys­tem­based and con­sis­tent ef­forts to pro­mote im­port-sub­sti­tu­tion within the frame­work of var­i­ous govern­ment, sci-tech and sec­toral pro­grams.

The third is­sue of the mag­a­zine fea­tures tra­di­tional sec­tions about the Union State, Be­larus’ in­no­va­tive projects and in­dus­try lead­ers.

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