Sustainability Through Balance
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.