The move came in the wake of growing pressure on the currency as a result of falling exports and growing demand for dollars among the population that forced the authorities in Minsk to use up to $1.33 billion of precious gold and foreign-currency reserves in 2008 to maintain the currency above BR2,000 to the dollar.
The devaluation of the Belarussian rouble and the higher interest rates come in the wake of an agreement with the IMF for a $2.5 billion standby arrangement. Under the terms of the emergency loan package, the Belarussian government had to sanction a strengthened monetary and exchange rate policy framework, cuts in public investment and directed lending by banks, and public sector wage restraint. As part of the deal the administration led by authoritarian president Alexander Lukashenko also agreed to devalue its managed currency, cut budget spending and recapitalize its banks.
|
“We live in new conditions Alexander Lukashenko |
Although the Belarussian economy is still mainly in state hands, in recent years there have been growing moves toward privatization and liberalization, which have helped to boost output. According to Petr Prokopovich, chairman of the National Bank of Belarus, GDP growth reached 10.5% in 2008. Over the same period, investment increased 23.1%, and bank lending expanded by more than 50%. In the wake of the devaluation, Lukashenko emphasized that measures to open the economy would continue. In a statement released by the government press service he said: “We live in new conditions and see new requirements. We must give businesses more freedom.” As a result Belarus is set to move closer to what Lukashenko terms “a socially oriented market economy”. As part of that vision he is looking to actively pursue import substitution policies designed to bolster the profitability of domestic producers. In particular, the president believes the country should minimize the import of components by engineering and machinery companies. “We can make them here,” he says. “It means a colossal number of jobs in small towns. We could reanimate old companies that work poorly.”
In another move to boost the country’s attractiveness as an investment destination, the government is slashing red tape. As of February 1, Belarus introduced same-day registration for all new businesses, with the exception of bank and non-bank financial institutions. Furthermore, new business registrations will require just three documents – a registration application form, a company charter and a letter confirming the payment of state duties.
