This site presents an analysis of the Belarus government's economic policies compared to a list of 35 economic policies as prepared by student K. S. with the Mike P. McKeever Institute of Economic Policy Analysis (MIEPA). This study was written in December of 2019. To read the analyses scroll through this site. To learn more about the background policies, click here
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Return to MIEPA's Home PageThe study by Specialist K. S. is presented immediately below.
BELARUS NATIVE K. S.
This study presents a detailed study of the economic policies of Belarus, as written by Specialist K. S.. The ratings herein are based on the following rating scale:
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2019. Used herein with permission]
RATING SUMMARY - K. S. POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 3.5 10.5 15.0 70 % 2 1.0 3.0 15.0 20 3 2.5 7.5 15.0 50 4 3.5 10.5 15.0 70 5 4.0 12.0 15.0 80 6 5.0 15.0 15.0 100 7 5.0 15.0 15.0 100 8 4.5 13.5 15.0 90 9 3.0 9.0 15.0 60 10 3.0 9.0 15.0 60 11 4.5 13.5 15.0 90 12 3.0 6.0 10.0 60 13 4.5 9.0 10.0 90 14 2.0 4.0 10.0 40 15 3.5 7.0 10.0 70 16 3.5 7.0 10.0 70 17 3.0 6.0 10.0 60 18 2.5 5.0 10.0 50 19 2.0 4.0 10.0 40 20 2.0 4.0 10.0 40 21 2.0 4.0 10.0 40 22 2.0 4.0 10.0 40 23 3.5 7.0 10.0 70 24 4.0 8.0 10.0 80 25 4.0 8.0 10.0 80 26 2.0 4.0 10.0 40 27 4.0 8.0 10.0 80 28 5.0 10.0 10.0 100 29 1.0 1.0 5.0 20 30 4.0 4.0 5.0 80 31 2.0 2.0 5.0 40 32 3.0 3.0 5.0 60 33 4.0 4.0 5.0 80 34 1.0 1.0 5.0 20 35 3.0 3.0 5.0 60 TOTAL 110.0 241.5 370.0 65.3% ===== ====== ===== =====
INDIVIDUAL POLICIES - K. S.
1. Freedom from internal control: 3.5
People of the Republic of Belarus as well as visitors of the country have no trouble moving within the country as there is no control on the borders of the cities and towns.
According to the Constitution of the Republic of Belarus, Citizens of the Republic of Belarus have the right to move freely and choose a place of residence within the Republic of Belarus, to leave it and to freely return back.
Though it is easy to move within the country it is not always easy to leave the country and come back, International Observation Mission (created by OSCE: Organization for Security and Co-operation in Europe) expressed serious concern about a number of events that indicate that the authorities of the Republic of Belarus in March 2012 resumed the practice of restrictions on the exit from Belarus of their citizens, who are civic activists, human rights defenders, journalists and representatives of political parties, in particular.
Sources: 1. The Committee on International Control over the Human Rights Situation in Belarus Official Website, https://hrwatch-by.org/zayavlenie-12-ob-ogranicheniyakh-svobody-peredvizheniya-v-otnoshenii-grazhdan-belarusi; 2. National Legal Internet Portal of the Republic of Belarus, http://pravo.by/pravovaya-informatsiya/normativnye-dokumenty/konstitutsiya-respubliki-belarus.
2. Freedom of speech: 1.0
In September 2019 the Committee to Protect Journalists included Belarus in the top 10 countries with the most stringent censorship. According to the committee’s conclusion, “the authorities in Belarus are almost completely in control of the media; several independent journalists and bloggers are harassed and detained”.
Belarus ended up on 9th position in the Committee to Protect Journalists list because “the state systematically puts pressure on influential media and private individuals, often publicly, arresting journalists, raiding editorial offices and initiating criminal investigations of those who cover the events.”
According to the non-governmental organization Freedom of Press report, the Belarusian government has the authority to oversee Internet service providers (ISPs), set information security standards, conduct digital surveillance of citizens and manage top-level domains in Belarus.
Sources: 1. RFI.fr News Portal, http://www.rfi.fr/ru/evropa/20190923-esli-chto-proiskhodit-poluchayut-imenno-zhurnalisty-o-smi-v-belarusi; 2.Human Rights Center "VIASNA" Official Website, http://spring96.org/ru/news/88837.
3. Effective, fair police force: 2.5
Reputation of police force in Belarus is comparatively high, though there are people who would not call it effective or effective enough to guarantee safety all around the country. Some factors such as low level of public confidence in law enforcement agencies,the peculiarity of the method of reporting a committed crime, excessive bureaucratization of the punitive apparatus, and the criminological specificity of certain types of crime, indicate a rather high level of latency of crime.
The Republic of Belarus among European countries seems to be a strong social state, which was able to significantly reduce crime, to a greater extent due to the effective development of criminal policy. After announcing independence from Soviet Union, crime in the country grew more than 2 times compared with the last decade of the Soviet period, however, at the moment, crime growth has stabilized, and its level is much lower than the pan-European one. Despite the fact that official statistics indicate a moderate level of crime, the actual situation seems different.
The reliable number of full-time employees of the Ministry of Internal Affairs of Belarus has not been officially disclosed. According to some reports, over the past five years, the state of the Belarusian police has increased almost 3 times.
Sources: 1. The Ministry of Internal Affairs of the Republic of Belarus Official Website, https://www.mvd.gov.by/ru/page/shtab; 2. Belarus in Focus Analytical Portal, https://belarusinfocus.info/by/regiyony/kadrovaya-politika-mvd-privela-k-kadrovoy-degradacii-belorusskoy-milicii.
4. Private property: 3.5
Land can be privately owned by citizens of the Republic of Belarus, non-state legal entities of the Republic of Belarus, foreign states, international organizations.
Land ownership or real estate property may be public or private. Land thatis not privately owned by citizens, non-state legal entities of the Republic of Belarus (hereinafter - private property) nor by foreign states or international organizations, is owned by the state.
The right of private ownership of land is certified by the relevant executive and administrative body, which is recorded in the land cadastral documents with the subsequent issuance of the State Act on the right of ownership of land.
Private ownership may include land plots:acquired by citizens of the Republic of Belarus permanently residing in the territory of the Republic of Belarus or equated with permanent residents, as well as provided to citizens of the Republic of Belarus for the construction and maintenance of single-family, blocked residential buildings based on the results of auctions for the sale of land in private ownership;transferred to legal entities of the Republic of Belarus, including enterprises with foreign investments, during the privatization of state property, as well as non-state legal entities of the Republic of Belarus based on the results of auctions for the sale of land in private ownership.
Sources: 1. Minsk City Real Estate Center Official Website, http://www.mgcn.by/land/general/land_rights.html; 2. State Committee on Property of the Republic of Belarus Official Website, http://gki.gov.by/ru/priobretenie_zem_uchastkov.
5. Commercial banks: 4.0
As of May 2019, 24 commercial banks and 3 commercial non-banking organizations(Belinkasgroup, INCASS.EXPERT and ERIP) are registered in the Republic of Belarus.
Commercial banks in Belarus are second-tier banks in a two-tier system that aim to make a profit. They maintain a balance of resources and credit investments. Commercial banks play a key role in the commercial circulation of goods and services in Belarus, allowing enterprises and individuals to continuously buy and sell.
The system of Belarusian commercial (second tier) banks is built on the principle of the banks of the European Union, although it is significantly inferior to them in size.
Sources: 1. Myfin.by financial news portal, https://myfin.by/wiki/term/kommercheskie-banki-belarusi; 2. The National Bank of the Republic of Belarus Official Website, http://www.nbrb.by/system/banks/list.
6. Communication systems: 5.0
In the Republic of Belarus there is a steadily high pace of development of the telecommunication infrastructure, which allows to fully ensure the accelerated satisfaction of the growing information needs of citizens, businesses and the state, the creation of an enabling environment for the provision of electronic services, the formation of state information resources and access to them on the entire territory of the republic.
In November 2017, the International Telecommunication Union published Statistical Digest “Measuring the Information Society”. According to the results of 2017, the Republic of Belarus took the 32nd place in the index of development of information and communication technologies.
As of January 1, 2018, digital television is available for viewing by 99.45 percent of the population of the republic of Belarus. Currently terrestrial television broadcasting of state, regional and commercial television programs provides 285 digital television transmitters of various nominal powers. Many varieties of digital television broadcasting have spread in the republic: on-air, cable, mobile, satellite, IP-television.
The total number of mobile telecommunication subscribers in the republic has reached 11.41 million (comparing to 9,5 million population). The cellular telecommunication usage rate in the republic amounted to 120.2 subscribers per 100 residents of the republic. Cellular mobile telecommunication covers 98.2 percent of the territory of the republic, on which 99.9 percent of the population lives.
The density of telephone sets per 100 people as of January 1, 2018 was 47.4. Fixed-line telephony is provided for 99 percent of rural settlements. In Belarus, the local telephone access service is universal, guaranteed by the state to all users in the Republic of Belarus at affordable rates.
Today, fixed broadband Internet access services are one of the fastest growing services. The total number of subscribers and users with Internet access using stationary broadband access technologies at the beginning of 2018 amounted to 3.16 million.
Sources: 1. The Ministry of Communications and Informatization of the Republic of Belarus Official Website, https://www.mpt.gov.by/en/telecommunication; 2. Belarusian Diplomatic Service Official Website, http://mfa.gov.by/en/press/news_mfa/c260a54b9a630c22.html.
7. Transportation: 5.0
Belarus is a country with a well-developed transportation system, it is served by a well-developed network of roads and railways that connects the regions, and the cost of transportation remains moderate. The capital is in the center of the country, meaning that all major cities are 3-5 hours away by public transport and 2-4 hours by private transport.
Belarus is a comparatively small country, therefore there are no regular domestic air flights. The National Airport Minsk welcomes international flights that connect the Belarusian capital with many countries across the globe.
In Belarus there are ten river ports, waterways are open on the rivers Dnepr, Berezina, Sozh, Pripyat, Zapadnaya Dvina, Neman, Mukhavets, and the Dnepr-Bug canal. However, nowadays the demand for passenger transportation by water is low.
Travelling by railroad is one of the most comfortable and reliable options. Railroads inside the country can get you to over 2,100 destinations.
In Minsk and other towns and cities of Belarus mass transit systems are available for use: buses, trolleybuses, trams, private buses and taxi (in Minsk and major towns and cities). Belarus’ only metro is located in Minsk.
Sources: 1. Official Website of the Republic of Belarus, https://www.belarus.by/en/travel/transport-in-belarus; 2. Ernst & Young Global Limited Official Website, https://www.ey.com/Publication/vwLUAssets/ey-it-industry-in-belarus-2017-and-beyond/$FILE/ey-it-industry-in-belarus-2017-and-beyond.pdf.
8. Education: 4.5
Belarus has a well-regarded education system, including universities and further education institutions that attract numerous foreign students.
Pre-school education is not compulsory in Belarus but around 70% of children do attend nursery or kindergarten before they start school.
Most children in Belarus start school at the age of 6. All pupils must follow the basic education curriculum up to the age of 15, and the vast majority of pupils stay at school until they finish their high school education at 18. At the age of 15, pupils that have successfully completed basic education can attend college or professional technical institutions where they can focus on completing their high school education and work toward a professional certificate. Completion of a high school or professional certificate allows students to apply to continue their education at the university level. Belarus has one of the highest student-to-population ratios in Europe. People with higher education accounted for 29.4% of the workforce in 2014, up from 22.8% in 2005. There is broad access to higher education, which is free for over 40% of students. The higher education system in the Republic of Belarus includes 51 educational institutions with a total enrollment of 313,200 undergraduate and 11,800 master’s students in 2016, or an average of 330 students per 10,000 population.
The demand for and affordability of higher education in Belarus can be judged from the World Bank’s Enrollment Index (the number of those who receive tertiary education over the total number of people graduated from school), in which Belarus placed second among 139 countries (2014) with 88.86% Enrollment Index.
In May 2015 Belarus officially joined the Bologna Process – the European Higher Education Area.
The dominant role of state-funded higher education means that education is very affordable: 41.7% of students receive full state funding, and 58.3% receive partial funding (a partial state subsidy, with the rest paid by the students themselves). The cost of education in technical disciplines averages USD 1,300 per year (4-year course of study). The full cost of education for foreign students is substantially higher.
Sources: 1. Official Website of the Republic of Belarus, https://www.belarus.by/en/about-belarus/education; 2. Ernst & Young Global Limited Official Website, https://www.ey.com/Publication/vwLUAssets/ey-it-industry-in-belarus-2017-and-beyond/$FILE/ey-it-industry-in-belarus-2017-and-beyond.pdf.
9. Social Mobility: 3.0
In Belarus 47% of the 1980s generation are more educated than their parents in the average developing economy, 57% in the average high-income economy. In some low-income economies, 12% of young adults have more education than their parents, compared to >80% in parts of E. Asia. In Belarus, 43% of young adults have more education than their parents.
Belarus officially proclaims itself “a state for the common people” that allegedly puts an emphasis on the interests of the lower social strata. Initially Alexandr Lukashenka played the role of an egalitarian leader working for the good of common people. His career began in the Perestroika era with anti-corruption “struggle against benefits” of officials. Yet the independent analysts note a stable growth of income inequality in Belarus during the Lukashenka presidency.
The CIA World Factbook 2009 reports GINI coefficient for the country is 0.35-0.39. That is lower than in Russia but higher than in Ukraine and other European countries. Actually, it is hardly possible to collect the correct data of income as well as property structure in Belarus. Every estimation should be very cautious. It is easy to observe clear signs of social inequality in the capital, Minsk: several separated portions of the city are growing increasingly impressive with their private mansions, while the majority of citizens are still dwelling in humble grey block apartments.
Sources: 1. United Nations Children's Fund (UNICEF) Official Website, https://www.unicef.by/uploads/picture/KEF/Presentations/Intergenerational-mobility_Belarus-in-the-global-context.pdf; 2. The World Bank Official Website, https://www.worldbank.org/en/topic/poverty/brief/what-is-the-global-database-on-intergenerational-mobility-gdim; 3. Belarus Digest Independent Analytical Portal, https://belarusdigest.com/story/myths/is-inequality-a-serious-problem-in-belarus/.
10. Share of All Jobs in Small Businesses: 3.0
1,331.3 thousand people are employed in Small to Medium size Enterprises (SME's) which is 30.7% of overall jobs. 30% of that is concentrated in the capital of Belarus, Minsk, the rest spread out around the country. Even though it is less than 50% of all jobs, it plays an important role in country’s economy: SME sector provides 34.8% of total tax revenues. SME's share in gross value added is 28.8%, in industrial production - 18.4%, in food service and hospitality - 49.9%, in retail trade turnover of trade organizations - 35.0%, and 51.0% - in the export of goods.
The contribution of small and medium-sized businesses to the GDP of Belarus (30%) is comparable with many countries of Eastern Europe, including those that are members of the EU. However, it is still significantly inferior to the EU average (over 50% of GDP). In 2017, Belarus prepared an extensive package of legal measures for the development of entrepreneurship. Belarusian government has stated the goal to stimulate the development of small and medium-sized businesses, including the right to use a simplified tax system, when qualified.
Sources: 1. Ministry of Economy of the Republic of Belarus Official Website, https://www.economy.gov.by/ru/small_business-ru/, https://www.economy.gov.by/uploads/files/msb-monitoring-2018/monitoring-Belarus-2018.pdf; 2.Institute for Privatization and Management Research Center Official Website, http://www.research.by/projects/smb/1802/; 3. Eurasia Expert information and analytical portal, https://eurasia.expert/nerazvitost-malogo-i-srednego-biznesa-v-belarusi-mif/.
11. Freedom from outside control: 4.5
People of Belarus feel secure from other countries governments, citizens and agencies. Belarusian government is the only government controlling the country and its people. Though Belarus does depend on Russia in terms of gas and oil because Russia is the only available supplier, Russia has no global control over Belarus.
While Moscow reminds Belarusians of debts and loans, in fact, it turns out that Belarus is not so dependent on Russia, as it is commonly believed. For example, in 2013, Russia directly and through the Eurasian Fund for Stabilization and Development controlled up to 87% of Belarusian debt, becoming, in fact, almost the only creditor of Belarus, which was a significant leverage. However, in 2016, the share of Russia fell to 62%, and in 2018, the total state debt of Belarus was 17 billion USD, only 7.3 billion belongs to Russia which is 43%, and the rest of the creditors are Eurobonds, World Bank money, US and EU loans.
Sources: 1. Segodnya.ua News Portal,https://www.segodnya.ua/politics/rossiya-teryaet-kontrol-nad-belarusyu-ekspert-obyasnil-situaciyu-1208442.html; 2. Personal.
12. Protection of Domestic Enterprises: 3.0
Analyzing 2018 foreign trade of Belarus in goods and services comparing export to import brings us to a deficit of 1337 USD Million, meaning that there were slightly more imports than exports. Considering that overall trade (both export and import of goods and services was 86231 USD Million I calculated the deficit being 1.5% of total foreign trade.
While the above Methodology of foreign trade statistics brings us to a deficit, using a different methodology (Methodology of balance of payments) according to the official website of the Ministry of Foreign Affairs of the Republic of Belarus is resulting in positive trade balance totaled 694.4 USD Million, with export amounted to 42 USD Billion (increased by 14.9 percent compared with 2017) and import totaled 41.3 USD Billion (increased by 13.3 percent in comparison with 2017). Total foreign trade turnover amounted to 83.3 USD Billion and increased by 14.4 percent compared with year 2017.
Export is one of the main priorities of Belarusian economy. Traditionally, exports account for more than half the Gross Domestic Product. That’s why it's the main source of sustainable economic growth of the country. A governmental system of encouraging and supporting exports was formed but is still developing and improving. The volume of the Belarusian export of goods and services has increased from 7.6 USD Billion in 2000 to 28.9 USD Billion in 2016.
The Republic of Belarus traditionally implements a multi-vector foreign trade policy and has trade relations with more than 170 countries around the world, the main trade partner is Russia.
The country adopted a trade policy to increase the share of high-tech products in exports and diversify supplies to foreign markets. Export is characterized by wide assortment. Among the major export commodities are oil products, potash fertilizers, trucks and cars, metal products, tractors, tires, dairy and meat products and timber.
Belarusian import is mainly composed of energy resources (oil and natural gas), raw materials and components (metals and metal products, raw materials for chemical industry, machine parts) manufacturing equipment.
Sources: 1. Ministry of Foreign Affairs of the Republic of Belarus Official Website, http://mfa.gov.by/en/foreign_trade/; 2. North Atlantic Treaty Organization Official Website, https://www.nato.int/docu/colloq/1999/pdf/321-331.pdf; 3. Personal.
13. Foreign currency transactions: 4.5
The currency of Belarus is the Belarusian ruble (BYN), it is not freely convertible, therefore it cannot be purchased before arriving in the country. Belarusian ruble is the only official national currency.
Belarus has improved a lot in terms of using just one currency over last few years, even though there was always only one official currency in Belarus, other currencies could be used on the street/black market. For example, 5 years ago it was possible to pay in euros or dollars if you are buying a used car from the owner, but only Belarusian rubles were officially accepted in-store. Now any transactions in foreign currencies besides exchange of those in official exchange offices/banks are illegal and are not happening.
There is no problem with money exchange in Belarus. Banks charge no commission for exchange operations, even at the airport. The exchange rate is regulated by the National Bank of Belarus, but rates can vary depending on the bank. Exchange offices are almost everywhere – in shopping malls and supermarkets, at railway stations; many banks have exchange points scattered along major streets so it’s easy for business owners to focus on their business and not worry about currency exchange.
Sources: 1. Official Website of the Republic of Belarus, https://www.belarus.by/en/travel/money; 2. Belarus Feed News Portal,https://belarusfeed.com/faqs-belarusian-ruble-belarus-money/; 3. Personal.
14. Border control: 2.0
It is Belarus’s fate to be located between two economic blocs – Russia and the EU. While the country’s eastern border is largely symbolic, its border to the west remains very much intact.
Entrenched borders and stringent customs regulations may be an obstacle to free trade between countries, but they also provide an illegal source of income for enterprising citizens.
According to the border authorities, the goods most commonly smuggled from Belarus into the EU are cigarettes, whereas from Russia to the EU through Belarus, cigarettes and alcohol take the lead.
Smuggling is widespread in Belarus, and not because Belarus is a corrupt state where the customs and border authorities are happy to encourage the shadow economy for an appropriate kickback. On the contrary, these bodies are efficient, and corruption is much less prevalent in Belarus than in other post-Soviet states.
The reason for a quite high rate of smuggling is that Belarusian law categorizes smuggling most categories of goods as only a minor infringement. The grey economy provides people in Belarus and Ukraine, as well as the residents of impoverished border regions in Lithuania and Poland, with a more substantial income than they could command by working legally. For some people, smuggling is the only available source of income.
Official figures show that the Belarusian market accounts for 20 billion cigarettes a year, but the country’s tobacco industry produces 30 billion. In other words, 10 billion cigarettes cross the border illegally each year.
Viktar Sazonau, a human rights activist and writer from the border town of Hrodna, has written an entire book, A Smuggler’s Notes, in which he describes, with a fair amount of humor, the activities of local smugglers in the 1990s and early 2000s. It sounds paradoxical, says Viktor, but smuggling became popular in Belarus because its citizens are a law-abiding lot. They see nothing immoral in buying something in one country and selling it in another – it’s just business. In their own country, Belarusians live exemplary lives, observing the law: stealing is considered a disgrace. But smuggling isn’t the same as stealing, although it might seem so in terms of the ‘public good’. By treating smuggling as a less than serious offence, the government encourages the attitude that, while it is a far from completely legal business, at least it’s a morally acceptable one.
Sources: 1. Open Democracy independent global media platform, https://www.opendemocracy.net/en/odr/art-of-smuggling-in-belarus/; 2. Personal.
15. Currency: 3.5
The currency of Belarus is the Belarusian ruble (BYN), it is not freely convertible, therefore it cannot be purchased before arriving in the country. Belarusian ruble is the only official national currency.
The most common foreign currencies accepted by banks and exchange points are U.S. dollars, Euro and Russian rubles. There is no problem with money exchange in Belarus. Banks charge no commission for exchange operations, even at the airport. The exchange rate is regulated by the National Bank of Belarus, but rates can vary depending on the bank. Exchange offices are almost everywhere – in shopping malls and supermarkets, at railway stations; many banks have exchange points scattered along major streets.
Because the exchange rate of the state currency has not always been very stable some people prefer to save money on their bank accounts/in cash in USD and not BYN. This factor has transformed the mind of locals into a calculator that perpetually convert prices from BYN to USD and backward. People convert their salaries, prices in supermarkets, rent (though it might be a good mental exercise). Should the ruble start behave abnormally, one will see Belarusians quickly forming lines near cash exchanges.
Sources: 1. Official Website of the Republic of Belarus, https://www.belarus.by/en/travel/money; 2. Belarus Feed News Portal,https://belarusfeed.com/faqs-belarusian-ruble-belarus-money/; 3. Personal.
16. Cultural, language homogeneity: 3.5
Although most Belarusians speak Russian, they not only do not associate themselves with Russia, but they clearly call themselves citizens of their Country. Among the country’s cultural characteristics are relative ethnic and religious homogeneity.
The main impetus for the formation of national identity in Belarus was establishment of a sovereign Belarusian state after the collapse of the USSR. Most residents of Belarus today speak Russian. The Belarusian language, which, along with Russian, is the state language in the republic, is understood by almost all citizens of the country. Many people use it situationally - in communication with Belarusian-speaking friends and colleagues, but constantly - at home, at work - majority speaks Russian. But the most important indicator of identity is subjective self-identification. A person can live anywhere, speak any language, grow up in any cultural tradition, but at the same time consider himself subjectively representative of a particular nation. For example, the entire family of the recognized classic of Belarusian literature Maxim Bogdanovich spoke Russian, however, he considered himself a Belarusian and wrote his famous works in Belarusian.
Sources: 1. Official website of the Republic of Belarus, https://www.belarus.by/ru/about-belarus/culture; 2. Deutsche Welle international broadcaster, https://www.dw.com/ru/???????????-???????????-????????????-????????????/a-37674267; 3. Personal.
17. Political effectiveness: 3.0
Belarus is a calm and quiet country; it is recognized as one of the safest countries for tourists to visit. Not only large cities are safe but also small villages in the countryside. The main reason for that is the mentality of Belarusian people.
Belarus has no substantial or dominant ethnic or religious conflicts. Crime rate isn’t high comparing to neighbor countries and middle-income countries. On the other hand, constitutionally vested powers give the president full control of the government, the courts, and the legislature by assigning greater legal force to presidential decrees than to ordinary legislation. The state controls 70 percent of the economy, feeding widespread corruption, and the lack of transparency and government accountability encourages graft.
Sources: 1. Heritage Official website Index of Economic Freedom, https://www.heritage.org/index/country/belarus; 2. Transformation Index BTI Official Website, https://www.bti-project.org/en/reports/country-reports/detail/itc/BLR/; 3. Personal.
18. Institutional stability: 2.5
Alexander Lukashenko is the longest serving political leader in Europe and he celebrated his 20th anniversary as president in 2014. He is the first and current president of the Republic of Belarus.
Government personnel remains relatively efficient. The Belarusian political system is highly centralized, with the presidential administration sitting at the apex of a so-called power vertical. The council of ministers is in reality subordinate to the unaccountable presidential administration. Subordinate structures are expected to implement commands and there are no genuine horizontal checks or balances between different branches of government.
Institutional conditions can definitely be considered stable, however, a public opinion poll conducted by IISEPS in June 2016 revealed that only 24.7% of respondents’ advocate maintaining the situation, while 67.3% support change.
Sources: 1. The Global Economy Data Series, https://www.theglobaleconomy.com/Belarus/wb_political_stability/; 2. Nouvelle Europe Online Journal,http://www.nouvelle-europe.eu/node/1138; 3. Transformation Index BTI Official Website,https://www.bti-project.org/en/reports/country-reports/detail/itc/BLR/.
19. Honest government: 2.0
According to transparency.org Belarus corruption rank is 70/180, with 44/100 score.
But according to other surveys, Belarus is often regarded as one of the least corrupt countries in the Commonwealth of Independent States, but implementation of anti-corruption measures remains selective in practice and lacks transparency. The authorities and the public display a high intolerance for official corruption.
Although petty corruption, such as bribery of police or customs officials, remains relatively uncommon in Belarus, higher-level corruption is more difficult to detect and represents a serious problem. Much of the economy is still controlled by the state, which creates fertile ground for graft and corruption.
In 2015 to 2016, the KGB and Investigative Committee of Belarus mainly focused on high-profile corruption cases in governmental bodies and state-controlled enterprises, such as Naftan, the Minsk Wheel Tractor Plant (MZKT trademark), BelAZ, Belkoopsoyz, et cetera. Several Belarusian businessmen such as Yuri Chyzh and Vladimir Yaprintsev, both associated with the president’s inner circle, were detained on charges of “tax optimization” (tax evasion). Some were released after paying fines.
In addition to that, according to the OSCE/ODIHR election observation missions, no election conducted after 1995 has been in compliance with OSCE/ODIHR standards of fair and free elections. Which is also bringing up the assumption of multiple corruption cases.
Sources: 1. Transparency International Official Website, https://www.transparency.org/country/BLR; 2. Transformation Index BTI Official Website, https://www.bti-project.org/en/reports/country-reports/detail/itc/BLR/.
20. Common laws: 2.0
The courts are organized by the executive branch and the president is directly responsible for appointing, dismissing and determining judges. Representatives of the executive at the regional and national levels de facto intervene in trials and even influence verdicts in cases of economic, political or social importance for the regime.
Belarus is the only country in Europe that still carries out the death penalty. State authorities do not make any effort to review this practice, despite heavy criticism from the international community.
The judiciary is also regularly used as a tool to pressure local businessmen, under the pretense of lacking loyalty, or if somebody wants to grab their business. The regime also abuses judicial power as a tool of punishment and repressions against the opposition. Members of the democratic opposition can face arbitrary arrest.
However, it should be noted that in “non-political” cases it is usually possible to receive a fair trial in Belarus if there is no state body involved in the suit.
Sources: 1. Transformation Index BTI Official Website, https://www.bti-project.org/en/reports/country-reports/detail/itc/BLR/.
21. Central bank: 2.0
The National Bank of the Republic of Belarus is the central bank of Belarus. According to the Banking Code of the Republic of Belarus and Decree of the President of the Republic of Belarus No. 78 dated February 23, 2016 the National Bank in concert with the Government of the Republic of Belarus shall carry out monitoring of financial stability, which means that central bank depends on the government and is controlled by the government and the President of the Republic of Belarus. Central bank manages all commercial banks and the currency of Belarus but is not independent of political control.
Sources: 1. The National Bank of the Republic of Belarus official website, http://www.nbrb.by/engl/publications/finstabrep; 2. Personal.
22. Domestic budget management: 2.0
In 2019, it is assumed that consolidated budget revenues will amount to 36.7 billion rubles. Revenues of the republican budget were planned in the amount of 23.7 billion rubles, expenses - 22 billion rubles. The draft republican budget was formed with a surplus of 1.7 billion dollars.
For 2019, the revenues of the consolidated budget (the set of revenues of the republican and local budgets) are projected in the amount of 37.8 billion rubles. The share of income to GDP in 2019 is estimated at 29.2%. But the dept of the country is growing and Belarus needs to borrow more money in order to follow the budget plan. Further reduction in government spending on family support and housing construction is another way to save money and spend less.
Sources: 1. Myfin.by financial analytics portal, http://www.minfin.gov.by/upload/bp/budjet/budjet2019.pdf; 2. Personal.
23. Government debt: 3.5
As of September 1, 2019, external public debt of Belarus was 16 574.3 USD Million, or 27,3% of current GDP, internal public dept was 8 806,2 BYN Million or 6.9% of GDP. Total public debt of the Republic of Belarus was stated as 43 579,0 BYN Million or 34,2 % of GDP.
In 2019, payments for servicing and paying off the state debt will amount to 3.29 USD Billion, with GDP being predicted to grow up to 61 USD Billion, it takes about 5.4% of GDP.
Public debt of Belarus is sustainable, but at the same time it is a very significant responsibility for the country in terms of the annual burden of servicing and paying off public debt.
Sources: 1. Ministry of Finance of the Republic of Belarus official website,http://www.minfin.gov.by/en/public_debt/condition/; 2. Ministry of Finance of the Republic of Belarus official website, http://www.minfin.gov.by/upload/gosdolg/vneshniy/Belarus_Macroeconomic_Snapshot_2018.pdf; 3. Myfin.by financial analytics portal, https://myfin.by/wiki/term/vneshnij-dolg-v-belarusi.
24. Economic statistics: 4.0
The National Statistical Committee of the Republic of Belarus (hereinafter referred to as Belstat) is a republican government authority in the field of state statistics, that aims at providing all user groups with complete, reliable, scientifically-based and timely statistical information on the social, economic, demographic and environmental situation of the Republic of Belarus. This statistical information is provided online for everybody on a free basis, in some special cases when a business owner or an organization needs information that is not available online it can be requested on a paid basis. Not all kinds of statistical information are accessible through Belstat but majority of them are. In my opinion, majority of this data is trustworthy.
Sources: 1. The National Statistical Committee of the Republic of Belarus,http://www.belstat.gov.by/en/; 2. Data processing center of the National Statistical Committee of the Republic of Belarus, http://www.ivcstat.by/index.php; 3. Personal.
25. Protection of public health and safety: 4.0
According to The United Nations Children's Fund (UNICEF) statistics Belarus is one of the Top 10 countries with the lowest infant mortality in the world.
In Belarus, 1.5 children die per 1000 newborns, which is the same rate of infant mortality as in South Korea, Norway and Luxembourg. Countries that border with Belarus such as Russia, Ukraine, Poland and Lithuania have worse infant mortality data.
The statistics on tuberculosis in Belarus is not that bright, there were 3052 cases notified in 2017, including relapse cases, and this data is per 9.5 million population of Belarus as of 2017. The rates of TB are pretty high in all the post-Soviet Union countries which might be a consequence of poor prison conditions in this area, but Belarus is taking actions to improve the situation and the number of TB cases is decreasing each year.
Sources: 1. UNICEF official website, https://www.unicef.org/publications/index_103264.html; 2. Thinktanks.by Belarusian Independent Studies portal, https://thinktanks.by/publication/2018/02/21/yunisef-belarus-voshla-v-top-10-stran-mira-s-samoy-nizkoy-detskoy-smertnostyu.html; 3. World Health Organization official website, https://www.who.int/features/2013/belarus-tb-reform/en/.
26. High wage policies: 2.0
For the middle-class local population, it is not very easy to afford things beyond basic living necessities, as well as it isn’t easy for low income households to afford even basic living necessities. Though there are special institutions providing housing and food for homeless people and people in need, therefore it’s very rare that one can see a homeless person sleeping on the street.
According to the National Statistics Committee of the Republic of Belarus, the average accrued salary in the country as of October 2018 amounted to 999.70 rubles or 472.05 US dollars. Despite the fact that the average salary in Belarus is relatively low, corruption is virtually absent. According to a sociological survey conducted in early 2016, only 15.7% of the local population are satisfied with their standard of living. Citizens of the countries of the former CIS (Commonwealth of Independent States) that are moving to Belarus for permanent residence having stable passive income in euros or US dollars at their home countries are especially comfortable here.
Sources: 1. Myfin.by financial analytics portal, https://myfin.by/wiki/term/srednyaya-zarplata-v-belarusi; 2. Personal.
27. Environmental protection: 4.0
Air and water condition in Belarus are good comparing to other countries of the region and according international environmental standards.
Economic and other activities of legal entities and citizens that affect the environment should are carried out on the basis of the constitutional laws and regulations by both the government and the people of Belarus. The legislation of the Republic of Belarus on environmental protection is based on the Constitution of the Republic of Belarus and consists of the laws and acts of legislation on specially protected natural territories, on state environmental review, on hydrometeorological activities, on the protection of the ozone layer, on waste management and other acts of the legislation of the Republic of Belarus containing rules governing relations in the field of environmental protection and nature management.
Sources: 1. Ministry of Natural Resources and Environmental Protection of the Republic of Belarus official website, http://www.minpriroda.gov.by/en/; 2. National Statistical Committee of the Republic of Belarus official website, http://www.belstat.gov.by/en/, 3. Personal.
28. Strong army: 5.0
Belarus can definitely be considered a safe environment for business owners, their families and customers and the population in general.
Belarus relies on Russia a lot in terms of armed forces, that’s why the cost of national forces isn’t high and is not being a burden for the domestic budget.
The main goals of the military policy of the Republic of Belarus are maintenance of international peace and security, prevention of the threat of war and guarantee of national security of the Republic of Belarus from possible military threats. Belarus actively participates in United Nations Organization forums supporting international peace and security and is actively making new international security treaties and agreements with many countries of the world as well as consistently working on maintaining old treaties and agreements in frames of United Nations Organization, Collective Security Treaty Organization and others.
Cooperation between the Republic of Belarus and the Russian Federation in the military and military-technical spheres is carried out in the interests of ensuring the military security of the Republic of Belarus and is aimed to maintain the necessary military potential, quality training of the armed forces, planning and organizing joint measures to prevent a military threat and repel aggression on the common defense space.
Sources: 1. Ministry of Defense of the Republic of Belarus official website, https://www.mil.by/en/; 2. Personal.
29. Foreign trade impact: 1.0
The total of imports and exports of services and goods for 2018 was 86231 USD Million, which is 144% of the GDP. Belarus highly depends on its trade relations with Russian Federation: Russia is the main trading partner of the Republic of Belarus, the most important supplier of energy and raw materials for industry, the buyer of the bulk of the products of Belarusian industry and agriculture.
The Belarusian economy in its modern form was formed as an export-oriented one. Currently, more than half of the country's product is exported. This is justified. A significant part of industrial products simply cannot be sold only in the domestic market, due to the insufficient number of buyers. On the other hand, a decrease in production volumes and/or the replacement of one type of product with another that would be more in demand on the domestic market, is not possible due to the “economies of scale”, whereas only mass production is beneficial for a modern industrial enterprise.
Sources: 1. Belarusian Diplomatic Service official website, http://mfa.gov.by/export/; 2. Myfin.by financial analytics portal, https://myfin.by/wiki/term/vneshnyaya-torgovlya-respubliki-belarus.
30. Management of foreign currency budget: 4.0
Looking at the previous years statistics I can tell that the balance is decreasing every year, so we can definitely see some progress. In 2018 the total of exports of goods was 33726 USD Million, total of exports of services (according to the balance of payments methodology) was 8721 USD Million. Combining those two we get 42447 USD Million as the total of country exports. The total of imports of goods was 38409 USD Million, imports of services – 5375 USD Million, which brings the total of all imports to 43784 USD Million. This data helps to find the balance between exports and imports being -1337 USD Million. Considering that GDP of Belarus in 2018 was 59700 USD Million we can tell that negative balance between exports and imports is less than 10% of country’s GDP.
Belarus maintains trade relations with more than 170 countries of the world.
The most important export positions are refined products, potash fertilizers, trucks, metal products, tractors, tires, dairy and meat products and timber.
In import, the largest place is occupied by energy resources (oil and natural gas), raw materials, construction materials and components (metals and products from them, raw materials for chemical production, machine parts), technological equipment.
The main trading partner of Belarus is Russia, in the first half of 2019 it accounted for 40.3% of Belarusian exports and 55.6% of imports. The European Union takes the second place in the commodity turnover, which accounts for 27.1% of Belarusian exports and a fifth of imports.
Sources: 1. Belarusian Diplomatic Service official website, http://mfa.gov.by/export/; 2. The National Bank of the Republic of Belarus official website, http://www.nbrb.by/bv/arch/suppl_42.pdf.
31. Layers of collective action: 2.0
Even though all forms of democracy are officially available for the people of Belarus, traditionally locally elected bodies are strongly dependent on the central government, any political activities are not encouraged and in many cases are prohibited.
According to the Constitution of the Republic of Belarus, the priority of Belarus’s social policy is to protect the interests of ordinary citizens and support people: all power in the Republic of Belarus belongs to the people of the Republic of Belarus, which is the bearer of sovereignty and the only source of state power in the republic. All-Belarusian national meetings, referendums, elections are supposed to be held in accordance with these principles. People can participate in discussion of the draft laws, make individual and collective appeals to the central government and gather for rallies, marches, demonstrations, pickets.
Sources: 1. National Legal Internet Portal of the Republic of Belarus, http://pravo.by/pravovaya-informatsiya/normativnye-dokumenty/konstitutsiya-respubliki-belarus/ ; 2. Personal
32. Pro-business climate: 3.0
Most businesses in Belarus are owned by foreign citizens, mainly Russian citizens. Though pro-business climate is definitely warming up according to local and foreign business analytics, the percentage of businesses owned by Belarus citizens is still low. State regulations that need to be met are strict and competition is very high. However, Belarusian government is making attempts in improving the business climate in Belarus, passing the laws “On the development of entrepreneurship” and “On the development of the digital economy”, and promising to stimulate local businesses as well as women-owned businesses.
The state’s approach to business mistakes has changed - from punitive to precautionary, according to Sergei Novitsky, Deputy Chairman of the Entrepreneurship Development Council in Belarus.
Sources: 1. Belarusian Telegraph agency, https://www.belta.by/economics/view/biznes-klimat-v-belarusi-znachitelno-uluchshilsja-ekspert-328404-2018/ ; 2. Personal
33. Government enterprises: 1.0
Approximately 70% of GDP of the Republic of Belarus is from government owned enterprises. This number is very high comparing to 40% in Ukraine, 35% in Russia, 25% in Poland and 23% in Lithuania. First of all, Belarus will have to streamline the ownership structure: optimize the ratio of government owned and private enterprises. This should be done before the modernization of the entrepreneurship sector.
The experience of developed countries shows that companies that manage state property should not have bloated structures and staffs. For example, in Singapore, a holding of just 500 people manages a portfolio of $ 240 billion.
The problem of Belarus, according to experts, is that the privatization process has dragged on and there are no noticeable changes in the structure of state property.
Today, domestic state enterprises are run by ministries responsible for specific sectors of the economy. The state acts as the setter of goals, the consumer, and the regulatory body at the same time. This creates a large number of problems, including the lack of competition between the state enterprises themselves.
According to experts, within ten years Belarus could get rid of inefficient state property, privatize some enterprises and ultimately reduce the government sector of GDP to 25-30%.
It is advisable to retain strategic, city-forming and socially important enterprises, as well as some monopolies, such as the railway and postal service.
Sources: 1. National Statistical Committee of the Republic of Belarus, http://www.belstat.gov.by/en/ ; 2. Belarus Tomorrow, https://zautra.by/news/news-22470
34. International security agreements: 5.0
Belarus pursues a consistent policy in the field of international security, non-proliferation of weapons of mass destruction, disarmament and arms control.
Belarus was the first country to voluntarily renounce possession of nuclear weapons remaining after the collapse of the USSR.
Within the framework of the United Nations Organization, Belarus actively participates in the activities of the UN General Assembly Committee on International Security and Disarmament.
The Collective Security Treaty (CST) was signed on May 15, 1992 in Tashkent by the heads of six states: Armenia, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Subsequently, Azerbaijan, Georgia and Belarus joined it.
Sources: 1. Belarusian Diplomatic Service official website, http://mfa.gov.by/mulateral/global_issues/global_security/ ; 2. Collective Security Treaty Organization official website, https://en.odkb-csto.org
35. Protection of domestic enterprises from government mandated costs: 3.0
Currently, the income tax rate in the Republic of Belarus is 18%. In some cases, specified by law, it can be reduced.
In order to avoid double taxation, income tax amounts paid in accordance with the legislation of a foreign state from income received in that state are credited to the Belarusian organization when paying income tax in the Republic of Belarus in the amounts and manner established in Article 144 of the Tax Code. Since 2015, the 50% reduced tax rate on profits from profits from the sale of shares in the authorized capital of Belarusian organizations has been canceled.
Not everyone in Belarus is able to open their own business. Statistics is inexorable: about 90% of new businesses close in a year. Someone does not withstand the tax burden, someone competitors' pricing policies, and for some, their project becomes unprofitable from the very beginning. Big businesses are owned by the government. The only area for creating a successful business is the service sector.
Sources: 1. Myfin.by financial adviser portal, https://myfin.by/wiki/term/nalog-na-pribyl; 2. Personal
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