by Sun Ping
Faced with mounting trade deficits and ailing state-owned enterprises, the Belarusian government led by President Alexander Lukashenko has laid out an ambitious agenda with a determination to fix the economy.
Belarus has witnessed climbing trade deficit and sluggish export growth in recent years, which could be caused by certain deeply-rooted structural flaws in the economy, according to some analyses.
National Bank statistics show Belarus's foreign trade deficit in goods and services totaled 7.4 billion U.S. dollars in 2010, 34.6 percent higher than in 2009.
Export growth remained sluggish compared to imports by the end of 2010, indicating Belarusian goods have become less competitive abroad.
Meanwhile, as major state-owned enterprises were all on a steady decline, the country's leaders have concluded that the private sector may be more capable of managing financial resources.
Facing the challenge of economic restructuring, the government has rolled out a national export development program to deal with related problems.
According to Belarusian Deputy Prime Minister Sergei Rumas, the five-year program sets the goals of reversing the trade deficit in 2014 and expanding trade surplus in goods and services to 500 million U.S. dollars in 2015.
As part of the efforts to facilitate the realization of the goals, the country plans to increase exports of goods by 2.2 times and triple services exports in 2006, Rumas said.
CRITICISM OVER WAGE RISE
The sharp increase in wages by the government at the end of 2010 has sparked sharp criticism from experts, who believed the decision was not made due to economic reasons but administrative ones.
"The authorities desire to perform those tasks set in the early five-year plan," said Natalia Koliadina, the International Monetary Fund (IMF) Resident Representative in Belarus.
She noted the wage increase could lead to significant errors, saying increasing costs caused by wage hikes could undermine the competitiveness of Belarusian goods in the international market, which could in turn increase the current account deficit.
Economist Sergei Chaly also believed such a move would give rise to inflation, undermining the welfare of its citizens.
"The inflation at the current rate means overstating of the real exchange rate and deteriorating situation in foreign trade. This leads to an impending devaluation," Chaly said.
OPTIMISTIC OUTLOOK FOR THE FUTURE
Analysts with the IMF hold positive attitudes towards Belarusian economic prospect in 2011, saying they did not expect a significant slowdown of the economy.
The prediction is based on the country's plans to narrow the current account deficit and the increased attention of the authorities to foreign economic stability, as compared with the previous period.
The IMF predicted Belarus's GDP would increase by 6.2 percent in 2011, while the World Bank projected an increase of 6 percent. Belarusian authorities forecasted its economic growth at 9 to 10 percent this year. According to analysts with the European Bank for Reconstruction and Development, the strong performance of the Belarusian economy in the past year could be attributed to large-scale incentives through direct lending as part of ambitious government programs.
Meanwhile, analysts warned the country's economy still remained vulnerable to external and internal turmoil, with some progress in structural reforms though.
The government would be forced to tighten its fiscal policy if Belarus has fewer opportunities to attract foreign loans against the backdrop of spiraling energy prices, analysts said.