BELARUS NEWS AND ANALYSIS
DATE:
30/03/2009
Belarus to support private business in crisis-econmin
By Andrei Makhovsky
MINSK, March 30 (Reuters) - Belarus will push on with economic reforms to help expand the private sector despite the global financial crisis but may have to limit some imports to support its currency, Economy Minister Nikolai Zaichenko said.
In an interview with Reuters, Zaichenko also said the ex-Soviet state will avoid recession at worst this year and could grow by up to 5 percent, if global markets improve.
The ex-Soviet state had for years retained state control over much of its economy but in the past year or so has moved towards privatisation and attracting foreign investment through looser regulation.
"In times of crisis we must create a mechanism for self-employment," Zaichenko said.
"Our aim is to create a new source of economic growth in the form of private business. We are supporting the economy that we have, but we will link the future stable growth of the economy to that sector," he said.
A new focus on the private sector signals the continued policy shift by long-serving President Alexander Lukashenko to more freedom in the economy.
Long accused of human rights abuses by the West, Lukashenko has eased state controls over the economy and other institutions and begun to improve ties with the EU.
Belarus has in the past year simplified the procedure for registering companies and the tax system, allowed greater foreign investment into the country and scrapped a "golden share" rule in the past year.
Zaichenko said the government planned to cut some taxes and some of the red tape encountered when running a business. He said it would expand its policies of deferring some taxes for large companies and reducing bank rates to support the economy.
"Based on a pessimistic scenario, the maximum that we can squeeze out is the same level (of output) as last year. And I do mean squeeze out.
"Based on an optimistic scenario of markets possibly restarting again in the second half of the year, then we can have growth of 2, 3 or 5 percent," he said. The economy grew 10 percent last year.
DEFENDING THE CURRENCY
The main impact of the global financial crisis on Belarus has been a sharp fall in its exports as economies falter in both key market Russia and Western Europe, which has also battered the Belarussian rouble since late year.
Minsk secured a $2.5 billion loan from the International Monetary Fund at the end of December and the central bank devalued the currency by 20 percent on New Year's Day. It is now worth 2,811 Belarussian roubles to the dollar.
Belarus also received $1.5 billion of a $2 billion loan from Russia and has organised a three-year currency swap with China worth 20 billion yuan ($2.93 billion).
The central bank, as in neighbouring Russia and Ukraine, has raided its reserves to prop up the currency. But at $3.8 billion, its reserves are limited and the ministry is thinking of raising some import duties to help the currency.
"We are not planning any measures limiting Russian goods. As for third parties, outside ex-Soviet states, this is not an easy decision but we are thinking about possibly raising duties on specific consumer goods," Zaichenko said.
Russia has been Belarus' traditional ally since the fall of the Soviet Union, and their economies remain closely intertwined.
"Taking into account the difficult situation in the currency market, the issue of limiting imports has to be solved ... This is not our policy, this is a neccesary temporary measure." (Writing by Sabina Zawadzki; Editing by Toby Chopra)
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