BELARUS NEWS AND ANALYSIS
DATE:
02/09/2009
Belarus cuts '09 GDP growth forecast to 1-2 pct
By Andrei Makhovsky
MINSK, Sept 2 (Reuters) - Belarus sharply lowered its 2009 gross domestic product (GDP) growth forecast, projecting an increase of between 1 and 2 percent, down from the previous 2 to 5 percent growth forecast.
In recent years, the ex-Soviet state's economy has grown between 7.5 and 10 percent.
But Belarus - like many of the post-Soviet republics with economies powered mainly by exports - has been battered badly by deteriorating demand for goods in Russia and Europe, its chief exports markets.
In the first seven months of the year, the economy grew by 0.4 percent [ID:nMSE57A1EX].
The government's new forecast came on the last day of the visit of the International Monetary Fund mission, which has returned to Minsk to discuss the disbursement of a third tranche of a promised $3.5 billion standby loan.
On Wednesday, Tatiana Starchenko, deputy economy minister said the IMF has revised up its GDP estimates for Belarus for this year.
"Based on preliminary results of this visit, they [the IMF] have changed their forecast, bringing them more in line with our estimates," Starchenko told reporters.
The IMF has previously forecast that the Belarusian economy would shrink by up to 3 percent this year.
Starchenko declined to provide the IMF's new estimates and the Fund has not revealed any revisions yet.
Belarus has already received $1.5 billion from the IMF since the beginning of the year and expects the remaining in three tranches, worth about $678 million each, by the end of next summer.
The IMF set a series of conditions for Belarus to follow to receive the loan in full, limiting, for example, the central bank's spending of its reserves. The Fund has also recommended banking privatisation as a way to generate much needed cash for the government.
The economy, which is still largely in government hands, has nonetheless fared better than many other ex-Soviet states during the recent crisis. It has decisively outperformed Russia, which saw its economy shrink by 10.1 percent in the first half of the year.
But while Russia has a massive oil windfall revenue savings it can draw from, as well as the world's third largest currency reserves, the resources of Belarus are limited. Its central bank's reserves, at $3.6 billion as of Aug. 1, are less than a hundredth of Russia's stash, and they are shrinking.
In addition, demand for Belarus's top exports, which include oil and agricultural products as well as chemicals and machines has declined drastically. This has forced Alexander Lukashenko's government to request financial assistance from the IMF, the World Bank and Russia.
The country is still waiting for the final $500 million tranche of a $2 billion credit from Russia, after bickering between the two governments earlier in the summer delayed the disbursement.
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