Institutional developments

Institutional developments

 

 

 

 

 

 

 

 

 

The main elements of transformation are: the transformation of state ownership into private, and liberalisation of the exchange.

 Privatisation was erratic after 1991 because it was impeded by ideological opposition from the parliamentary leadership prior to 1995, and by President Lukashenko and members of the Supreme Council afterwards.

The accelerated privatisation in 2007-10, supported by regulatory measures, such as the approval of amendments to the Privatization Law, the creation of the National Investment and Privatization agency and introduction measures on entrepreneurial liberalization, was halted by the global financial crisis in 2009 and by the domestic crisis in 2011. In this period, the gas pipeline “Beltransgaz”, telephone operators “BeST” and “Velcom”, as well as two banks, “Belpromstroibank” and “Belvneshekonombank”, were sold.

These examples represent, however, forced privatization, since foreign investors, who bought the assets, provided Belarus with foreign currency, a badly needed resource to improve the deteriorating balance of payment.

In 2011, state-owned enterprises still owned 55 per cent of all fixed assets in the country, employing half of the population. Agriculture is one of the least reformed sectors, since around 90 per cent of the total agricultural land is operated by state agricultural enterprises. 

Price liberalisation is considered to be one of the essential elements of market reforms in all post-socialist countries. However, the initial liberalisation brought about an unprecedented rise in prices: in the early 1990s the level of inflation in Belarus was estimated in four-digit numbers.

This effect of price liberalisation made the Belarusian government reconsider the speed of economic policy, re-establishing thereafter price controls. Thus, in the following years, the actual inflation level was much higher than official indicators, since the Belarusian Government artificially kept inflation down by controlling over 50 per cent of prices.

Price reforms intensified in 2008-11, when the government began to gradually ease administrative controls – general ceilings on monthly price increases were eliminated while price controls and restrictions on retail margins were abolished. Yet, the scale of price control remains very large since prices of socially important goods, agricultural and those produced by monopolies (over 700 enterprises are registered as monopolies) are state-regulated. The sharp currency devaluation of 2011 had a huge impact on prices, leading to hyper-inflation and making the Belarusian government reconsider the system of price regulation. 

Author: Handbook on Belarus for International journalists

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