January 17, 2019
The cyclical recovery of the Belarusian economy continues, with growth in the first three quarters of 2018 reaching 3.7 percent.
", "publishDate": "2019-01-18", "sections": [ { "heading": "Growth, external accounts, and inflation — Findings", "content": "- Real GDP growth in the first three quarters of 2018 reached 3.7 percent.\n- The current account deficit could reach 2½ percent of GDP in 2018, versus 1.6 percent in 2017.\n- Inflation was 5 percent y/y in November 2018.\n- The exchange rate has remained relatively stable on a nominal effective basis, as have international reserves.\n- Higher oil prices and robust external demand supported exports; domestic demand was boosted by double-digit wage growth tied to ambitious wage targets.\n- Stronger imports, including related to the nuclear power plant construction, contributed to some deterioration in the external accounts despite positive terms of trade.\n- Budget revenues could increase by some ¾ percentage points of GDP in 2018 relative to 2017, but expenditures—particularly capital spending, wages and salaries—have been rising faster.\n- The overall budget deficit including quasi-fiscal spending on state-owned enterprises could reach 1.3 percent of GDP in 2018, from 0.3 percent in 2017.\n- The deficit is projected to fall modestly over the medium-term to about ½ percent of GDP, notably thanks to the planned completion of the nuclear power plant.\n- Medium-term growth is projected at 2 percent absent vigorous structural reforms; this projection is conditional on full compensation from Russia for losses triggered by Russia’s new energy taxation system (the so-called tax maneuver).\n- Key risk: if compensation from Russia is significantly less than full, medium-term growth could be materially lower than 2 percent, and the budget and current account deficits higher than projected." }, { "heading": "Executive Board assessment and policy recommendations", "content": "- Main risks highlighted:\n - Rapidly rising public debt.\n - High dollarization.\n - Uncertainty about negative spillovers from Russia’s new energy taxation system.\n- Fiscal policy:\n - Directors encouraged authorities to undertake additional consolidation, spread over the next three years, to achieve a credible medium-term debt target balancing development needs and fiscal sustainability.\n - Directors encouraged monitoring fiscal risks from state-owned enterprises (SOEs) and gradually switching funding toward rubel-denominated debt to reduce exchange rate susceptibility.\n- Monetary and financial policy:\n - Directors agreed on the importance of continued central bank independence and supported the current monetary policy stance, which is consistent with the inflation target goal.\n - Directors welcomed continued progress towards inflation targeting and commended liberalization of the FX market and reductions in directed lending.\n - It will be important to eliminate interest rate caps.\n - Directors encouraged continued efforts to strengthen financial sector stability and welcomed progress on implementing FSAP recommendations; they urged implementation of remaining recommendations.\n - Directors emphasized the need to further reduce high dollarization and to develop local capital markets as a key component of successful de-dollarization.\n- Structural reforms and social policy:\n - Directors called for a comprehensive reform of state-owned enterprises via a systematic, risk-based assessment of SOEs’ viability followed by an actionable restructuring plan.\n - Directors underscored the need for enhanced social safety nets to cushion the impact of restructuring on vulnerable groups.\n - Facilitating private sector activity by improving the business climate and leveling the playing field was highlighted as important." }, { "heading": "Selected economic indicators (baseline) — Key statistics (2016–2023)", "content": "- Real GDP (percentage change):\n - 2016: -2.5\n - 2017: 2.4\n - 2018: 3.7\n - 2019: 2.4\n - 2020: 2.8\n - 2021: 2.3\n - 2022: 2.0\n - 2023: (table lists values under projections)\n- Total domestic demand (percentage change):\n - 2016: -5.4\n - 2017: 4.0\n - 2018: 4.8\n - 2019: 3.1\n - 2020: 2.0\n - 2021: 1.5\n - 2022: 1.8\n - 2023: 2.1\n- Consumer prices:\n - End of period 2016: 10.6\n - End of period 2017: 4.6\n - End of period 2018: 5.5\n - Average 2016: 11.8\n - Average 2017: 6.0\n- Net credit to the economy (percent of GDP):\n - 2016: 41.5\n - 2017: 40.2\n - 2018: 40.1\n - 2019: 41.0\n - 2020: 41.4\n - 2021: 42.6\n - 2022: 43.1\n - 2023: 44.7\n- Net credit to private sector (percent of GDP):\n - 2016: 21.7\n - 2017: 22.4\n - 2018: 22.9\n - 2019: 23.5\n - 2020: 24.3\n - 2021: 25.7\n - 2022: 26.6\n - 2023: 27.9\n- Current account balance (percent of GDP):\n - 2016: -3.4\n - 2017: -1.6\n - 2018: -2.6\n - 2019: -4.0\n - 2020: -2.3\n - 2021: -2.4\n - 2022: -2.2\n- Trade balance, goods (percent of GDP):\n - 2016: -5.3\n - 2017: -5.9\n - 2018: -5.6\n - 2019: -4.3\n - 2020: -4.1\n - 2021: -4.1\n- Exports of goods (percent of GDP):\n - 2016: 48.4\n - 2017: 52.7\n - 2018: 53.3\n - 2019: 52.5\n - 2020: 53.8\n - 2021: 54.3\n - 2022: 53.7\n- Imports of goods (percent of GDP):\n - 2016: 58.0\n - 2017: 59.2\n - 2018: 58.1\n - 2019: 58.3\n - 2020: 57.7\n - 2021: 56.8\n- Gross external debt (percent of GDP):\n - 2016: 78.6\n - 2017: 73.3\n - 2018: 68.3\n - 2019: 69.0\n - 2020: 67.5\n - 2021: 66.8\n - 2022: 66.1\n - 2023: 64.3\n- Public gross external debt (percent of GDP):\n - 2016: 36.9\n - 2017: 37.7\n - 2018: 36.2\n - 2019: 38.9\n - 2020: 37.5\n - 2021: 36.7\n - 2022: 36.1\n - 2023: 34.9\n- Private gross external debt (including SOEs) (percent of GDP):\n - 2016: 41.7\n - 2017: 35.7\n - 2018: 32.1\n - 2019: 30.1\n - 2020: 30.0\n - 2021: 29.5\n- Net international investment position (percent of GDP):\n - 2016: -85.6\n - 2017: -75.9\n - 2018: -72.0\n - 2019: -72.8\n - 2020: -72.1\n - 2021: -71.7\n - 2022: -71.1\n - 2023: -69.5\n- Gross domestic investment (percent of GDP):\n - 2016: 26.5\n - 2017: 26.2\n - 2018: 27.0\n - 2019: 27.7\n - 2020: 26.7\n - 2021: 26.8\n- National saving (percent of GDP):\n - 2016: 23.1\n - 2017: 24.7\n - 2018: 24.5\n - 2019: 23.7\n - 2020: 24.4\n - 2021: 24.8\n- General government primary balance (percent of GDP):\n - 2016: 2.5\n - 2017: 1.7\n - 2018: 0.2\n - 2019: 3.2\n - 2020: 3.1\n- General government overall balance (percent of GDP):\n - 2016: 0.5\n - 2017: -0.3\n - 2018: 0.4\n- Overall balance 2/ (percent of GDP):\n - 2016: -3.9\n - 2017: -1.2\n - 2018: -0.8\n- Gross public and publicly guaranteed debt (percent of GDP):\n - 2016: 53.5\n - 2017: 53.4\n - 2018: 51.7\n - 2019: 54.1\n - 2020: 55.4\n - 2021: 55.7\n - 2022: 56.0\n- Nominal GDP (billions of U.S. dollars):\n - 2016: 47.7\n - 2017: 54.4\n - 2018: 59.6\n - 2019: 62.4\n - 2020: 65.2\n - 2021: 67.6\n - 2022: 70.1\n - 2023: 73.8\n- Nominal GDP (billions of BYN):\n - 2016: 94.9\n - 2017: 105.2\n - 2018: 121.2\n - 2019: 130.3\n - 2020: 141.1\n - 2021: 150.1\n - 2022: 159.1\n - 2023: 168.2\n- Terms of trade, percentage change:\n - 2016: -5.2\n - 2017: 1.1\n - 2018: -0.4\n - 2019: -0.7\n- Real Effective Exchange Rate:\n - 2016: -9.2 ( \"-\" denotes a depreciation)\n- Nominal Effective Exchange Rate:\n - 2016: -17.5 ( \"-\" denotes a depreciation)\n - 2017: -4.9\n- Official reserves (billions of U.S. dollars):\n - 2016: 6.6\n - 2017: 7.1\n - 2018: 7.5\n- Months of imports of goods and services:\n - 2016: 1.6\n- Percent of short-term debt:\n - 2016: 46.4\n - 2017: 75.3\n - 2018: 68.1\n - 2019: 71.9\n - 2020: 71.0\n - 2021: 70.7\n - 2022: 70.6\n - 2023: 70.4\n- Quota (2016): SDR 681.5 million (923.5 million U.S. dollars)\n\nSource: IMF Executive Board press release, January 17, 2019.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Republic of Belarus and the IMF\n- Russian Federation and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm.\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm.\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/01/18/pr1907-imf-executive-board-concludes-2018-article-iv-consultation-with-the-republic-of-belarus" } ], "bullets": [ "[Markdown version](/en/news/articles/2019/01/18/pr1907-imf-executive-board-concludes-2018-article-iv-consultation-with-the-republic-of-belarus/index.md)", "[Structured JSON version](/en/news/articles/2019/01/18/pr1907-imf-executive-board-concludes-2018-article-iv-consultation-with-the-republic-of-belarus/index.json)", "[Bundle manifest](/en/news/articles/2019/01/18/pr1907-imf-executive-board-concludes-2018-article-iv-consultation-with-the-republic-of-belarus/bundle-manifest.json)", "Published: January 18, 2019", "Real GDP growth in the first three quarters of 2018 reached 3.7 percent.", "The current account deficit could reach 2½ percent of GDP in 2018, versus 1.6 percent in 2017.", "Inflation was 5 percent y/y in November 2018.", "The exchange rate has remained relatively stable on a nominal effective basis, as have international reserves.", "Higher oil prices and robust external demand supported exports; domestic demand was boosted by double-digit wage growth tied to ambitious wage targets.", "Stronger imports, including related to the nuclear power plant construction, contributed to some deterioration in the external accounts despite positive terms of trade.", "Budget revenues could increase by some ¾ percentage points of GDP in 2018 relative to 2017, but expenditures—particularly capital spending, wages and salaries—have been rising faster.", "The overall budget deficit including quasi-fiscal spending on state-owned enterprises could reach 1.3 percent of GDP in 2018, from 0.3 percent in 2017.", "The deficit is projected to fall modestly over the medium-term to about ½ percent of GDP, notably thanks to the planned completion of the nuclear power plant.", "Medium-term growth is projected at 2 percent absent vigorous structural reforms; this projection is conditional on full compensation from Russia for losses triggered by Russia’s new energy taxation system (the so-called tax maneuver).", "Key risk: if compensation from Russia is significantly less than full, medium-term growth could be materially lower than 2 percent, and the budget and current account deficits higher than projected.", "Main risks highlighted:", "Fiscal policy:", "Monetary and financial policy:", "Structural reforms and social policy:", "Real GDP (percentage change):", "Total domestic demand (percentage change):", "Consumer prices:", "Net credit to the economy (percent of GDP):", "Net credit to private sector (percent of GDP):", "Current account balance (percent of GDP):", "Trade balance, goods (percent of GDP):", "Exports of goods (percent of GDP):", "Imports of goods (percent of GDP):", "Gross external debt (percent of GDP):", "Public gross external debt (percent of GDP):", "Private gross external debt (including SOEs) (percent of GDP):", "Net international investment position (percent of GDP):", "Gross domestic investment (percent of GDP):", "National saving (percent of GDP):", "General government primary balance (percent of GDP):", "General government overall balance (percent of GDP):", "Overall balance 2/ (percent of GDP):", "Gross public and publicly guaranteed debt (percent of GDP):", "Nominal GDP (billions of U.S. dollars):", "Nominal GDP (billions of BYN):", "Terms of trade, percentage change:", "Real Effective Exchange Rate:", "Nominal Effective Exchange Rate:", "Official reserves (billions of U.S. dollars):", "Months of imports of goods and services:", "Percent of short-term debt:", "Quota (2016): SDR 681.5 million (923.5 million U.S. dollars)", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Republic of Belarus and the IMF](http://www.imf.org/external/country/BLR/index.htm)", "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm.](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm.](http://www.imf.org/external/np/sec/misc/qualifiers.htm.)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2019/01/18/pr1907-imf-executive-board-concludes-2018-article-iv-consultation-with-the-republic-of-belarus/index.md", "json": "/en/news/articles/2019/01/18/pr1907-imf-executive-board-concludes-2018-article-iv-consultation-with-the-republic-of-belarus/index.json", "bundleManifest": 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