Belarus Contemplates Economic Reforms

As Russia’s economy continues to slide due to falling oil prices worldwide, its neighbor and economic partner, Belarus, is facing some tough times of its own. The former Soviet republic is still, in many respects, following the economic model established by the communist government of the USSR. The hard line government of Belorussian President Alexander Lukashenko, however, is now contemplating a series of economic reforms intended to drive investor interest in the country.

Belarus, more than any other Soviet state, stuck to its former economic system after the wall came down. Most, though not all, farms in Belarus are still collectivized as government operations. Most of the factories are similarly state owned enterprises, as well as the nation’s system of oil refineries. Some private business has flourished in Belarus, but high tax rates and sweeping regulations have been a consistent impediment to the growth of the private sector.

Now, in the wake of economic slowdowns worldwide and decreased financial assistance from Russia, the government of Belarus is debating how best to reform the economy. The reforms are likely to be slow at first, as the population of Belarus has long been supported by unsustainable government spending. Some initial reforms that are being debated are the dropping of tax barriers to private business, increased access to loans and finance to stimulate the consumer economy, and a comprehensive review of internal efficiency in the state owned enterprises. In order to carry itself through the financial upset, the government of Belarus has announced that it will create a 2016 bond issue of 1 billion euros.