Analysis: Belarus tones down - but sticks to pre-crisis policies

Wed Apr 3, 2013 4:06am EDT
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By Olzhas Auyezov

MINSK (Reuters) - Shortly after emerging from a crisis that wiped out its foreign currency reserves and forced a 65 percent rouble devaluation, Belarus appears to be sticking with some of the policies that caused it - but with more caution.

President Alexander Lukashenko's government is again doling out subsidized loans, raising wages and drafting ambitious economic development plans while shunning International Monetary Fund calls for deep market reforms.

However, analysts say the authorities are acting more carefully this time and the economy will most likely muddle through this year thanks to continued support from Russia and possible asset sales or Eurobond issuance.

"Growth will not be stimulated carelessly, the way it was in 2010," said Dmitry Kruk, a Minsk-based analyst at the Belarussian Economic Research and Outreach Centre (BEROC).

The former Soviet republic's government and central bank are planning to reduce inflation to 12 percent this year from 21.7 percent in 2012 while pushing economic growth to 8.5 percent from 1.5 percent.

Some economists say the growth target is unrealistic and will not be met.

"Officials are already preparing excuses for failing to meet this target," said Yaroslav Romanchuk of the Minsk-based think tank Mises Centre.

Belarussian exports - dominated by oil products, chemicals such as fertilizers, and heavy machinery such as dump trucks and tractors - actually fell 13 percent year-on-year in January, leading to a 71 percent drop in the trade surplus.   Continued...

Belarussian President Alexander Lukashenko sits during an interview with Reuters in Minsk November 26, 2012. REUTERS/Yuri Oreshkin/Presidential press service/Handout