World Bank advices to refuse from Lukanomics
12:56, — Economics
Macroeconomic misbalances in Belarus are deeply structurally rooted in the economic model, based on the state’s dominance over the economy.
For the stabilization of Belarus’ economy and preventing another balance of payments crisis a coherent macroeconomic policy and deep structural reforms are needed, a World Bank’s Economic Review on Belarus points out.
In the first nine months of 2013 significant real GPD growth impairment was observed in Belarus. The reason for that was a low external demand combined with internal factors, including the incoherent macroeconomic policy, lack of progress in the area of structural reforms and the decline in exports. The inflationary pressure continues, external misbalances have re-emerged. According to World Bank’s prognosis for 2013, the real GDP will have grown by 1% and the negative balance of the current account will have increase to reach 9% of the GDP, and an insignificant budget deficiency will have emerged again.
“Carrying out a coherent macroeconomic policy is crucially important for lowering the inflationary pressure, restricting the external misbalances and preventing a recurrent macroeconomic crisis”, - the director of World Bank’s department for Ukraine, Belarus and Moldova Mr. Qimiao Fan noted.
World Bank also highlights that macroeconomic misbalances in Belarus are deeply structurally rooted in the economic model, based on the state’s dominance over the economy. Comprehensive and sustained structural reforms will help not only to eliminate the misbalances, but also to lay the foundation for sustainable growth by the means of increasing productivity and competitive ability.
The goal of the structural reforms should be the transition towards a new growth model, based on significant productivity growth. This may be reached on account of strengthening market stimuli and creating a more favorable investment climate for all kinds of business. A comprehensive reform program should include price liberalization, restructuring of state enterprises, transparent privatization and the creation of a sustained financial sector, operating by market principles.
“Structural reforms will make it possible to eliminate the deep causes of the macroeconomic instability and lay the foundations of sustained growth. They will also help to consolidate Belarus’ significant social achievements”, - Mr. Qimiao Fan pointed out. “World Bank is ready to provide Belarus with assistance in developing and implementing comprehensive structural reforms”.
World Bank’s current investment and loan portfolio in Belarus includes 5 projects with the total amount of 547.5 million US dollars. From the moment of Belarus’ joining World Bank in 1992 the country’s commitments have reached 955 million US dollars. Apart from that, grant financing in the total amount of 23.7 million US dollars has been provided for implementing about 30 programs, including the programs involving civil society institutes.
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