{"id":92709,"date":"2024-06-26T14:45:30","date_gmt":"2024-06-26T11:45:30","guid":{"rendered":"https:\/\/pozirk.online\/en\/longreads\/92709\/"},"modified":"2024-06-26T14:46:40","modified_gmt":"2024-06-26T11:46:40","slug":"belarus-economic-problems-multiply-for-future-generations","status":"publish","type":"longreads","link":"https:\/\/pozirk.online\/en\/longreads\/92709\/","title":{"rendered":"Belarus\u2019 economic problems multiply for future generations"},"content":{"rendered":"\n

A year before a presidential election, the government must feel the urgency of offering voters some vision of the future. However, Minsk clearly has a problem with positive messages, while the likelihood of negative scenarios, for example price hikes, and even the probability of a black swan event is rising.<\/strong>

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\n (freepik.com)<\/span>\n <\/div>\n <\/figcaption>\n<\/figure>\n\n\n\n

The government is multiplying problems just to leave them for future generations.<\/p>\n\n\n\n

Key challenges: demographic crisis<\/strong><\/h2>\n\n\n\n

The government\u2019s repressive policies have forced hundreds of thousands of Belarusians into exile. The country faces a shortage of skilled labor to keep the pace of economic recovery. It will be a constant threat in the future.

Demographic challenges are closely related to social challenges. Possible future reforms will inevitably affect living standards. The longer reforms are delayed, the more painful will be the population\u2019s adjustment to new economic realities.

Transition to a market economy usually results in a wider income gap. The current, seemingly good level of economic equality in Belarus is essentially the equality of the poor, and is therefore not sustainable.<\/p>\n\n\n\n

Sanctions<\/strong><\/h2>\n\n\n\n

An obvious problem inherited from the current government will be the long list of economic sanctions. If the new generation continues to pursue authoritarian policies, the sanctions will not be lifted and may be even tightened.

This, in turn, will have a negative impact on foreign trade and access to international markets. The economy can grow only if the sanctions are lifted, but this is a matter of political will.<\/p>\n\n\n\n

Dependence on Russia<\/strong><\/h2>\n\n\n\n

Belarus is heavily dependent on economic support from Moscow, including cheap energy, loans and access to the Russian market. Russia is the main consumer of Belarusian exports and the only major route to third country markets.

A change in economic policy in Belarus will inevitably lead to a change in relations with Russia, a reduction in its support and preferential treatment.<\/p>\n\n\n\n

Most Eastern European countries were able to reduce their heavy dependence on the energy-rich empire.<\/p>\n\n\n\n

Debt<\/strong><\/h2>\n\n\n\n

A substantial debt burden will also be a challenge for future generations. Belarus temporarily lost access to cheap Russian energy in the late 2000s, and its foreign debt increased significantly at the time.<\/p>\n\n\n\n

The government also borrowed billions from Russia to build a nuclear power plant.

The total debt decreased slightly this year, but this is more a negative sign, indicating that the Belarusian economy is no longer attractive to investors.

Although the external debt does not seem critical, the country needs access to the global capital market to service it. This is where Minsk faces obvious difficulties after a complete breach with leading international economic institutions.

Belarus’ future sustainability will largely depend on its ability to manage its external debt and repair relations with potential creditors.<\/p>\n\n\n\n

Social infrastructure<\/strong><\/h2>\n\n\n\n

A less obvious but important challenge arising from the previous ones is the possible erosion of social infrastructure.

Until 2020, it has been upgraded with support from international donors. In their absence, funding comes from the government\u2019s budget.

Maintaining a sufficient level and quality of social infrastructure will be an obvious challenge.<\/p>\n\n\n\n

A future government may have to cut spending on health care, education and social security to finance economic reforms.

This, in turn, will affect living standards, heighten social tensions and potentially destabilize the country.<\/p>\n\n\n\n

Support from international economic institutions will be crucial, but the government has yet to restore the disrupted ties.<\/p>\n\n\n\n

Solutions<\/strong><\/h2>\n\n\n\n

To mitigate the negative consequences, it is necessary to thoroughly prepare the reform by adopting a detailed plan for transition to a market economy, taking into account all possible risks and ways to mitigate them.

It is important to develop programs to support the unemployed, pensioners and other socially vulnerable groups. The current social security system is not good for the future.

To sustain the economy, it will be necessary to offer incentives for small and medium enterprises.

In addition, it will be necessary to overcome the excessive dependence on Russia, diversify the economy, reduce dependence on exports of raw materials, spur other industries and expand to new markets.

It is important to avoid the mistakes of the early 1990s and create a transparent and accountable system of state administration.

The solutions are quite clear and there is no need to reinvent the wheel. Many post-communist countries followed the same path.

But it would be na\u00efve to hope that the Belarusian ruler will launch economic reforms. To hold on to power he continues to lay mines under the nation\u2019s future.<\/p>\n\n\n\n

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