May 21 – May 27, 2018
The ruling elite

The Belarusian authorities have resumed industrial modernisation investing hopes in the state sector

The situation got worse
The Belarusian authorities have resumed industrial modernisation investing hopes in the state sector

Amid economic recovery and plans to double GDP growth by 2025, industrialists in the government lobby a massive re-industrialisation of the Belarusian economy. Law enforcement continued applying anti-corruption pressure on state managers and public officials to enhance the public sector’s efficiency. Given resumed GDP growth, the Belarusian authorities appear to focus on pursuing the existing economic policy, rather than embarking on reforms.

Industrialists are lobbying a new industrialization in Belarus to be funded from the state budget and borrowed funds, including some USD 4 billion of tied Chinese loans. That said, the large-scale modernization of the cement industry and wood processing in 2008-2015 derailed and failed to ensure improvements in economic performance, despite significant USD 2 billion investment by the state.

Modernisation projects in wood processing, which were restructured and transferred to the Development Bank, are beginning to inspire the authorities, thereby strengthening the position of the industrial lobby in the government, who propose to launch a new re-industrialisation programme in Belarus. Re-industrialization would enable the Belarusian authorities to retain high employment rate and avoid tension growth in the labour movement.

The president appears to regard the public sector as the main economic driver, which predetermines strong administrative pressure and anti-corruption persecution of state managers by law enforcement. In Q1 2018, law enforcement officers instigated twice as many anti-corruption cases as compared with Q1 2017. Ultimately, the power block has strengthened its positions in the power hierarchy and enhanced its influence on the Belarusian economic policy.

Overall, the environment is favourable for the industrial lobby to sell a new industrial modernisation strategy, the cost of which is likely to exceed that of modernisation in 2018-2015.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.

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