Republic Of Belarus: Staff Report for the 2005 Article IV Consultation

IMF Staff Country Reports, June 28, 2005

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Belarus experienced strong economic growth in 2004, supported by policies aimed at raising incomes and credit, and a favorable external environment.
Inflation was halved during 2004, and slowed down further to 11 percent in April 2005, aided by a balanced budget, exchange rate stability, and continued remonetization.
Although the economy’s current momentum is likely to result in significant growth in 2005, long-term prospects are uncertain in the absence of wide-ranging structural reforms and a phasing out of massive quasi-fiscal activities.

Strong economic growth in 2004.
Inflation developments:
- Inflation was halved during 2004.
- Inflation slowed to 11 percent in April 2005.
Fiscal and monetary context:
- A balanced budget contributed to disinflation.
- Exchange rate stability supported price stability.
- Continued remonetization aided the disinflation process.
Credit and income policies supported domestic demand expansion.

Near-term outlook:
- The economy’s current momentum is likely to produce significant growth in 2005.
Medium- to long-term risks:
- Absence of wide-ranging structural reforms would undermine long-term prospects.
- Continued massive quasi-fiscal activities pose significant risks to sustainability.

Subjects: Banking, Currencies, Expenditure, External debt, Monetary base, Money, Public debt.
Keywords: authority, banking system, Belarus economy, Belarusian authorities, CR, Currencies, Europe, fund advice, fund mission, growth forecast, ISCR, Monetary base, state, Western Europe.