In the red: Belarus’ foreign trade balance

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April 22, 2016 18:41

Foreign trade balance has been in the chronic red ever since the solvent scheme was suspended 15 months ago. Modernization hit hard on Belarus’ foreign trade in 2013. Regardless of Russian subsidies and participation in the Customs Union on favourable terms, Belarusian economy is still not self-sufficient. 

Since 2006, Belarus reported foreign trade surplus in goods only in mid-2011 through mid-2012 (when it invented the “solvent scheme” and devaluation sharply reduced the cost of Belarusian goods). Foreign trade balance has been in chronic red ever since the solvent scheme was suspended 15 months ago. In October 2013, foreign trade deficit in goods reached record high USD 719.4 million.

The structure of goods imports in 2013 clearly highlights a problem with Belarus’ foreign trade. Amid falling petrochemical exports and reduced volumes of imported oil, the supply of capital goods has increased substantially. Imports of investment goods increased by at least 20% in January - September 2013. Simultaneously, exports of Belarusian investment goods have decreased. Consumer imports increased due to higher wages in the economy.

To some extent, Belarus reckoned on support from Russia in the framework of the Customs Union. And in fact, it does receive support, bearing in mind the discounts on gas and oil supplied from Russia. The average price of natural gas supplied to Belarus is USD 150 per 1000 m3. In 2013 22 billion m3 of gas will have been supplied to Belarus. Other countries in the region receive gas at USD 164 per 1000 m3. Ergo, Belarus is saving circa USD 3 billion. In addition, Belarus receives oil for domestic consumption free from export duties at USD 392 per ton.

Potentially, these significant amounts of aid could help remedy the deficit in foreign trade in goods.  However, Belarus has an inefficient economic system based on redistribution of resources, which, coupled with technically backward industrial production, led to a foreign trade deficit of more than USD 4 billion in January – October 2013.

The amount of support from Russia to Belarus is immense, but it is still not enough to compensate for inefficient economic management. If Russia’s economic situation deteriorates, it will reduce its support to its Western neighbour, which will threaten the viability of the Belarusian economic model.

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President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

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