World Bank: Belarus should Reduce State Subsidies

The World Bank released its recommendations to restore sustainable economic growth in Belarus. The bank experts suggest the Belarusian authorities reducing the amount of state subsidies in agriculture and energy, as well as reforming social and pension system.


After analyzing public expenditure in Belarus, the World Bank experts have come up to the need of reforming the fiscal economy of the country and offered a number of fiscal reforms in priority areas of fiscal policy aimed at reducing the scale of economy governance.

"Despite the significant fiscal consolidation, undertaken in the last three years, the cost of the public sector still accounts for about 44% of GDP, which is about 3% higher than in the region and almost 5% higher than in countries with similar income per capita," said World Bank senior economist Galina Andronova-Vinselett, noting that it weakens the competitiveness of the economy. The reforms, suggested by the World Bank, she said, will enable the country to save up to 4% of GDP annually.

In particular, the World Bank recommends fiscal and structural reforms in agriculture. According to international experts, currently it’s operating inefficiently. The companies’ debt is rapidly growing, while the state support of agricultural enterprises makes 5% of GDP.

It’s also recommended to reduce energy subsidies, as well as to revise the existing tariffs. According to the World Bank experts, Belarus’s lost about 2% of GDP through the understated energy tariffs.

The World Bank also advises the Belarusian authorities to redistribute funds for targeted programs in social system, while in the pension system - to raise the retirement age, to consider higher prices in the indexation of pensions, to lower fees and to introduce a notional account.

Belarus has been a member of the World Bank since 1992. The World Bank has recently provided the country with the loans of $865 million to implement 12 projects. Another 30 national programs have been supported by grant funding in the amount of $22.8 million. In addition, the World Bank is providing advisory assistance on economic policy and technical assistance to the Belarusian government in the implementation of structural reforms in order to form the basis for the restoration of sustained economic growth.