Belarus Requires Prompt Reforms, Expert Says

Otherwise, the country will face economic catastrophe.

Marek Dabrowski, professor and senior researcher at CASE, the member of the team that implemented the Balcerowicz Plan in Poland 25 years ago, thoroughly monitors the situation in Belarus.

"Since 1994 I have regularly visited Belarus," Dabrowski said while the conversation with a journalist of thinktanks.by on the sidelines of the Kastrychnik Economic Forum.

Professor does not dare comment on speeches of Mikalai Snapkou and Kiryl Rudy, but "personally for him, as well as for many others, it is clear what the Belarusian economy requires - market reforms stuck many years ago should be fully implemented."

Marek Dabrowski notes that Belarus now is far from being a leader in the economic development among the countries not even of the Central and Eastern Europe, but former Soviet republics.

"If to consider structural and institutional reforms calculated by the European Bank for Reconstruction and Development, three outsiders appear: Turkmenistan, Uzbekistan and Belarus. Other indicators vary, but these three countries are united with the fact that comprehensive reforms falter there," the economist notes.

"In his view, a sweeping change in the external economic environment — drop of oil prices, rent reduction from trade with Russia - gives an additional hit for the Belarusian authorities to reform. "The world economy has decelerated and will hardly begin to develop faster in the near future. The situation is not as favourable as it used to be before the crisis in 2008. I will not make forecast for 10 next years, but in the next 2-4 years we have to live in conditions of deceleration of the world economy," Marek Dabrowski said.

"Yes, both Russia and Ukraine have stabilized the GDP drop, Ukraine even shows a slight growth, but they surely will not have a quick return to high growth rates. Oil prices are likely to remain the same, Dabrowski considers. - The demographic situation in the region is negative; the number of working-age population is declining. To overcome these negative factors the performance of the economy, attraction of more foreign investment should be improved, but this is impossible without comprehensive and overhaul market reforms".

Marek Dabrowski enumerates the principal steps on the way of reforms:

Privatization of enterprises; abolition of many regulatory restrictions for private business - small and large one; lifting restrictions on foreign investors; reform of the law enforcement and judicial system; public administration reform; land reform; banking reform. Here is nothing new."

Marek Dabrowski does not agree that reforms in Belarus may become a "shock therapy", which were much told about during the reforms in Poland in the late 80s of the last century.

"This term was invented by opponents of changes in Poland to caricature the sense of changes, and make people scare. I prefer call it complex and overhaul reforms, the responsibility for which was shared by that Polish government. They paid with their political popularity, but got an expected result," Marek Dabrowski stressed.

But, in his view, today's situation in Belarus is fundamentally different than the one was in any post-Communist country 25 years ago.

"Then the depth of the macroeconomic and structural crisis was even more severe. Yes, Belarus does not take the leading position in reforms, but still it had some over the past 25 years, he says. - Belarus suffers regular shocks caused by crises, the last one occurred in the end of 2015 - early 2015. That is, the question is what to do to avoid the occurrence of another crisis.

Here is a narrow option - either to take prompt reforms now when the situation is still far from the worst, or to be stalling unless the more severe crisis comes. Reforms in such circumstances can cost more than the crisis itself. But above all, this is the resolve and political will issue".