Belarusian Economy Is Losing Opportunities And Prospects

There is a significant investment outflow in the country.

Belarus is becoming less and less interesting for foreign investors. Last year, businesses invested 8.7 billion US dollars in our country. According to the results of the first quarter of this year, the latest figures voiced by official statistics show that about 3.5 billion US dollars have been invested in Belarus. At the same time, there is a significant investment outflow. As a result, according to economists in a conversation with Belsat, our country is increasingly falling behind its neighbours.

The authorities were concerned about the lack of investment. Foreign businessmen do not want to invest their money in Belarus, and those investors who started working here earlier withdraw their funds. However, last year, about 8.7 billion US dollars were invested in our country. Belarus received about 3.4 billion investments in the first quarter of this year. Still, official statistics also show that the coefficient of real investment in fixed assets in the first half of the year turned out to be 17.1% less than in the corresponding period last year. It is worth recalling that last year, compared to 2020, the coefficient also decreased by 7.1%.

Research Associate at BEROC Anastasia Luzgina believes that it is unlikely that our country will lose all the investments. The fact is that there are different options that officials will consider. But it is worth recalling that our country has always had difficulties in attracting foreign funds, especially when it comes to direct investment, which is very important for the development of the economy.

During the most recent period, the situation has only gotten worse. The investment climate turned out to be even less attractive. Our country is now seen as a co-aggressor in Russia's war against Ukraine. Sanctions have a negative effect. The decision of the country's leadership to make loan payments in Belarusian rubles, and not in the currency prescribed in the contracts, had a very significant impact on the investment situation. Since the prescribed currency of payment under contracts is an essential condition of the contract. The decision of the country's leadership is the failure to fulfil the contract.

It is known that international financial structures reacted to this and lowered their financial rating of Belarus. Moody's defaulted Belarus on foreign debts. All this in general reduces the prospects for our country to attract foreign investment,” says Anastasia Luzgina.

The expert continues that in the current conditions it is clear that Western markets will not invest in Belarus in the near future. "However, Asian investors can consider our country for their business. Of course, they also do not like the fact that the authorities in Minsk unilaterally change the terms of the contract. Therefore, if they are ready to invest, then due to the attention to risks, resources will be expensive," Anastasia Luzgina sums up.

Russia is a proven channel for investments in our country. Belarus is using it all the time. It is known that relying on only one source is not worth it, since no one will immediately invest just because of desire. Anastasia Luzgina emphasises that we are now seeing that long negotiations are taking place before receiving any loans.

“I think that if there is such a situation of an urgent need for money, then Russia will allocate funds. But it is important that other resources come to the country besides state loans, including private investment,” the source of Belsat says.

The expert also draws attention to the fact that there are ongoing negotiations with Arab investors in the field of construction, and joint projects with China are possible. But there the problem is that these are related loans with rather tough conditions. Although there is a possibility of an agreement on other grounds.

“Even Asian investors are not always ready to cooperate with a country associated with great risks. There is an example of failure to fulfil obligations, and also sanctions,” Anastasia Luzgina clarifies.

All together creates a generally not very favourable situation with the investment climate in the country.

Previously, not much attention was paid to the failure to fulfil plans on investment attraction, since in any case there were foreign investors who created enterprises. As a result, investors brought technology and developed production, not only money.

Production involves the import of high-tech equipment in addition to large cash injections and investments, especially if it is a modern production. Moreover, it involves additional jobs, according to the expert.

“As a result, people have jobs, and receive high salaries, and this affects other sectors of the economy. After all, people begin to consume more and acquire better products. And it generally stimulates economic development. As a result, the lack of investors or their failure to fulfil their previous plans leads to a downside. The country is losing opportunities, losing prospects. The gap between Belarus and neighbouring progressive countries is starting to grow,” Anastasia Luzgina sums up.

Lost opportunities for the country are an aspect that cannot be defined in terms of material units. But this of the prospect for the economy, the possibility for the development of society, the realization of the potential of the persons. Belarussian authorities do not take into account these aspects valuable for human society.