Belarus and the Advice of IFIs

Speech of Mark Allen at the conference KEF-2016 ”Reforms for Inclusive Growth”, November 3–4, 2016.

Ever since independence, the IFIs have been telling the Belarusian authorities that rapid and comprehensive reform was needed if Belarus was to grow and prosper. To a large extent, this advice was ignored, and Belarus remains well behind in all the indicators of transition. And yet, despite this, Belarus’s record of growth has been quite good, especially during the period 2000-2008. Belarus has also been able to avoid the disruptions to people’s livelihoods and the sharp widening of income differentials that have occurred elsewhere. It is not surprising if the authorities have not been convinced by the arguments of the IFIs.

But Belarus was hit by the global crisis of 2008-2009, and then by further balance of payments crises in 2011 and 2014. Since 2008, growth has been mediocre, despite efforts to mobilize resources internally and externally, and to raise productivity by administrative fiat. Of course the IFIs say that the only solution is reform, but they were saying that for almost two decades before this downturn. But, they might well be right now. It really does look as though the growth model has run out of steam. However, it would be unrealistic to expect Belarusian policy makers to be easily convinced that the alternative, reform strategy suddenly looks like the answer.

Nevertheless, the country needs assistance. The assistance of the IFIs is largely conditional. So what should the IFIs be recommending?