Features of the transition period in the economy of the Republic of Belarus

In the socio-economic development of the Republic of Belarus, the years 1996-2000 were a turning point in overcoming the deep crisis phenomena occurring in the country as a result of the collapse of the USSR and the liberal economic reforms carried out from 1991 to 1994. Price liberalization in 1992 triggered an acute financial crisis, resulting in galloping inflation. In order to bring the country out of the crisis, in 1994 the Program of Urgent Measures was developed, the implementation of which made it possible to reduce to a certain extent the level of inflation and the state budget deficit, slow down the decline in the standard of living of the people, and stop the collapse of production. In this regard, a new task arose to create the prerequisites for the transition from the decline in production to its stabilization and growth. To this end, the Main Directions were developed and approved. socio-economic development of the Republic of Belarus for 1996 – 2000, where exports, housing and food were identified as priorities.

On a new basis, the system of economic management that meets the realities of the transition period was restored, adjustments were made to ensure social protection of the population. New approaches and principles for carrying out economic reforms have been determined, taking into account the maturation of objective prerequisites for this in the field of pricing, denationalization and privatization.

The implementation of the measures taken made it possible in 1996 not only to overcome the decline in production, but also to achieve positive dynamics of the main macroeconomic processes, to ensure annual growth in GDP, industrial production and consumer goods. To a certain extent, it was possible to stabilize the situation in the domestic consumer market (Table 9.1.).

In 1996-2000, two different trends are distinguished: the trend of relatively high growth rates, characteristic of the beginning of the period (1996 – I half of 1998) and the slowdown in economic development in its second half. The latter is due to the fact that many factors that stimulated economic growth at the beginning of the five-year period, such as underutilized production and scientific and technical potential, the policy of monetary expansion, and strict price regulation have largely exhausted themselves. Since 1998, inflationary processes have worsened. In the current situation, the main goal for 1999-2000 was already to achieve financial stabilization of the real sector of the economy, strengthen the national currency, improve the pricing system and, on this basis, maintain sustainable economic growth and improve the standard of living of the population.

However, the accumulated inflation potential did not lead to a significant improvement in the economic situation. As a result, the pace of socio-economic development began to slow down. The situation in the financial, credit and currency spheres has deteriorated. Accounts payable and accounts receivable have increased. The number of unprofitable enterprises did not decrease, the low level of profitability of the products sold remained, which did not  provide conditions for expanded reproduction.

Table 9.1.

Indices of the main socio-economic indicators, in % to 1990

(in comparable prices)*

1) December to December of the previous year.

* Statistical collection “Belarus in figures”.- Mn., Minstat RB, 2001. P.11-14.

For 1996-2000, one of the priority areas of economic development was to increase the level of self-sufficiency of the country in food and ensure food security of the state. However, agricultural production has declined. The share of agricultural products in GDP has decreased. If in 1990 it was 22.9%, then in 1999 – 10.7%. The number of unprofitable enterprises increased, the level of profitability of agricultural production decreased to 5%.

Investments in fixed assets in 2000 amounted to only 44% of the 1990 level (Table 9.2.).

Table 9.2.

Indices of the main indicators for investment and construction, in % by 1990

(in comparable prices)*

* Statistical collection “Belarus in figures”.- Mn., Minstat RB, 2001. – S.68-69.

In the context of complications of financial problems, fixed assets are not updated, while the depreciation of their active part in most sectors of the national economy reaches 70 percent or more. It was not possible to ensure the intensification of investment processes at the expense of domestic savings. The share of bank deposits of the population in the country’s GDP is less than 2%, the savings of the population in monetary income have significantly decreased. Administrative suppression of inflation leads to an increase in price imbalances, and prolonged price freezes do not contribute to the stabilization of the domestic market.

The unstable financial and economic situation could not but affect the standard of living of the population. In 1999, 78.8 per cent of the population had incomes per family member below the minimum consumer budget and 46 per cent below the subsistence budget.

Thus, the assessment of the main trends in the socio-economic development of the country allows us to identify the following main problems that require priority solutions:

high level of inflation, unbalanced prices between sectors of the economy and in sectoral sections; shortage of foreign exchange resources; insufficient concentration of resources in priority areas; high level of depreciation of fixed assets and insufficient rates of their renewal, low activity of innovation and investment processes and insufficient rates of structural adjustment of the economy; instability of the financial situation in the economy; decline in agricultural production; high material and energy intensity of products in all sectors of the economy; the slow growth of real money incomes of the population and the insufficient stimulating role of wages in improving the efficiency of production; imperfection of the legislative and legal framework that stimulates economic activity in the country; insufficient role of entrepreneurship, small and medium-sized businesses in the development of the economy.

The first five years of the XXI century should be the most important stage in achieving the strategic goal of the socio-economic development of the country – improving the well-being of the people and bringing it closer to the level of economically developed European states.

In accordance with the adopted “Basic provisions of the Programme for the Socio-Economic Development of the Republic of Belarus for 2001-2005”, the main tasks are:

to create the necessary conditions for improving the health of the population, raising the level of its education and culture on the basis of the priority development of healthcare, education, culture, sports and tourism; to improve the demographic situation in the country and strengthen the institution of the family; create conditions for sustainable socio-economic development and growth of efficiency of the real sector of the economy; reduce the tax burden on commodity producers and the population; carry out technical re-equipment and restructuring of enterprises on the basis of introduction of new and high technologies; significantly increase the average monthly salary of workers in the national economy; increase the level of pensions and scholarships; improve the environmental situation, implement effective measures to overcome the consequences of the Chernobyl disaster; to ensure the comprehensiveness of the socio-economic development of regions, districts and cities, the stabilization of the situation in problem regions.

Based on the goals and objectives set for the next five years, the following priorities have been identified in Belarus:

formation of an effective health care system; intensification of innovation and investment activities; increasing exports of goods and services; further development of housing construction on an emission-free basis with maximum use of extrabudgetary sources of financing; development of the agro-industrial complex and related industries.

The main means of implementing priorities are:

financial recovery of the economy, improvement of the balance of payments and increase of foreign exchange reserves; intensification of structural restructuring of the economy on the basis of specialization, cooperation and integration of large and small enterprises, accelerated development of knowledge-intensive, resource-saving industries and industries, as well as the development of the service sector; state support for innovations and the most important investment projects that ensure an increase in the level of competitiveness of the economy of the republic and its regions; introduction of an effective mechanism for investing in the economy, including an increase in the volume of foreign direct investment and loans, a new depreciation policy, the concentration of resources in priority areas; further integration of Belarus into the system of international division of labor, formation of effective interstate and interregional financial and industrial groups within the framework of the Union State of Belarus and Russia, the CIS and other international integration entities; accelerated development of institutions of extra-budgetary financing of housing construction – a system of construction savings, construction accumulations, mortgage lending; expansion of state support for entrepreneurship, small and medium-sized businesses, creation of conditions for attracting private capital.

The implementation of the goals and objectives in 2001-2005 will take place in conditions of some uncertainty of the expected impact of external and internal factors on socio-economic processes. In this regard, the Program of socio-economic development of the country provides for the implementation of the development of the Belarusian economy according to two main scenarios (options). The fundamental differences between them lie in the degree of intensity of the use of economic growth factors for the transition to the stage of sustainable development, as well as in the depth and effectiveness of the reforms carried out, the speed of approach to the new economic system.

The first (inertial) scenario is based on the trends and directions of socio-economic development that have developed in the base period, moderate growth rates of investment activity, a slight improvement in the use of existing production capacities and a slight renewal of fixed capital. This scenario uses tighter fiscal and relatively loose monetary policy. Integration ties are maintained or minimally grow compared to the base period, foreign investment and loans are minimal.

The second (target) scenario provides for a more complete use of internal and external factors of economic growth; intensification of innovation and investment activities; a higher level of renewal of fixed capital; implementation of fiscal, monetary and exchange rate policies that stimulate the production of goods and services; active state support of entrepreneurship, small  and medium-sized businesses. This option accumulates the tasks of previously developed programs and forecasts of socio-economic development. It assumes a high level of development of integration ties with the countries of near and far abroad and more than twice the volume of attracted foreign investments and loans. As a result, all this determines higher indicators of growth in the standard of living of the population and the efficiency of the economy.

Based on the specifics of the industries and activities of the Republic of Belarus, additional options can be worked out, the quantitative parameters of which are likely to be in the interval between the main scenarios. Despite these differences,  the scenarios developed should take into account the constraints arising from the requirements of the country’s economic security.

Thus, the peculiarity of the content of the transition economy predetermined the specifics of solving the problem of transforming the Belarusian economy into a market economy. In the process of transformation, it is necessary to solve, firstly,  extraordinary tasks related to the crisis state of the economy and other spheres of public life; secondly, the challenges of transition to a market economy; Thirdly, the tasks of long-term strategic development in the direction of creating a socially-oriented market economy. The creation of a socially-oriented market economy in the Republic of Belarus is the ultimate goal of reforming the economy.