The World Bank has warned Belarus that its economic growth model has reached its limits and that the country`s economic growth cannot be sustained without structural reforms. The warning is stated in economic memorandum for Belarus presented by World Bank’s expert team in Minsk on July 10.
Within 2001 and 2010, Belarus had a fairly high economic growth rate that averaged out at eight percent yearly, which allowed the country to reduce the share of the population living in poverty from 47 percent in 1999 to five percent in 2010, the memorandum reads.
The World Bank attributes Belarus` high economic growth to, among other factors, cheap energy resources supplied by Russia and estimates the mean annual level of Russia`s subsidies for Belarus in the period at over 13 percent of GDP.
The World Bank concludes that Belarus has failed to take advantage of the subsidized energy resources to make its economy more competitive, which has restricted its opportunities to find new sources of growth.
According to the document, Belarus has not carried out the economy`s structural modernization and, after failing to eliminate external imbalances, experienced two economic crises in the last three years.
The World Bank urges Belarus to conduct structural reforms with a view to shifting more workforce and capital to high-productivity economic sectors, restructuring the government-controlled sector of the economy and increasing the share of private businesses and service providers in the economy.
The institution predicts that if Belarus accomplishes the tasks, it will revitalize its competitive economic sectors and discover unused opportunities for economic growth, as well as reduce its dependence on cheap energy resources from Russia.