Belarus Moldova
Total Page:16
File Type:pdf, Size:1020Kb
COUNTRY REPORT Belarus Moldova 3rd quarter 1998 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Jeremy Eagle Tel: (44.171) 830 1183 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases Microfilm FT Profile (UK) NewsEdge Corporation (US) World Microfilms Publications (UK) Tel: (44.171) 825 8000 Tel: (1.781) 229 3000 Tel: (44.171) 266 2202 DIALOG (US) Tel: (1.415) 254 7000 CD-ROM LEXIS-NEXIS (US) The Dialog Corporation (US) Tel: (1.800) 227 4908 SilverPlatter (US) M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1998 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1356-4137 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Belarus 5 Political structure 6 Economic structure 7 Outlook for 1998-99 9 Review 9 The political scene 12 Economic policy 14 The economy 17 Foreign trade and payments 18 Business news Moldova 19 Political structure 20 Economic structure 21 Outlook for 1998-99 25 Review 25 The political scene 27 Economic policy 30 The economy 33 Foreign trade and payments 35 Business news 36 Quarterly indicators and trade data List of tables 9 Belarus: forecast summary 14 Belarus: real interest rates 15 Belarus: monthly wages and pensions 16 Belarus: consumer prices 18 Belarus: current account 24 Moldova: forecast summary 27 Moldova: central government budget 30 Moldova: output of selected products 31 Moldova: consumer prices 33 Moldova: current account 36 Belarus: quarterly indicators of economic activity 37 Moldova: quarterly indicators of economic activity EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 2 38 Belarus: OECD trade 39 Moldova: foreign trade 40 Former Soviet republics: exchange rates 41 Former Soviet republics: GDP and GDP per head List of figures 9 Belarus: gross domestic product 9 Belarus: inflation 13 Belarus: volume of dollar foreign exchange transactions 24 Moldova: gross domestic product 32 Moldova:Transdniestrian rouble 34 Moldova: net protfolio investment EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 3 September 1st 1998 Summary 3rd quarter 1998 Belarus Outlook for 1998-99: Repression of the opposition will continue, preventing it from active participation in the political process. A presidential election in 1999 is extremely unlikely. The regime will continue its deliberately defiant attitude towards the West. Economic policy will target high growth and low unemployment as the first priorities while the currency will continue to plunge. Russia’s devaluation of the rouble and coming economic recession will have a negative effect on Belarusian economic growth. The political scene: The president, Alyaksandar Lukashenka, has evicted foreign ambassadors from their residences in a Minsk suburb, causing the recall from Belarus of ambassadors from the EU, the US and Japan and reciprocal actions by those countries against Belarusian ambassadors. Undeterred, he has continued to violate international agreements on the treatment of diplomats resulting in the virtual international isolation of Belarus and a ban on his own travel to EU countries and to the US. A familiar pattern of oppression of the opposition continued with activists arrested, political parties disbanded and newspapers threatened with closure. Yet Belarusian legislators conducted hear- ings on human rights in Belarus and found no significant violations by the government. Economic policy: President Lukashenka’s stated goal is to reconstruct the economic system of the late Soviet period. This translates into policies of high economic growth and full employment supported by soft budget constraints, in turn leading to expansionist monetary and credit policies and the severe restric- tion of foreign-exchange transactions. Privatisation and structural economic reforms are non-existent. Price controls are accompanied by the sporadic ration- ing of basic goods. The economy: GDP and industrial production have continued to grow at high rates, although some sectors of the economy have experienced a drop in output. The Belarusian rouble has continued to plunge on unregulated markets while the official exchange rate has been maintained at an artificially high level. Inflation exhibited a slowing trend in July, even though it remained higher than the government target, but shortages of basic consumer goods indicate the presence of considerable latent inflation. Foreign trade and payments: Russia remains the leading trade partner accounting for more than 60% of Belarus’s foreign trade. The trade deficit is widening as is the current-account deficit. Belarusian debt for Russian gas amounted to $250m in August although this may be offset by deliveries of Belarusian goods to Russian state-financed organisations. Business news: Russia and Belarusian firms are set to agree a joint venture on weapons production. The US car manufacturer, Ford, has announced plans to increase investment in its Belarusian plant. EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Moldova Outlook for 1998-99: The governing coalition, the Alliance for Democracy and Reforms, will hold together to pull the country through the economic crisis. Russia’s internal problems means that a resolution of either Transdniestr’s status or troop withdrawals is that much more unlikely. Growth will be affected by the collapse in Russian demand, but is likely to remain positive. The EIU does not expect Moldova to be able to withstand pressure for a currency devaluation, despite the resumption of IMF lending. Consequently, inflation will rise in 1999. The political scene: The Bloc for a Democratic and Prosperous Moldova (BDPM) has broken ranks from the government coalition and voted with the Communists, yet the coalition remains intact. Moldova has made little pro- gress in negotiations on the Transdniestr issue, but has resolved its territorial dispute with Ukraine. Economic policy: The government has revised the 1998 budget but is facing problems collecting taxes and duties. The IMF has given the new government qualified support and indicated it will resume lending shortly. Negotiations are continuing with Gazprom following cuts in gas supplies in July. Electricity prices for domestic consumers are set to rise. The economy: Industrial output rose slightly year on year in the first half of 1998, but the grain harvest is not as strong as it was in 1997. Inflation has been low so far this year, but unemployment is rising. The World Bank has pub- lished a report on the economic situation in Transdniestr. Foreign trade and payments: The trade deficit continues to widen, putting strong pressure on Moldova’s current-account position. Moldova appears to be persisting for the moment with plans to issue a Eurobond, despite credit rating downgrades. Business news: The privatisation of Moldtelecom has reached a dead-end for the second time. The EBRD has extended a loan to refurbish Chisinau airport. Editor: Kitty Ussher All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 Belarus 5 Belarus Political structure Official name Republic of Belarus Legal system The constitution adopted in March 1994 was amended by referendum in November 1996 to increase presidential powers and form a bicameral parliament National legislature Bicameral parliament (National Assembly): upper house, Council of the Republic, with 64 members; lower chamber, the House of Representatives, with 110 members