Policy Documentation Center

Furtun, Fatih

Turkish-Chinese relations in the shadow of the Uyghur problem

Regulski, Jerzy

A practical guide to building local government: the Polish experience

Development cooperation program between the Czech Republic and Mongolia, 2011-2017

Kratochvil, Petr

Evaluating the multilateral framework of the Eastern Partnership

English

Four years from the candidacy status \u2013 what has been done and what can be expected?


Swedish Presidency with the EU – Expectations for the Western Balkans 
1
On the 1st of July 2009, Sweden took over the Presidency of the EU for the next six months. As each 
member state of the European Union takes its turn in presiding with the European Council for a period of 
six months in accordance with a pre-established rotation schedule, the agenda of each presidency reflects 
the interests of the member state. It is a critical position as each presidency plays a central role in 
organizing the work of the Council and serves as the driving force in setting the agenda, as well as in 
directing the legislative and political decision-making process.
Generally, the countries of the Western Balkan (further in the text WB) are highly interested in the 
rotating presidency as the promotion of their interests depends on how favorable the country in charge is 
to EU Enlargement. If Enlargement is high on the agenda then the process of EU approximation can 
move forward at a faster pace. The Presidency can also help in mediating the regional or bilateral 
disputes that hold the accession process behind. Which way the government holding helm of the EU 
presidency will choose depends on its own interest in the region and its connections with the individual 
WB countries.
The biggest challenges that the Swedish EU Presidency has to face in the next six months are the Lisbon 
agreement and its further ratification, the global economic crisis, the climate changes and the 
implementation of the “Stockholm Programme”.1 On the presentation of the Swedish agenda for this 
presidency, in front of the European Parliament, the Swedish Prime minister Fredrik Reinfeldt focused on 
climate change and the advantages of taking concrete action in this field, the economic crisis and the 
                                                          
1 At the meeting of the European Council on 5 November 2004, a five-year action plan for cooperation on judicial matters and 
home affairs was adopted. The plan, known as the Hague Programme, includes police and customs cooperation, rescue 
services, criminal and civil law cooperation, asylum, migration, visas and checks at external borders, etc. The first strategic 
action plan in the area of justice and home affairs was adopted in Tampere in 1999. The current plan, the Hague Programme, 
which was adopted in November 2004, expires in December 2009. Producing guidelines for future work in the form of a new 
action plan, the Stockholm Programme, will be a major and important negotiating task for the Swedish Presidency. On 25 
September 2008 the European Commission launched a public consultation on the scope of future cooperation directed at the 
Member States, national parliaments, the general public and other stakeholders. The Commission intends to produce a 
communication on the future programme in May 2009. (Communications are documents in which the Commission formally 
presents its view of the measures that need to be taken.) The programme will be discussed at the informal JHA Council in 
Stockholm in July 2009 and adopted at the Summit in December 2009. The issues will affect several ministries in the 
Government Offices, including the Ministry of Justice, the Ministry of Finance, the Ministry of Defence and the Ministry of 
Integration and Gender Equality (Government Offices of Sweden http://www.sweden.gov.se/sb/d/11666/a/120682)
Swedish Presidency with the EU – Expectations for the Western Balkans 
2
control of the financial markets as well as the big budget deficits and the key point, the “Stockholm” 
Programme.  
Since Sweden has always been a pioneer in new innovative environmentally sustainable solutions, with 
this presidency Sweden has the possibility to promote its own type of “eco” state in whole EU. The new 
agreement that will replace the Kyoto Protocol together with the plan for revitalization of the Baltic Sea 
are the highest priorities on Sweden’s agenda. However, other issues threaten to “steal” the spot light of 
the eco-plan such as the on-going ratification of the Lisbon treaty. The Swedish presidency could signify 
the end of an era if the Lisbon Treaty, designed to streamline and clarify the roles of the various EU 
institutions, were to be ratified by all the member states by the end of the year. A second referendum is 
scheduled in Ireland for October 2009, whose initial rejection of the Lisbon Treaty in June 2008 stalled 
the entire ratification process. Should this referendum pass, the Lisbon Treaty could be soon ratified by 
the rest of member states, while the institutional structures it provides for would open the door for further 
enlargement.
On the question of the credit crunch, Sweden’s standpoint is that the EU has to make a way out of it 
through a solid budgetary discipline and order in public finance. For overcoming this crisis and lowering 
the unemployment rate, Sweden will push forward the policy of opening the European markets and 
creating even greater mobility for workers instead of using the protectionist measures. 
Connected to this is Sweden’s third priority for this Presidency, the implementation of the “Stockholm” 
programme for joint migration policy of the EU. With the measures proposed in it, a free flow of people 
would be provided and joint European asylum system will be created. Swedish position on this issue is 
that ‘fresh’ working force is required in Europe despite the current economic crisis and the high 
unemployment rate. 
Other priority in the agenda is the role that EU has in the world. It follows the current stances of the EU 
on greater involvement and strengthening of the position on the war in Afghanistan, the Pakistan issue, 
the peace process in the Middle East and the crises in Africa.
The top Swedish priorities, as outlined above, suggest that the WB countries are not high on the Swedish 
agenda. Apart from proceeding with the Visa liberalization process, which started before, Sweden will 
not get involved deeper in the WB enlargement process. Not to be mistaken, Sweden is a strong supporter 
of the enlargement process as long as the candidate countries fulfill the conditions set by the EU and has 
Swedish Presidency with the EU – Expectations for the Western Balkans 
3
no reservations towards it like some other member states. In the Swedish presidency programme only
Croatia is mentioned, for which it is stated that it might enter the last round of negotiations with the EU 
this autumn. For the rest of the countries, named only as Western Balkans, the presidency will work on 
their further progress in the EU accession process but this will depend greatly on the reforms done in 
each country individually.  Sweden is also in favor of the Turkish accession and would like to make 
progress on its EU accession talks, which did not move forward in the first half of 2009 under the Czech 
EU presidency. France and Germany have revived calls to offer Turkey a “privileged partnership” rather 
than outright EU membership. Sweden must walk a fine line between seeking renewed momentum on 
Turkish accession talks and risking a political backlash that may subvert its other agenda priorities.
On the other side, what WB countries must also have in mind is that Sweden is strongly against 
intervention of EU in the bilateral problems in the region and for that reason cannot expect much help for 
their quick solution.  In that manner Carl Bildt, the Swedish Minister for Foreign Affairs, stated that the 
EU will not get involved in the bilateral regional disputes between EU member states and aspirant 
countries (Greece and Macedonia, Slovenia and Croatia).2 Other Swedish official representatives stated 
too, that the bilateral disagreements cannot be abused in the enlargement process.3
What can the individual Balkan countries expect from the Swedish presidency in the following six 
months? 
Macedonia – The country got the green light for visa liberalization from the Commission at the 
beginning of July. The EC has twice assessed the progress of the five WB countries (one report in 
November 2008 and one on 18th of May 2009) and “these assessments conclude – based on the most 
thorough expert assessments ever undertaken in the fields of document security, border control, migration 
management and security – that Macedonia meets the conditions for visa-free travel”4 and recommended 
moving it to the White List. Before Macedonian citizens can enjoy visa-free travel to the Schengen 
countries, the Council needs to accept the Commission’s recommendation, which is likely to happen by 
the end of 2009. 
                                                          
2 “Шведска го нема Западен Балкан на агендата” (Sweden does not have Western Balkans on its agenda), Tatjana 
Grncharoska, Utrinski vesnik  
http://utrinski.com.mk/?ItemID=5D1397CA78F7974EB429FAC73B8A715F
3  Paul Beyer, Swedish ambassador in Sofia, Makfax, Independent News Agency
http://makfax.com.mk/mk-mk/Details.aspx?itemID=6285
4 Scorecard – Schengen White List Conditions, European Stability Initiative, 22nd of May 2009, page 2. 
Swedish Presidency with the EU – Expectations for the Western Balkans 
4
The next step is the long-waited “date” for the start of the accession negotiations. Macedonian authorities 
are positive that this autumn the country, after four years of waiting, will finally get the date for the start 
of the negotiations for full EU membership. In this context the Swedish ambassador in Macedonia, Mr. 
Lars Fredén, stated for the media that the chances for that to happen are very good. However whether that 
will happen does not depend on the Swedish presidency but on the EC5 and the Macedonian government 
who is responsible for fulfilling the rest of the benchmarks set by the EC in March 2008.
Croatia – it is expected that the negotiation will move forward this autumn. However, the bilateral 
dispute with Slovenia over the stretch of the Mediterranean border could hinder this process furthermore. 
In 2008, 26 EU countries (and the European Commission) wanted to open ten new ‘chapters’ in the 
negotiations with Croatia. However, Slovenia vetoed all but one. Since then, the tension in the relations
between Ljubljana and Zagreb increased and the EU has called in Martti Ahtisaari to find a way out. Will 
Croatia continue the negotiations during the Swedish EU Presidency, knowing that the Swedes do not 
wish to get involved in the regional disputes (see above), remains to be seen. 
Serbia – just like Macedonia, Serbia was included in the group that should get the visa liberalization by 
1st of January 2010. The Commission’s report stated that Serbia meets most of the conditions for visa-
free travel and the Commission decided to reward the impressive recent progress that it made 
(particularly in recent months), although Serbia will need to work further in order to fulfill the rest of the 
criteria by the end of the year. As for other developments, it is expected that Serbia will continue the 
reforms required by the EU in the process of approximation with one big obstacle in it, the Kosovo issue. 
No greater developments on this field are expected during the Swedish EU Presidency.
Montenegro – got the same remarks as Serbia on the visa liberalization process and together with Serbia
and Macedonia was recommended for visa liberalization. Montenegro submitted application for EU 
membership on 15th of December 2008 and on 23rd of April 2009 the Council invited the Commission to 
submit its opinion on Montenegro's application. This fall is the earliest expected period for the 
Commission to give its opinion, if Montenegro answers the Commission’s Questionnaire by that time.
Bosnia and Herzegovina – is in the group of countries that did not fulfill the requirements for visa 
liberalization, as according to the EC does not (yet) meet the conditions for visa free travel. Bosnia was 
                                                          
5 Interview on A1 News Channel. http://a1.com.mk/vesti/default.aspx?VestID=111661
Swedish Presidency with the EU – Expectations for the Western Balkans 
5
however encouraged to proceed with its efforts at fulfilling the visa roadmap criteria in the next year. 
Other major moving forward in the EU approximation is not expected in the next six months. 
Albania – is in the same situation as Bosnia and Herzegovina regarding the visa liberalization. It has 
however submitted its application for membership on 28th of April 2009. The Council is still revising it 
and has not yet asked the EC to give its opinion on it. This issue probably will not be in the next EC 
report on Albania so no major changes are expected during the Swedish Presidency.
Kosovo – “The sixth Western Balkan state whose citizens are required to obtain a visa to travel to the EU, 
is not yet included in this process leading to visa liberalization and risks being left behind as an enclave 
in the region.”6 This is a very problematic aspect not only for Kosovo but also for Serbia, the WB region 
and the EU, which as it is known has a direct responsibility for Kosovo. “It is not clear why the EU 
would wish to forego such a powerful instrument to improve policing, border controls and the rule of law 
in Kosovo.”7 Since the WB is not high on the Swedish agenda and added to that the complicated situation 
Kosovo is in, some substantial changes in its relation with the EU are not expected in the next six 
months. 
The Swedish EU Presidency brought one very positive thing for the Western Balkans: green light from 
the Commission for the visa liberalization for Macedonia, Serbia and Montenegro. Albania and Bosnia 
and Herzegovina were strongly encouraged to continue with the reforms in this area. Nevertheless, the 
analysis in this brief showed that the Swedish Presidency will not bring more substantial developments in 
the relations with the Western Balkan countries. The agenda is full with other priorities such as the 
economic crisis and the ratification of the Lisbon Treaty that push the problems and expectations of the 
WB further down the line. Sweden remains a strong supporter of the enlargement process but it will not 
get involved closely in the regional disputes that hinder this process. Sweden also expects that these 
countries will continue implementing the reforms and fulfill the benchmarks set by the Commission. The 
recommendation for the WB countries stays the same, hastening the reforms before the publishing of the 
EC Annual Reports in November and accepting these and other reforms and benchmarks not only as 
conditions for EU membership but also as part of their own policies for their countries’ development. 
                                                          
6 Scorecard – Schengen White List Conditions, page 2. 
7 Ibid., page 2.



Swedish presidency with the EU - expectations for the Western Balkans

Belarus Info Letter 01/2009

  
 
Sechin's Little Secret 
02 July 2009 
 
By Konstantin Sonin 
 
An economist would normally criticize Deputy Prime Minister Igor Sechin. He rarely says anything
meaningful in terms of economics. But twice in the past two weeks, it was necessary to come to
Sechin's defense. First, he was right in saying that Russia does not need a production sharing
agreement, or PSA. Second, claims that Russia's agreement to provide China with oil is unprofitable
for Russia might really turn out to be groundless. But the lack of understanding on the subject and the 
controversy surrounding it attests to the lack of transparency in the agreement. This is an
unacceptable situation, particularly when it involves such an important strategic interest. 
 
Russia currently has three PSAs that are intended to protect foreign investors from political risks.
Such agreements were specially created to allow major international corporations to sign long-term 
contracts with unpredictable, authoritarian regimes. In many countries, these PSAs have proven at
least partially successful at protecting foreign investors from changes in leadership. But there is a
certain stigma attached to them since they are only needed in unstable countries. In stable states with
a safe investment climate, foreign investors do not require special protection because all investors are 
protected equally. 
 
Although Russia does not need insure foreigners against risks connected with its own behavior, it
might need to insure itself against the risks involved in deals with other countries. 
 
Thus, there might be good reason to consider Russia's agreement to sell oil to China at $55 to $60
per barrel as some form of insurance, considering that the deal only becomes profitable at a price of
$80 per barrel. The idea of any insurance policy is that it chews up a certain percent of the profit when
everything is going well but saves the insured party from major losses if things go badly. 
 
Of course, the insurance premiums themselves can prove to be the cause of financial loss. When a
driver has accumulated enough years without an accident, the total amount of paid insurance
premiums can often exceed the original cost of the car. Thus, criticism rained down on Sechin from all
sides for having orchestrated an unprofitable agreement with China. But its profitability can only be
gauged once all the terms of the agreement are finally made public. 
 
That disclosure process should happen as soon as possible. The rules are very simple: If an
economic agreement is signed in the best interests of the country, there is no reason to hide anything. 
If the agreement is sound, it will naturally withstand criticism from political opponents, analysts and
the press. The fact that leaders are afraid to reveal the terms is probably a sign that the agreement
has problems. If the agreement with China is flawless, why keep it secret? 
 
Russia already has enough corruption without adding speculation about whether the agreement with
China was on the up and up. If, however, anything underhanded is involved here and the agreement 
is not sound, Sechin's contract with China might go down in history like the notorious privatization
auctions of the early 1990s. 
 
 
 
Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.
 
 
 
© Copyright 2007. The Moscow Times. All rights reserved.  
 


Sechin's little secret

The Bulgarian economy - April 2009

 
January 2009 1 
BELARUSIAN MONTHLY 
ECONOMIC REVIEW 
• Reaching an agreement on a gas price for 2009. 
• Deceleration of industrial growth. 
• New borrowings from abroad and liberalisation of the busi-
ness environment. 
• Drop of exports to Russia. 
• Immediate devaluation of the national currency by 20.5%. 
Politics: Reaching an agreement on a gas price for 2009 
In December, a meeting between Presidents of Belarus and 
Russia A. Lukashenka and D. Medvedev took place, where the 
issues of a gas price for Belarus in 2009 and other cooperation 
issues were discussed. The parties agreed upon the gas price, 
which, however, was not declared officially. According to the 
statement of A. Lukashenka, the price will be falling during the 
year, which will provide an acceptable level of the annual aver-
age price. Moreover, A. Lukashenka noted that because of the 
preferences in a gas price, the parties agreed on arranging set-
tlements on energy resources in Russian rubles and about 
speeding up signing an agreement on joint air defense. 
However, a tendency of improving relations between Belarus 
and EU maintained as well. In December, Lithuanian Foreign 
Minister V. Ushackas came to Belarus with a working visit. 
During his meeting with the Belarusian Foreign Minister 
S. Martynau the issues on bilateral cooperation and possible 
participation of Belarus in the project of the EU ‘Eastern Part-
nership’ were discussed. Thus, under the financial crisis Bela-
rusian authorities cope to achieve intermediary goals in rela-
tions both with the EU and Russia, which might mitigate the 
impact of unfavorable stance of the global economy. 
Real sector: Deceleration of industrial growth 
In November, an unexpected acceleration of GDP growth took 
place, which grew in Jan-Nov by 10.8% yoy (10.7% yoy in 
Jan-Oct). This tendency took place against the background of 
deceleration of industrial growth and was determined by the 
growth in the agriculture, which achieved 8.9% yoy 
(8.1% yoy in Jan-Oct). 
In November, industry grew by 4.1% yoy, while the increase 
was provided because of inventories growth (if the inventories 
had not grown, then the industrial production would have fallen 
by 3.2% yoy in November). Furthermore, nine main industry 
branches performed a growth of only 2.2% yoy. It means that 
‘other branches’ whose share in the structure of the industrial 
production is less than 13%, grew by 16.1% yoy. Hence, the 
tendencies of November witness about increasing impact of the 
global crisis on the Belarusian industry, which might not be 
captured fully by the national statistics. 
Structural trends: New borrowings from abroad and 
liberalisation of the business environment 
In the end of December, Belarusian officials declared about 
reaching an agreement between Belarus and IMF about provi-
sion of a loan for Belarus of USD 2.46 bn under a stand-by ar-
rangements. Moreover, in January the information about ob-
taining a loan of USD 0.5 bn from Venezuela was affirmed. In 
January, the Executive Board of the IMF confirmed the decision 
on provision of a loan to Belarus and the first tranche of about 
USD 800 m was transferred to the government’s account. Ac-
cording to the signed memorandum, Belarus took commit-
ments to implement a new exchange rate regime, restriction of 
budget expenditure (including restriction of salaries in the  
 
 
 
No. 1 (76) 
January 2009 
 
 
 
 
 
 
 
 
Population: 9.69 m 
Industry / GDP: 26.7% 
Agriculture / GDP: 7.4% 
Investment / GDP: 26.3% 
Export destination: Russia 37%, EU 44% 
Import origin: Russia 60%, EU 22% 
 
 
 
 
 
 
 
 
 
 
Real GDP growth 
8.4
3.4
5.8
4.75.0
6.8
11.4
9.2
9.9
8.6
10.0
0.0
0
1
2
3
4
5
6
7
8
9
10
11
12
97 98 99 00 01 02 03 04 05 06 07 08 09
% yoy
Source: Ministry of Statistics and Analysis. Forecast 
for 2009: IPM Research Center. 
 
 
 
 
 
 
 
 
 
 
IPM Research Center 
 
German Economic Team 
in Belarus  
 
50Б Zakharova St., Minsk 220088, Belarus 
Tel./fax (+375 17) 210 0105 
E-mail: bmer@research.by 
Internet http://research.by/ 
 
 
© IPM Research Center, 2008 
 
Belarusian Monthly Economic Review №1 (76) 
 
 
 
January 2009 2 
budget sector and at the state enterprises in 2009), and carry-
ing out structural liberalisation policies, including price liberali-
sation. In December, an Edict that postponed revisions of firms 
until enforcement of a new special legal act stipulating a unified 
order of such revisions was signed, which may be considered 
as one of the liberalisation measures. Later on, a Decree that 
stipulates an announcement principal of firms registration was 
adopted. Further, in January the complex plan of liberalisation 
of the Belarusian economy was adopted. Thus, sharpened 
problems of the Belarusian economy under the global financial 
crisis, for instance increasing trade deficit, brought Belarusian 
authorities to apply for new governmental borrowings and to 
implement new measures of economic and institutional policy. 
Foreign trade: Drop of exports to Russia 
In Jan-Oct, the merchandise trade deficit amounted to USD 
4.7 bn, having grown by 47.0% yoy (48.9% yoy in Jan-Sep). 
During Jan-Oct, the exports grew by 52.0% yoy, while imports 
by 51.3% yoy. But in October this tendency changed because 
of the global crisis. In comparison to September, exports fell by 
9.7% mom, and imports by 7.2% mom. New tendency was 
mostly evident in exports to Russia, which dropped by 
17.1% mom (and by 4.4% yoy in comparison to October 2007). 
The decrease of supply to Russian markets was mostly peculiar 
to tractors (by 74.6% mom), trucks (by 64.1% mom), metal 
processing equipment (by 85.0% mom) and truck tractors (by 
89.5% mom). In 2009, competitive positions of the Belarusian 
producers may worsen because of the protection measures 
that are going to be undertaken by the Russian government. 
In trade with non-CIS countries the global crisis affect Belaru-
sian producers mainly through falling prices. In October, in 
comparison to September average exports prices dropped by 
11% mom. Hence, despite increase of supply by 12.4% mom, 
the trade proficit decreased by 23.4% mom and compensated 
the deficit in trade with Russia only by 28% (34.5% in Sep-
tember). Trying to oppose to the negative conjuncture the gov-
ernment allowed enterprises to sell their production at market 
prices, even if they are lower than costs. But nevertheless in 
the medium-term period a decrease in the external demand, 
decrease of prices, growth of non-payments and deterioration 
of competitive positions at the Russian market are going to 
worsen the stance of the Belarusian foreign trade. 
Public finance: Approval of non-deficit budget for 2009 
In Jan-Oct, the surplus of consolidated budget amounted to 
5.9% of GDP that is by 2.5 percentage points higher than in 
Jan-Oct 2007. Consolidated revenues reached 52% of GDP, 
while expenditures – 46.1%, which is higher than in Jan-Oct 
2007 by 2.7 and 0.2 percentage points, correspondingly. 
In January, a non-deficit budget for 2009 was set by adopting 
the President’s Edict, despite previously the law for 2009 an-
ticipated the budget with a 1.81% of GDP deficit. At the same 
time a budget law for 2009 anticipates a couple of innova-
tions. There is a decreased rate of tax levy to the agricultural 
fund of 1% (2% in 2008), a local sales tax for imported pro-
duction was reduced from 15% down to 5%, and active part 
of the production capital stock from the tax base of the real 
property tax. Furthermore, in 2009 the taxation of small busi-
ness will be changed substantially. Since January 1st, individ-
ual entrepreneurs dealing with imported goods will pay single 
tax with a correction coefficient of 2 (1.5 in 2008). But at the 
same time, tax rates under the simplified taxation system 
were reduced from 10% down to 8% of the net revenue if not 
paying VAT, from 8% down to 6% if paying VAT, and from 
20% down to 15% if using total revenues as a tax base. 
 
GDP and Industrial Output 
0
3
6
9
12
15
Ja
n.
0
7
M
ar
.0
7
M
ay
.0
7
Ju
l.
0
7
S
ep
.0
7
N
o
v.
0
7
Ja
n
.0
8
M
a
r.
0
8
M
ay
.0
8
Ju
l.0
8
S
e
p
.0
8
N
o
v.
0
8
real GDP growth
real industrial output growth
% yoy cum.
Source: National Statistical Committee. 
 
 
 
 
 
 
Growth rates in Agriculture in 4th quarter 
before and after revision 
 
Operational 
data 
Revised 
data 
Difference 
2000 24.2 22.2 2.0 
2001 -4.2 -3.8 -0.4 
2002 -5.2 -9.8 4.6 
2003 23.0 16.9 6.1 
2004 25.5 17.6 7.9 
2005 -1.5 -0.5 -1.0 
2006 23.6 19.8 3.8 
2007 -2.4 -5.0 2.6 
Source: National Statistical Committee. 
 
 
 
 
 
 
 
Merchandise Trade 
1000
1500
2000
2500
3000
3500
4000
4500
Ja
n
.0
7
M
ar
.0
7
M
ay
.0
7
Ju
l.
07
S
e
p.
0
7
N
ov
.0
7
Ja
n
.0
8
M
ar
.0
8
M
ay
.0
8
Ju
l.
0
8
S
e
p
.0
8
N
ov
.0
8
-900
-750
-600
-450
-300
-150
0
150
balance (right axis)
exports
imports
USD m
Source: National Statistical Committee. 
Belarusian Monthly Economic Review №1 (76) 
 
 
 
January 2009 3 
Monetary policy: Immediate devaluation of the national 
currency by 20.5% 
In November, net foreign assets of the monetary authorities 
decreased by 5.3% mom, which was equal to about USD 
300 m. At the same time, trying to stimulate credit market 
NBB increased bank refinancing substantially in November, 
which resulted in increased claims on banks by 34.0% mom. 
But nevertheless base money shrank in November by 
11.8% mom, while in annual terms its growth rate amounted 
to 41.9% yoy (68.5% yoy in October). 
While the demand for foreign currency increased significantly, 
the liquidity level of the banking system was lowering. In this 
situation, interest rates at the credit and deposit market in-
creased drastically, while the access to finance was hindered by 
banks. Thus, the growth rate of the credit to real economy fell 
to 56.1% yoy (57.2% yoy in October), after a long period of its 
increase. Cash in circulation decreased by 3.1% mom, while in 
annual terms its growth rate amounted to 33.8% yoy 
(40.9% yoy in October). Furthermore, there was a drop in the 
growth rate of ruble time deposits. In November its growth 
rate amounted to 25.0% yoy (38.6% yoy in October), which 
was mainly determined by households’ deposits. However, a 
huge part of this outflow was compensated by the inflow of 
deposits in foreign currency. Finally, in November ruble money 
decreased by 4.9% mom, and broad money by 1.9% mom. In 
annual terms, their growth rates amounted to 31.4 and 
28.3% yoy (45.1 and 39.9% yoy in October). 
Consumer prices in November grew by 1.4% mom, and in an-
nual terms inflation amounted to 14.7% yoy (15.7% yoy in 
October). Belarusian ruble was devaluated in November by 
1.6% vs. US dollar and as of November 30 its exchange rate 
was 2153 USD/BYR. In December, negative tendencies at the 
financial markets strengthened and since January, 2nd NBB 
decided to carry out an immediate devaluation of the Belaru-
sian ruble vs. US dollar by 20.5% taking commitments to peg 
Belarusian ruble to the currency basket of US dollar, Euro and 
Russian ruble (in equal shares). However, this step seems to 
be of doubtful effectiveness, while gradual, but rapid devalua-
tion of Russian ruble eliminates advantages in price competi-
tiveness in trade with this country, which is currently most vital 
for Belarus. Thus it will not change essentially the situation at 
the currency market due to foreign trade, at the same time 
increasing panic buying of foreign currency, at least in January. 
Banking sector: EBRD purchased blocking shareholding 
in RRB-bank 
In December, RRB-bank informed about purchase of 25% plus 
one share in its capital by the European bank of Reconstruction 
and Development. RRB-bank is one of the medium Belarusian 
banks, which focuses mainly on granting loans for small busi-
ness and consumer loans. The deal enhanced the bank to in-
crease its capital up to about USD 25 m, which is close to new 
minimal capital requirements by the NBB (EUR 25 m). Having 
the EBRD as a shareholder may lead to provision of additional 
borrowed resources from EBRD for the bank. Furthermore, it 
hopes that it will lead to higher rating of the bank and better 
access to borrowings from abroad, which, however, may be 
doubtful during the global crises. In the scope of the whole 
Belarusian banking system, this deal shows that cooperation 
with international financial institutions might be the most real-
istic source of new capital and/or borrowed funds during the 
crisis. For instance, the deal of purchasing of Belinvestbank by 
Commerzbank was declared to be postponed, which demon-
strates restraining of large investors from new deals within the 
Belarusian banking system during the global deficit of liquidity. 
Consolidated Budget 
30
40
50
60
70
80
Ja
n
.0
7
M
a
r.
0
7
M
a
y.
0
7
Ju
l.
0
7
S
e
p
.0
7
N
o
v.
0
7
Ja
n.
0
8
M
ar
.0
8
M
ay
.0
8
Ju
l.0
8
S
ep
.0
8
-30
-20
-10
0
10
20
balance (right axis)
revenues
expenditures
% of GDP
Source: calculations based on the National Statistical 
Committee data. 
 
 
 
 
Monetary Base and СPI 
10
20
30
40
50
60
Ja
n
.0
7
M
ar
.0
7
M
ay
.0
7
Ju
l.
0
7
S
ep
.0
7
N
ov
.0
7
Ja
n
.0
8
M
ar
.0
8
M
a
y.
0
8
Ju
l.
0
8
S
ep
.0
8
N
o
v.
0
8
6
8
10
12
14
16
18
CPI (right axis) monetary base
% yoy eop % yoy
 
Source: calculations based on the National Statistical 
Committee and the NBB data. 
 
 
 
 
Refinancing rate 
8
9
10
11
12
13
Ja
n
.0
7
M
ar
.0
7
M
ay
.0
7
Ju
l.
0
7
S
ep
.0
7
N
o
v.
0
7
Ja
n
.0
8
M
ar
.0
8
M
ay
.0
8
Ju
l.
0
8
S
ep
.0
8
N
o
v.
0
8
-6
-4
-2
0
2
4
real (right axis) nominal
% per annum
Source: calculations based on National Statistical 
Committee and the NBB data. 
 
Belarusian Monthly Economic Review №1 (76) 
 
 
 
January 2009 4 
Economic Trends  Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 
Sep. 
08 
Oct. 
08 
Nov. 
08 
GDP growth % yoy 10.8 8.4 8.9 8.4 7.3 10.9 10.1 11.2    
GDP growth % yoy cum. 9.9 8.4 8.6 8.4 8.2 10.9 10.4 10.7 10.7 10.7 10.8 
Industrial Production % yoy cum. 11.3 5.9 7.7 8.2 8.5 14.7 13.0 13.1 13.1 12.8 12.7 
Agricultural Production % yoy cum. 6.1 4.4 5.2 5.6 4.1 6.8 5.4 6.9 6.9 8.1 8.9 
CPI % yoy eop 6.6 8.1 7.2 9.0 12.1 13.2 16.0 16.3 16.3 15.7 14.7 
PPI % yoy eop 8.5 11.6 13.6 16.8 17.1 13.5 16.2 18.5 18.5 19.0 18.2 
Merchandise export (USD)* % yoy 13.6 6.3 23.3 18.5 44.4 69.2 56.0 44.9 44.8 19.8 -19.1 
Merchandise import (USD)* % yoy 23.5 20.8 23.7 23.8 42.4 56.5 55.3 53.1 49.4 23.1 -11.4 
Merchandise trade balance 
(NBB data) 
USD m cum. –2398 –836 -1563 -2304 -3858 -647 -2049 -3835 -3835 -4470 -4995 
Current account USD m cum. –1512 –641 -1152 -1652 -2944 -433 -1411 -2920 -2920 -- -- 
Current account % GDP cum –4.1 –7.0 -5.8 -5.1 -6.6 -3.6 -5.5 -6.6 -6.6 -- -- 
International reserves USD m eop 1383 1565 2344 2155 4182 4746 4618 4120 4120 4052 3775 
Monetary base % yoy eop 20 22 29 25 38 59 54 48 48 69 42 
Lending rate** % p.a. aop 12 14 11 12 12 11 10 11 11 12 14 
Exchange rate 
(official) 
USD aop 2141 2141 2145 2147 2152 2148 2136 2114 2112 2114 2137 
Exchange rate 
(official) 
EUR aop 2761 2805 2890 2948 3115 3215 3339 3183 3039 2830 2719 
* Growth rates in value terms (source: Ministry of Statistics and Analysis). 
** Nominal rate of commercial banks for new loans for legal entities in national currency. 
Sources: Ministry of Statistics and Analysis, NBB. 
 
Key Economic Indicators 2001 2002 2003 2004 2005 2006 2007 
Nominal GDP* BYR trn 17.173 26.613 36.565 49.991 65.067 79.231 96.047 
Nominal GDP** USD bn 12.1 14.5 17.7 23.1 30.2 36.9 44.8 
GDP Growth % yoy 4.7 5.0 7.0 11.4 9.4 9.9 8.2 
Industrial production % yoy 5.9 4.5 7.1 15.9 10.5 11.3 8.5 
Agricultural production % yoy 1.8 0.7 6.6 12.6 1.7 6.1 4.1 
CPI % yoy aop 61.1 42.6 28.4 18.1 10.3 7.0 8.4 
CPI % yoy eop 46.1 34.8 25.4 14.4 8.0 6.6 12.1 
PPI % yoy aop 72.1 41.4 37.5 24.1 12.1 8.3 16.2 
PPI % yoy eop 40.9 42.7 28.1 18.8 10.0 8.5 17.1 
Exports (gs, USD) % yoy 10.9 9.8 24.4 35.7 15.8 21.8 24.3 
Imports (gs, USD) % yoy 11.1 9.0 25.1 40.3 3.0 33.0 27.9 
Current account USD m –394 –311 –424 –1206 510 –1512 -2944 
Current account % GDP –3.2 –2.1 –2.4 –5.2 1.7 –4.1 -6.6 
FDI (net) USD m 96 453 170 163 303 351 1768.9 
International reserves USD m 347 457 474 770 1297 1383 4182 
Fiscal balance % GDP –1.6 –0.2 –1.6 0.0 –0.6 2.2 0.6 
Domestic public debt % GDP eop 6.1 5.4 5.5 5.7 5.8 6.5 6.4 
External debt (total) % GDP eop 24.8 27.0 23.7 21.4 17.9 18.6 28.4 
Monetary base % yoy eop 225 32 50 42 74 20 38 
Exchange rate (official)* USD aop 1394 1784 2075 2160 2154 2145 2146 
Exchange rate (official)* USD eop 1580 1920 2156 2170 2152 2140 2150 
Spread*** % aop 0.8 0.0 0.0 0.0 0.0 0.0 0.0 
Spread*** % eop 0.2 0.0 0.0 0.0 0.0 0.0 0.0 
Exchange rate (official)* EUR aop 1239 1690 2353 2684 2681 2692 2937 
Exchange rate (official)* EUR eop 1392 1989 2695 2956 2550 2817 3167 
* On January 1, 2000 the Belarusian ruble was denominated 1:1000. All figures for 1999 are given in ‘new’ Belarusian rubles. 
** For the period of 1999–2000, GDP in USD is calculated by using the market (unofficial) exchange rate (source: IPM Re-
search Center). 
*** Spread between the black market and official (NBB) exchange rates (source: IPM Research Center). 
Sources: Ministry of Statistics and Analysis, Ministry of Finance, NBB, IPM Research Center. 
 
Notes: 
aop average of period gs goods and services 
avg average trn trillion 
bn Billion NBB National Bank of Belarus 
cum. cumulative p.a. per annum 
eop end of period yoy year-on-year 
m million ytd year-to-date 
 


Belarusian Monthly Economic Review, \u21161(76), January 2009