2017 Index of Economic Freedom

Belarus

overall score58.6
world rank104
Rule of Law

Property Rights50.9

Government Integrity37.6

Judicial Effectiveness56.3

Government Size

Government Spending48.7

Tax Burden89.8

Fiscal Health92.8

Regulatory Efficiency

Business Freedom71.3

Labor Freedom74.6

Monetary Freedom60.4

Open Markets

Trade Freedom80.6

Investment Freedom30.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 9.4 million
  • GDP (PPP):
    • $167.7 billion
    • -3.9% growth
    • 1.2% 5-year compound annual growth
    • $17,654 per capita
  • Unemployment:
    • 6.1%
  • Inflation (CPI):
    • 13.5%
  • FDI Inflow:
    • $1.6 billion
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Belarus has achieved minor success in deregulation, but more liberal economic policies have not been a priority. Pervasive state involvement and control hamper the economy. Restructuring of the economic system has been very slow, and the small private sector is marginalized. Undercut by domestic structural weaknesses, the economy has little resilience against external shocks.

Corruption remains widespread, and the ineffective judiciary and time-consuming bureaucracy undermine the enforcement of property rights. Government interference with the private sector holds monetary freedom, investment freedom, and financial freedom far below average levels. Public debt has risen, partly due to increasing losses in the state-owned enterprises.

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Background

President Alexander Lukashenko, in power since 1994, rules all branches of government. The U.N. Human Rights Council has appointed an investigator for Belarus. In a controversial move, the European Union has lifted sanctions against 170 people, including Lukashenko, that had been in place since the government crackdown on opposition figures in 2010. The two main opposition parties boycotted the rigged 2012 parliamentary elections. Lukashenko faced no serious competition in the October 2015 presidential election, which was neither free nor fair. Industries and state-controlled agriculture are not competitive. Moscow maintains huge influence in the government and the economy, which has been negatively affected by a faltering Russian economy. Belarus joined the Russia-backed Eurasian Economic Union in January 2015.

Rule of LawView Methodology

Property Rights 50.9 Create a Graph using this measurement

Government Integrity 37.6 Create a Graph using this measurement

Judicial Effectiveness 56.3 Create a Graph using this measurement

Soviet-era property laws remain in effect. The constitution vests most power in the president, giving him control of the government, the courts, and even the legislative process by stating that presidential decrees have a higher legal force than ordinary legislation. The state controls 70 percent of the economy, feeding widespread corruption. Graft is also encouraged by an overall lack of government transparency and accountability.

Government SizeView Methodology

The personal income tax rate is 13 percent. The top corporate tax rate remains 18 percent. Other taxes include excise taxes and a value-added tax. The overall tax burden equals 23.0 percent of total domestic income. Government spending has amounted to 41.3 percent of total output (GDP) over the past three years, and small budget surpluses have averaged 0.04 percent of GDP. Public debt is equivalent to 59.9 percent of GDP.

Regulatory EfficiencyView Methodology

Simplifying registration formalities and abolishing the minimum capital requirement have facilitated business formation. Procedural requirements for necessary permits have also been reduced. An efficient labor market is not fully developed. Heavily dependent on subsidized Russian energy, the government subsidizes its inefficient agricultural sector, but it cut some of those subsidies and liberalized food prices in 2016.

Open MarketsView Methodology

Trade is extremely important to Belarus’s economy; the value of exports and imports taken together equals 119 percent of GDP. The average applied tariff rate is 2.2 percent. State-owned enterprises distort the economy, and extensive government control severely limits investment and financial activity. Many industries are primarily or exclusively state-run to the detriment of private investment and enterprises.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
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