2016 Index of Economic Freedom

Belarus

overall score48.8
world rank157
Rule of Law

Property Rights20.0

Freedom From Corruption31.0

Limited Government

Government Spending44.8

Fiscal Freedom88.6

Regulatory Efficiency

Business Freedom69.0

Labor Freedom74.9

Monetary Freedom50.4

Open Markets

Trade Freedom79.0

Investment Freedom20.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 9.5 million
  • GDP (PPP):
    • $172.0 billion
    • 1.6% growth
    • 3.5% 5-year compound annual growth
    • $18,161 per capita
  • Unemployment:
    • 5.9%
  • Inflation (CPI):
    • 18.1%
  • FDI Inflow:
    • $1.8 billion
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Belarus is one of only two European economies that remain mired in the “repressed” category. Pervasive state controls persist in many economic areas, and widespread state interference and redistribution activities have undermined the development of a diversified economy. Institutional reforms are critically needed to open markets and improve productivity.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 48.8 (down 1.0 point)
  • Economic Freedom Status: Repressed
  • Global Ranking: 157th
  • Regional Ranking: 43rd in Europe
  • Notable Successes: Trade Freedom and Fiscal Freedom
  • Concerns: Property Rights, Corruption, and Regulatory Efficiency
  • Overall Score Change Since 2012: –0.2

Overall progress in business reform has been uneven, and the small private sector remains marginalized. With poor protection of property rights and high levels of corruption, Belarus lacks the political will to build any momentum toward functioning markets. Dictatorial governance, an ineffective judiciary, and time-consuming bureaucracy leave prospective entrepreneurs with little hope of success.

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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 a human rights investigator for Belarus. The European Union imposed targeted economic sanctions following beatings and arrests of opposition figures after Lukashenko falsified the December 2010 election results. 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. Corruption and inflation plague the economy. Russia 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 20.0 Create a Graph using this measurement

Freedom From Corruption 31.0 Create a Graph using this measurement

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 greater 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. Soviet-era property laws remain in effect.

Limited GovernmentView Methodology

The personal income tax rate is 13 percent. The top corporate tax rate is still 18 percent. Other taxes include excise taxes and a value-added tax. The overall tax burden equals 25.4 percent of total domestic income. Government spending now equals 42.9 percent of total domestic output, and public debt hovers around 37 percent of GDP. The state remains highly dependent on external financing and subsidized energy.

Regulatory EfficiencyView Methodology

Simplifying registration formalities and abolishing the minimum capital requirement have facilitated business formation, but state interference and public-sector domination of the labor market still hamper the overall entrepreneurial environment. Belarus is heavily dependent on subsidized Russian energy, and the government subsidizes the inefficient agricultural sector and products made by state-owned enterprises.

Open MarketsView Methodology

Belarus has a 3 percent average tariff rate. It is a member of the Eurasian Customs Union, which includes Armenia, Kazakhstan, Kyrgyzstan, and Russia. The government screens foreign investment, and state-owned enterprises distort the economy. Limited reform of the state-owned financial sector has begun. Since 2011, the central bank has stopped its direct lending operations to banks.

Country's Score Over Time

Bar Graph of Belarus Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Belarus to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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