2018 Index of Economic Freedom

Belarus

overall score58.1
world rank108
Rule of Law

Property Rights53.5

Government Integrity42.0

Judicial Effectiveness57.3

Government Size

Government Spending47.9

Tax Burden89.8

Fiscal Health75.4

Regulatory Efficiency

Business Freedom74.1

Labor Freedom73.1

Monetary Freedom62.3

Open Markets

Trade Freedom81.4

Investment Freedom30.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 9.5 million
  • GDP (PPP):
    • $171.0 billion
    • -3.9% growth
    • -0.5% 5-year compound annual growth
    • $18,000 per capita
  • Unemployment:
    • 0.5%
  • Inflation (CPI):
    • 11.8%
  • FDI Inflow:
    • $1.2 billion
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Belarus’s economic freedom score is 58.1, making its economy the 108th freest in the 2018 Index. Its overall score has decreased by 0.5 point, with a sharp decline in fiscal health overwhelming small improvements in government integrity, business freedom, and property rights. Belarus is ranked 42nd among 44 countries in the Europe region, and its overall score is below the regional and world averages.

Belarus’s economy has stagnated. Lower global prices for key exports such as petroleum products and potash fertilizer have forced the government to tighten monetary policy, including moving to a more flexible exchange rate regime, and reduce subsidized lending to state-owned industrial and agricultural enterprises. The government has had some success with deregulation, but broad-scale liberalization has not been a priority. Instead, pervasive state involvement in and control of the economy still severely hamper growth and development, and the small private sector remains marginalized.

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Background

President Alexander Lukashenko, in power since 1994, rules all branches of government in this former Soviet republic. Although the U.N. has investigated human rights violations in Belarus, the European Union decided in 2016 to lift sanctions against 170 people, including Lukashenko, that had been in place since a 2010 government crackdown on opposition figures. Lukashenko faced no serious competition for election to his fifth five-year term in 2015 in a vote that was neither free nor fair. The opposition boycotted the 2012 parliamentary elections and won just two of the 110 seats contested in September 2016. The country’s aging industries and state-controlled agriculture are not competitive. Moscow maintains huge influence in Belarus, which joined the Russia-backed Eurasian Economic Union in 2015.

Rule of LawView Methodology

Property Rights 53.5 Create a Graph using this measurement

Government Integrity 42.0 Create a Graph using this measurement

Judicial Effectiveness 57.3 Create a Graph using this measurement

Soviet-era property laws remain in effect. Expropriation of private property sometimes occurs through deprivatization. The president constitutionally controls the entire government, the courts, and even the legislative process through presidential decrees that have 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 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 and value-added taxes. The overall tax burden equals 23.0 percent of total domestic income. Over the past three years, government spending has amounted to 41.7 percent of total output (GDP), and budget deficits have averaged 3.5 percent of GDP. Public debt is equivalent to 52.3 percent of GDP.

Regulatory EfficiencyView Methodology

Simpler registration formalities and abolition of minimum capital requirements have facilitated business formation. In 2016, the government also streamlined procedures for obtaining electricity. An efficient labor market is not fully developed. Belarus benefits from subsidized Russian natural gas, and domestic subsidies, directed lending, and price controls have been a drag on economic growth.

Open MarketsView Methodology

Trade is extremely important to Belarus’s economy; the combined value of exports and imports equals 125 percent of GDP. The average applied tariff rate is 1.8 percent. Nontariff barriers impede trade. Government policies such as reliance on state-owned enterprises and sectoral restrictions limit foreign investment. Development of the financial sector has progressed slowly. Large state banks continue to dominate the banking system.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.70.2
2Ireland80.43.7
3Estonia78.8-0.3
4United Kingdom781.6
5Iceland772.6
6Denmark76.61.5
7Luxembourg76.40.5
8Sweden76.31.4
9Georgia76.20.2
10Netherlands76.20.4
11Lithuania75.3-0.5
12Norway74.30.3
13Czech Republic74.20.9
14Germany74.20.4
15Finland74.10.1
16Latvia73.6-1.2
17Austria71.8-0.5
18Macedonia71.30.6
19Romania69.4-0.3
20Armenia68.7-1.6
21Poland68.50.2
22Malta68.50.8
23Bulgaria68.30.4
24Cyprus67.8-0.1
25Belgium67.5-0.3
26Hungary 66.70.9
27Kosovo66.6-1.3
28Turkey65.40.2
29Slovakia65.3-0.4
30Spain65.11.5
31Slovenia64.85.6
32Albania64.50.1
33Montenegro64.32.3
34France63.90.6
35Portugal63.40.8
36Italy62.50.0
37Serbia 62.53.6
38Bosnia and Herzegovina61.41.2
39Croatia611.6
40Moldova58.40.4
41Russia58.21.1
42Belarus58.1-0.5
43Greece57.32.3
44Ukraine51.93.8
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