What to expect from Russia when Belarus gets rid of Lukashenka

"It is assumed that a rapid democratic transition in the near future will avoid losses associated with sanctions. We predict the gradual disappearance of a number of systemic macroeconomic deficiencies. This may allow the economy to realize its growth potential and even expand slightly. However, the overall picture of the growth potential will not change radically or quickly," wrote the economists.

Belarus will need about €3.15 billion, the experts say. To cover the budget deficit, we need €1.06 billion and another €2 billion to compensate for the energy subsidy. And €90 million for reforms in the vocational education system.

This is small money for a country, and it is not difficult to find it if you can borrow somewhere other than Russia. Given the democratic changes in Belarus, there will be access to international funds.

"In this scenario, Belarus will be able to bear most of the financial burden on its own if it has access to international capital markets. Donors would support Belarus mainly by providing technical assistance and funding only critical parts of the budget deficit, including weaning the country off energy subsidies".

"The Belarusian economy will face additional obstacles of artificial trade suspension, cancellation of subsidies and belligerent actions from the Russian side".

This scenario would require much more money -- 13.38 billion euros. In order to stabilize the economy when the main partner becomes an enemy, Belarus should not rely on its own forces.

It will need €3.9 billion to stabilize the current account of the balance of payments. The current account shows how successful the country is in trading abroad and how successful the companies are in earning. 

Another €5 billion to cover the budget deficit, €4 billion to compensate energy subsidies. Also, 90 million is for reforms in the vocational education system. Breaking ties with Russia would cause unemployment, and €388 million would be needed to solve this problem.

"In contrast to the first scenario, Belarus will need support from international donors, such as the EU, IMF, World Bank and others. At the same time, financial macroeconomic support should be limited in time (no more than three years), sufficient to achieve stabilization".
 

Like in Ukraine

"The effect of such a collapse, caused by extreme isolation from traditional markets, and before new ties are created, could be enough to make Belarusians flee to the West, especially in the event of an open military invasion of the country by Russia. This will have implications for Belarus' human capital in the future".

Belarus will need 25.97 billion euros of support funds. Of these, 17.8 billion will be needed to stabilize the current account of the balance of payments. Another 6 billion euros to close the budget deficit. As much as 1.78 billion will be needed to compensate for the Russian energy subsidy. Also, 90 million will be needed to reform vocational training and 300 million to solve the problem of excessive unemployment.

"If the primary goal is to prevent a hard landing and the accompanying financial crises, Scenario Three would require a much larger investment than Scenario Two. At the same time, the prospects for stabilization are slim, and imbalances may persist. So this support scheme is likely to simply delay shocks," experts conclude.