Belarus has managed to successfully develop its economy in the aftermath of the USSR’s demise. The implementation of the “Electronic Belarus” program advanced the use of ICTs both by citizens in their everyday life and in the activities of government and business entities. By the end of 2017 Belarus was ready to enter the list of the top 30 most developed countries in information and communication technologies.
The penetration rate of internet access reached 74% of the population in 2018. The use of mobile internet increased dramatically with the introduction of more advanced technology and the remarkable increase of the use of smartphones and tablets. Around 95% of businesses have some kind of internet access, usually through fixed broadband connections.
Belarus’ government and the market regulating agency have set up three projects which are planned for building up the telecom sector and digital economy. Considerable progress has been made, in particular with enabling the mobile network operators to trial 5G services and with extending the reach of fibre infrastructure. These programs were initiated while the country experienced declining economic growth (in 2015 and 2016) and formed part of wider efforts to secure economic growth through promoting the digital economy and developing the ICT sector. Such considerations have also encompassed a growing interest in applications relevant for smart cities.
There are many opportunities for growth in coming years, especially in the broadband segment where the incumbent telco Beltelecom is moving its PSTN network to a fibre-based network. This will improve the company’s offer adding a new range of bundled services. The mobile sector has also experienced some growth, with an increase in mobile penetration attributed to effective competition which has helped drive down consumer prices.
After the break-up of the Soviet Union, Belarus’ economy declined for several years. However, it revived in the mid-2000s. Belarus has only small reserves of crude oil and imports crude oil and natural gas from Russia at subsidized, below market, prices. Belarus derives export revenue by refining Russian crude and selling it at market prices. Russia and Belarus have had serious disagreements over prices and quantities for Russian energy. New non-Russian foreign investment has been limited in recent years, largely because of an unfavorable financial climate. In 2011, a financial crisis lead to a nearly three-fold devaluation of the Belarusian ruble. The Belarusian economy has continued to struggle under the weight of high external debt servicing payments and a trade deficit. In mid-December 2014, the devaluation of the Russian ruble triggered a near 40% devaluation of the Belarusian ruble.
Belarus’s economy stagnated between 2012 and 2016, widening productivity and income gaps between Belarus and neighboring countries. Budget revenues dropped because of falling global prices on key Belarusian export commodities. Since 2015, the Belarusian government has tightened its macro-economic policies, allowed more flexibility to its exchange rate, taken some steps towards price liberalization, and reduced subsidized government lending to state-owned enterprises. Belarus returned to modest growth in 2017, largely driven by improvement of external conditions and Belarus issued sovereign debt for the first time since 2011, which provided the country with badly-needed liquidity, and issued $600 million worth of Eurobonds in February 2018, predominantly to US and British investors.
The state telecom monopoly, Beltelecom, holds the exclusive interconnection with Internet providers outside of Belarus. Beltelecom owns all the main backbone channels, and is the only operator licensed to provide commercial VoIP services in Belarus. Because Beltelecom controls the market, tariffs for residential local calls are below cost. At the same time, the incumbent operator keeps a high-price policy for international calls and Internet access service, which allows the operator to subsidize local call services and remain a revenue-generating enterprise. This policy, however, hinders the establishment of a competitive market.