Business model on rating positions
By Alexander Barkovsky
International ratings became a serious stone in the foundation of Belarusian economic policy several years ago. Since then, the country’s legislation has been guided with international institutions’ rankings in mind. It may seem unreasonable to conduct reform with the aim of receiving a certain reaction from foreign financial organisations but every country behaves in the same manner. Moreover, assessments can help Belarus decide how to avoid future mistakes.
In fact, the Belarusian business model has its own advantages, which are gaining recognition. Over the past three years, our country has made a serious breakthrough in the Doing Business Report (conducted by the World Bank and the International Finance Corporation to assess the investment and business climate), shifting from 115th position (in 2008) to 58th (in 2010). Moreover, last year, Belarus was placed third regarding the aggregate effect of the liberalisation of business conditions. In the crisis year of 2008, the Government faced the problem of an unfavourable investment climate but approached this with sporting fervour. Its goal is to place the country among the top thirty — a mission being accomplished via economic liberalisation.
Not long ago, an interesting situation occurred: Belarusian mass media reported that the country had been accepted into the 2011-2012 Global Competitiveness Index, prepared by the World Economic Forum (WEF). However, it later became clear that the 27th position was occupied by the United Arab Emirates; Belarus did not even appear in the rankings. “We are not yet participating. However, it would be incorrect to assert that we’re far from taking part,” notes the Deputy Head of the Economy Ministry’s Main Department for Macroeconomic Analysis and Forecasting, Svetlana Ivanova. She explains that Belarus is already actively liaising with the WEF to ensure the necessary conditions for joining the authoritative ranking system are met. “A special document is being planned jointly with the National Bank, to include not only issues of joining but the country’s advancement within the system. A daft is currently being studied by the Government,” she adds.
The Global Competitiveness Index is often compared with Doing Business; the documents even share similar positions. However, the WEF rating is considered to be more comprehensive, using a greater number of variables. According to the Economy Ministry, the WEF is actively participating in preparing a survey in Belarus. “The Global Competitiveness Index sets a country’s position primarily by questioning company heads (70 percent); the remainder is guided by statistical figures,” explain Ministry staff. This is the reason for Belarus’ failure to gain a ranking for 2011; the country is yet to prepare a base for the collection of Belarusian businesses’ views. Organisational and methodological difficulties exist.
Scientists from the Economy Ministry’s Scientific-Research Economic Institute are to oversee this collection of information. Last year, the establishment underwent reformation, to include regional centres. Each region of the country now has Institute representation, which will conduct polling locally.
It’s important for Belarus to take part in global ratings, despite the fact that each has its own limitations. Ratings have their own system of parameters, applying their own system of criteria. The Economy Ministry believes that ratings are important and necessary, since they shape the global view of our state’s position. Good rankings could help Belarusian enterprises in accessing the capital market, making it easier to find loans at profitable interest rates (since investors can be confident of the state’s good reputation). Ratings also indicate progress over a certain period of time. As the Deputy Head of the Economy Ministry’s Macroeconomic Policy Department, Marina Vasilevskaya, notes, each country’s detailed characteristics are also mentioned, creating a mini report. “It’s always interesting to compare Belarus with other countries,” she admits.