Belarus is on the verge of transitioning to the category of high-income countries - head of the EDB

Belarus, Kazakhstan and Russia are on the verge of transitioning to the high-income country category. This was stated by Dmitry Pankin, Chairman of the Management Board of the Eurasian Development Bank (EDB), speaking at the conference "Economic, Financial and Monetary Changes in the Global Economy" at the Astana Economic Forum, BELTA was informed by the EDB press service.

As Dmitry Pankin noted, on the one hand, this fact reflects the progressive dynamics of socio-economic development over the past decades. On the other hand, such a qualitative change implies not just the adoption of comprehensive economic measures, but the implementation of a new development model. The head of the EDB noted that without consistent structural reforms, a transition to a strategy of implementing innovations, diversification and export growth, as well as increasing domestic demand, all three countries are threatened by the "path dependency effect". Only a small number of countries manage to break out of the established rut of economic specialization and developed methods of using existing labor, natural and capital resources. A sharp slowdown in GDP growth rates and a drastic reduction in investment levels occur: countries lose incentives for further active economic development, preferring the existing "comfortable" growth model.

"The biggest challenge is the transition from resource-driven economic growth, dependent on cheap labour and capital, to growth based on high productivity and innovation," emphasised Dmitry Pankin. Such a "new acceleration" model should meet the needs for increased economic growth rates in each of the EAEU countries. At the same time, according to Dmitry Pankin, a set of jointly implemented measures will contribute to achieving this goal. This should include the formation of an effective capital market for the Eurasian Union; the implementation of joint infrastructure projects; the implementation of a number of unified policies (pension; overcoming inequality; technological development; improving institutions); a unified acceleration strategy that combines different sets of measures for different countries; and an increase in human capital, primarily through the development of higher education.

Speaking at the forum during the session "Vectors of Eurasian Integration Development in a Global Context", the Chairman of the EDB Management Board noted the strategic importance of EAEU countries coordinating their macroeconomic policies, which will lay the long-term vector for the development of this integration association. He outlined the most priority areas for such work. In his opinion, EAEU countries, in particular, need to achieve progress in coordination in the financial sphere, including issues such as removing restrictions on capital movement and liberalising access to each other's banking sector and securities market, as well as integrating their financial markets.

The head of the EDB also noted that fiscal coordination and, in particular, an effective system for the general control of budgetary processes are necessary for the success of Eurasian integration.

Speaking about the need to develop common principles of monetary and financial policy to ensure macroeconomic stability of the union countries, Dmitry Pankin noted: "Currently, we need to discuss not a hypothetical single currency, but 'boring' issues of currency restrictions, exchange rate policy coordination, trade in national currencies, and compliance with the macroeconomic criteria fixed in the EAEU Treaty. However, even now, it is necessary to form a centre for coordinated actions and expertise, which will subsequently serve as a donor of personnel and powers for a new financial mega-regulator."

"One of the intellectual centres for forming well-founded approaches to financial and currency integration could be the EDB," believes Dmitry Pankin. "Our team of analysts possesses extensive expertise in this matter. We closely cooperate with the EEC. Together with the Commission, we have developed an economic and mathematical toolkit that allows us to model all sorts of integration scenarios and calculate the corresponding economic effects. Furthermore, we have already established interaction with the central banks of the EAEU member states."

The EDB is an international financial organisation established by Russia and Kazakhstan in January 2006 with the aim of promoting the development of market economies of the member states, their sustainable economic growth, and the expansion of mutual trade and economic ties. The member states of the bank are Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan.

News of Belarus (BELTA)