Policy Papers
Macroeconomic Effects of the Third Unit of the Belarusian NPP: A CGE Assessment
The construction and commissioning of the third power unit of the Belarusian NPP, planned by the Belarusian authorities, will lead to changes in the structure of power generation through an increase in the share of nuclear energy and a reduction in natural gas imports. In this regard, an important task is to assess the macroeconomic effects of the project, including the role of its financing conditions. This analytical note presents an approach to quantitatively assessing the impact of launching the third power unit on the Belarusian economy. The methodological basis is a computable general equilibrium (CGE) model for the Belarusian economy. The CGE-based simulation results show that the launch of the third power unit stimulates output growth in energy-intensive industries, increases household income and consumption, and boosts investment. Accounting for the repayment of the Russian loan for the construction of the power unit through the budget and the inclusion of loan payments in tariffs significantly weakens the positive macroeconomic effects, and in the case of exchange rate rigidity, the equilibrium level of investment in the economy will decline.