Belarus’ economic model cannot solve choking warehouses problem

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April 22, 2016 18:47

Since early 2014, industrial stocks grew by more than EUR 400 million, which implies that Belarusian automakers’ competitiveness on the Russian market continued falling. Competiveness could improve if industrial enterprises’ management became more independent, but so far, the authorities do not consider such a move.

The National Statistics Committee has published data on stocks’ value as of March 1st, 2014.

On March 1st, 2014 the industrial enterprises stocks’ volume totalled EUR 2.54 billion, which is EUR 0.4 billion more than on January 1st, 2014. The main increase occurred in engineering, which is associated with a drop in truck, agricultural machinery and dump trucks sales on foreign markets. Measures to stimulate domestic demand for these products have had little effect, due to the small capacity of the domestic market relatively the production volumes.

Official data on warehouse stocks does not reflect the real situation. For example, in February trucks’ stocks increased by 1728 units, while only 670 units were produced in February. Some 1058 trucks have appeared virtually ‘out of the blue’, if we assume that all cars produced in February were sent straight to the warehouse. The practice of disguising real stocks at warehouses behind ‘assembly in progress’ statistics has become widespread. For instance, an enterprise refers to a missing part, which prevents a truck from being completed, and does not list the truck in the warehouse statistics.

The enterprises are prompted to distort statistics, because, on the one hand, they have industrial production plans, and on the other hand, they have a task to maintain the ratio – inventories to average monthly production volume. In the context of rapidly changing market prices, due to the devaluation in countries-Belarus’ major trading partners, the industrial enterprises’ opportunities to reduce prices are limited. As a result, enterprises lose contracts and build up stocks.

Long-term storage of products in improper conditions leads to products’ degradation and additional costs on the repairs. In addition, stocks bind enterprises’ working capital, which, given the costly loans, leads to additional costs and reduced competitiveness. 

Thus, the restrictions on stocks’ growth have resulted in enterprises fiddling the statistics. Enterprises’ greater managerial independence could help them to save money and would improve export data and settlements in the economy.

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