The piling stocks problem is to be solved through trade

Category status:
April 22, 2016 18:28

The draft law on state regulation of trade will allow local authorities to intervene in commodity markets, including illiquid products.

Fulfillment of government’s industrial production plans results in piling stocks at warehouses. The government intends to force the illiquid goods trade. If this approach is legalized, enterprises will be able to improve their reporting indices and industries will partially share the overproduction costs with the trading companies.

Since early 2013 the country’s stocks increased by 33.7% or by BYR 7.5 trillion, making it BYR 29.7 trillion. One of the main reasons behind growing stocks is the quantitative reporting in the goods production, regardless of the current economic situation. Some enterprises did not sell their products and were sending them to warehouses. Industrial production parameters have been adjusted to show better performance, while industries put pressure on local authorities to assist in the sales of illiquid products they have produced.

The draft law “On state regulation of retail and food service in the Republic of Belarus” contains a paragraph, allowing for broad interpretations and permitting the local governments to force retailers to sell goods regardless of the demand. Additional effect from these regulations would be the temporarily reduced stocks due to their transfer to the retail and wholesale trade.

In the regions, this mechanism is already at work. If legalized, these practices will become more widespread in trying to fight the piling stocks at warehouses. The established modus operandi is economically inefficient: overstated industrial production – stocks’ growth – administrative means to clear warehouses. In the end, trade will be the one to blame.

Instead of improving retailer’s efficiency to supply popular goods or adjusting production plans to produce more high-liquidity goods, the government is using a mechanism, which aims to meet the GDP growth targets using any means, even to the detriment of the financial situation in industry and trade.

Similar articles

Minsk attempts to make up for image losses from military exercises by opening to Western values
October 02, 2017 11:49

The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.

Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.

Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.

In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.

Recent trends