The piling stocks problem is to be solved through trade
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.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.