The government turns a blind eye to piling stocks at warehouses

The National Statistics Committee reported that from early 2013 industrial warehouse stocks grew by BYR 7.5 trillion, reaching BYR 29.7 trillion (GDP in January-February 2013 BYR 81.5 trillion).

In value terms, warehouse stocks by far exceeded the pre-devaluation standard. The pressure exerted on the National Bank to lower the loans’ rates – meant to improve the funds’ accessibility to meet the GDP growth plan, (inter alia, through built up warehouse stocks) – compromises the balanced economic development.

On March 1^st, 2012 the volume of warehouse stocks at industrial enterprises in Belarus was BYR 29.7 trillion (USD 3.44 billion). Since early 2013, stocks rose by 33.7% or by BYR 7.5 trillion. In relative terms, stocks make 75.2% of the average monthly production. In absolute value, stocks’ volumes are record high.

Growing stocks result in enterprises’ working capital outflow; they require additional storage space for unsold goods, and additional costs to maintain the manufactured products in the commodity shape. Profits from the industrial products sales in January 2013 fell by 25.5% compared to January 2012, over 60% of industrial enterprises have sales returns under 10% (in January 2012, there were 58.5% of them). On March 22^nd, Belarus’ Vice Premier Prokopovich said that the volume of stocks was not yet critical and that it was linked to changes in the international markets’ situation. Deadlines for unloading stocks have not been set.

The problem is ignored largely because 8.5% GDP growth is the primary target in 2013. Russia, despite having similar problems in the production of vehicles, machinery and equipment, started cutting down the production pace. When Belarus calculates its GDP, stocks are included; therefore it can adjust GDP to increase even if the demand for industrial products is generally reduced. Regardless of the current market situation, Belarusian enterprises are ordered to increase production volumes, which results in growing warehouse stocks.

Belarus’ government has once again demonstrated its commitment to quantitative economic indicators, ignoring the qualitative. The pressure exerted on the National Bank to lower the loans’ rates – meant to improve the funds’ accessibility to meet the GDP growth plan, (inter alia, through building up warehouse stocks) – compromises the balanced economic development.