Government increases its stake in nine companies, expert warns of ineffective governance

May 17, BPN. The government has increased its stakes in nine joint-stock companies to offset “state support from the national budget in 2021,” according to the Council of Ministers’ directive dated May 14.

The government now owns additional shares of the Belarusian Cement Plant worth over 9 million rubles; a glass factory in Homieľ, over 11 million rubles; a glass factory in Hrodna, over 145,000 rubles; a construction materials plant in Krasnaseľsk, over 5.6 million rubles; a cement plant in Kryčaŭ, over 27 million rubles; wood processing plants in Homiel’, Ivacevičy, and Masty, 3.7 million, over 12 million, and 3.7 million rubles respectively; and the Svietlahorsk Pulp and Paper Mill, 27.7 million rubles.

Jaraslaŭ Ramančuk, an economist of the Ludwig von Mises Think Tank, told BPN that the government has wasted billions of dollars supporting state enterprises, which remain unprofitable. He explained that the authorities kept spending on investment projects and modernization in the last 20 years and when something went wrong, the government increased its stake in the companies instead of collecting debts.

Ramančuk pointed out that about $6 billion was spent on the most problematic sectors of woodworking, cement, and glass production, but instead of repaying these funds, the companies only created more problems.

Ramančuk believes that the arrangement is “very comfortable” for the top managers, as they can obtain funds and blame failures on sanctions.

He noted that a debt/equity swap is “not even nationalization” but an attempt to sweep failures under the carpet.