State, Municipalities Owe BGN 0.5 B to Bulgaria's Business Sector

Bozhidar Danev, executive chair of the Bulgarian Industrial Association (BIA), presented Monday statistics about intercompany indebtedness in 2010. Photo by BGNES

The state and municipalities owe a total of BGN 457 M to the business sector by end-September 2011, the Bulgarian Industrial Association (BIA) announced on Monday.

According to the data, overdue payments by the state amount to BGN 254.7 M, while the municipalities' debt is 202.3 M.

In comparison, by end-2010, the state and municipalities owed to the private sector BGN 482 M for executed but unpaid for public procurement orders and BGN 2.2 B in non-refunded VAT.

In 2010, intercompany indebtedness among firms from the non-financial sector exceeded BGN 157 B, up by BGN 9B (6%) on the year, according to BIA.

The growth was slower than in previous years because the crisis made companies shrink investments, the experts explained.

In 2010, employers continued to delay payments to workers, with the sum growing by BGN 126 M (7%) to BGN 1.9 B by the end of the year.

At the same time, unpaid social insurance contributions rose by 17% to BGN 947 M in the said period.

Tax liabilities of companies went up by 13% to BGN 4 B.

"The high rate of intercomnpany indebtedness among firms in the non-financial sector, the ongoing decapitalisation of the economy, and the deprecation of assets acting as collateral pose a potential threat for the stability of the country's banking system because the collaterals no longer have a stabilizing role", said BIA executive chair Bozhidar Danev.

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