Non-Financial Corporations in Bulgaria with Debts of BGN 168 B in 2012

Shrinking markets are a major problem for companies and a key factor for their indebtedness, according to the Economic Research Institute at the Bulgarian Academy of Sciences.

The survey of the ERI, as cited by the Bulgarian Telegraph Agency (BTA), was conducted among 200 actively working private companies.

71% of the polled agree on the importance of the problem of shrinking markets.

This fact turns deferred-payment sales, i.e. the emergence of debts, into normal practice for over 74% of the companies.

The rate of increase in claims of non-financial corporations (NFCs) grows for the first time in 2012 at the expense of the rate of increase in debts, reaching BGN 71.181 B. The increase is by BGN 5.2 B, according to Prof. Mitko Dimitrov, Director of the ERI.

The researchers also inform that the total debt of NFCs reaches nearly BGN 168 B for 2012 compared to BGN 163 B in 2011.

The rate of growth of indebtedness of companies decelerates, according to Ivaylo Yankov.

The survey also proves that part of the corporate debt is fictitious with a view to evading VAT. The survey claims that companies with a history of up to three years on the market are most high-risk.

Debts to suppliers increase, while debts to banks decrease, the researchers specify.

The survey also concludes that there are also internal incentives for corporate indebtedness.

In 36.3% of the cases, managers' salaries are fully based on the company's performance, while in 18.9% of the cases the connection is only partial.

Nearly 52% of the polled say high interest rates of banks encourage a part of the companies to delay payments to suppliers.

Slightly over 1/3 of the companies complain of difficulties getting extra funding through bank loans.

Over 42% of the polled cite late payments by the state and municipalities as a main generator of intercompany indebtedness.

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