About BGN 1 bn needed for a clearing house

“About BGN 1 bn is needed for the establishment of a clearing house where the liabilities of enterprises from the non-financial sector of the economy can be traded, but these funds cannot be ensured at present. Setting up a market for liabilities is a way of reducing them,” Kamen Kolev, Vice Chairman of the Bulgarian Industrial Association (BIA), said today. According to experts, one of the main dilemmas facing Bulgaria’s economy is whether indebtedness will block growth for a long period of time or will growth reduce the risk of over-indebtedness.

BIA’s most recent survey showed that in 2005-2010, the liabilities of manufacturing enterprises to banks increased 3.2 times, reaching BGN 31.6 bn. At the expense of that, the share of tax liabilities decreased during the period from 4.5% to 2.6% or almost two-fold. The share of liabilities to suppliers fell by 30% - from 27.0% to 19.1%. In 2010, a considerable increase was registered in the liabilities of businesses in a group and those connected with associated enterprises and joint ventures - from 20% to 23.5% or 17%. “This is one of businesses’ tricks for survival,” commented BIA’s Executive Chairman, Bozhidar Danev. According to him, the EU Directive for the acceleration of payments under commercial contracts should be copied by Bulgarian legislation. In addition, corporate indebtedness will be reduced by accelerating bankruptcy procedures. For the purpose, minority creditors should be prohibited from appealing against bankruptcy procedures. In European statistics, Bulgaria is a black map in terms of information on the number of bankruptcies, which are increasing in number. Last year alone, more than 1,300 bankruptcy proceedings were opened, according to BIA’s Executive Chairman.

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