Companies' liabilities reach 70% of their capital

The liabilities of the companies in the non-financial sector of the economy continue to grow, albeit at a slower pace, and have reached 70% of their capital, showed the regular study of the Bulgarian Industrial Association (BIA), presented yesterday. Their total amount at the end of 2010 stood at BGN 157 bn. Compared to 2005, the figures increased by BGN 91 bn, or 2.4 times more. Compared to 2009, the recorded increase was BGN 8.945 bn or 6%.

The upward trend of liabilities will continue in 2011 and 2012, but at a slower rate because of the economic crisis. The situation in the enterprises listed on the stock exchange is particularly alarming. The major depreciation of their shares in 2008 and 2009 had an additional negative impact on their ratings and potential for development. The high indebtedness of the companies from the non-financial sector, the ongoing decapitalisation of the economy and the depreciation of the assets used as collateral potentially endanger the stability of the banking system because the collateral can no longer play a stabilising role, commented BIA experts.

“The "debts of non-financial firms” phenomenon has become a chronic disease of the Bulgarian economy. It is mainly noticed in the trade sector, (BGN 34.2 bn), in the real estate branch (BGN 23.6 bn) and in construction (BGN 20.3 bn), which have been most severely affected by the crisis,” said Bojidar Danev, Executive President of BIA.

In 2010, the State and municipalities continued to generate inter-company indebtedness but to a lesser extent, compared to 2009. The balance sheets of non-financial enterprises, as of 31.12.2010, showed that their due receivables from state and municipal enterprises, under unsettled contracts, were BGN 482 mln. Refundable taxes amounted to BGN 2.2 bn, which represents just 2.1% of the intercompany indebtedness of non-financial corporations at the end of 2010.

By 31.12. 2010, the outstanding liabilities of the public sector amounted to BGN 431.5 mln, out of which BGN 237.2 mln were due receivables from the state budget and BGN 194.3 mln - from municipalities.

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