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Ekonomia

BoA report, debt-ridden businesses continue to suffer losses due to pandemic

BoA report, debt-ridden businesses continue to suffer losses due to pandemic

The year 2021 has started at a loss for most companies in the country. The reduction of restrictive measures has been helpful for businesses in the country, but most of them continue to come at a loss. In a report recently published by the Bank of Albania, it is stated that, in the last months of the last year and until the first months of 2021, businesses have registered 40% losses and most of them belong to small enterprises, which are failing to recover after the crisis brought about by the pandemic. The report clarifies that the weakening of consumption in the economy has faced businesses with a drastic decline in sales. At these rates, businesses predict that in the first six months of 2021 they will continue with losses, with figures projected at 10% -20%. "Sales levels have dropped for all companies. Thus, Small enterprises continue to report a significant decline in the sales level by -36.9%, somewhat improved compared to the 2020 quarter, but at a deteriorating level compared to the same period a year earlier. In terms of expectations for the level of overall sales in the next six months, large enterprises have positive expectations regarding their performance with a positive net balance of 21.2%, followed by medium-sized enterprises, for which the positive balance is only 1.5 %. Meanwhile, small enterprises are pessimistic where, with a negative net balance of -8.6%, they expect a further decline in the level of sales for the first half of 2021 ", the report states. As a result of declining sales, these businesses are facing significant revenue declines. Referring to the BoA report, Financial deterioration is felt in all three categories of businesses, ranging from a 9% to 38% decline. Where even in these cases small enterprises are in a worse situation. "Small enterprises estimate a significant decrease in the financial result by -38.1% and medium and large enterprises declare negative balances of the financial result, respectively -26.9% and -9.3%. "Expectations for the first half of 2021 are pessimistic for small and medium enterprises", the report emphasizes. respectively -26.9% and -9.3%. "Expectations for the first half of 2021 are pessimistic for small and medium enterprises", the report emphasizes. respectively -26.9% and -9.3%. "Expectations for the first half of 2021 are pessimistic for small and medium enterprises", the report emphasizes.

Businesses increase debts

The financial downturn has reduced businesses' solvency of loans taken so far. According to the BoA report, many of the companies in the country have increased their debt to banks and not only that, they have also had difficulty in repaying their debts to the state and suppliers. Specifically, only in recent months small businesses have increased debt by 2.8% while large and medium-sized ones have increased the debt level by 5.3%. What stands out is that the debt rate has increased more than their profits. This situation implies that for the coming months businesses will not be able to repay the debts received. They look at the first six months of 2021 with such pessimism. “From December 2020 to March 2021, 23% of medium-sized enterprises and 22% of large enterprises have debts equal to the value of their total capital or higher. This indicator implies a higher debt burden. According to the survey, debts to small enterprises increased by 2.8% and to medium enterprises by 5.3%. The debt burden continues to remain higher in the enterprises of the service sector and those of trade ", reports the Bank of Albania. Unable to repay them, businesses have reduced lending in recent months and the downturn is expected to continue. According to the BoA, corporate demand for credit is declining, with about 11% of businesses declaring that they have applied for financing. Unable to repay them, businesses have reduced lending in recent months and the downturn is expected to continue. According to the BoA, corporate demand for credit is declining, with about 11% of businesses declaring that they have applied for financing. Unable to repay them, businesses have reduced lending in recent months and the downturn is expected to continue. According to the BoA, corporate demand for credit is declining, with about 11% of businesses declaring that they have applied for financing.