The measures for support, structural reforms and sound banking system are key to the reduction of the risks for the corporate sector in conditions of a pandemic

Skopje, 3th of October 2021

Measures taken by policy makers, including central banks, during the pandemic significantly supported the liquidity of the corporate sector, thereby limiting the insolvency risks. In the period ahead, it is important to take target measures, which will provide support to the sound and sustainable companies, which, together with the continuation of structural reforms, will enable faster recovery from the pandemic crisis, said the Governor of the National Bank, Anita Angelovska Bezhoska, at the annual lecture at the Joint Vienna Institute.

This is an extremely important event, which was also attended by the Governor of the Oesterreichische Nationalbank, Robert Holzmann, as well as directors in the European Central Bank and the International Monetary Fund. Subject-matter of the discussion was the insolvency in the corporate sector in the context of the corona-crisis, with special emphasis on the Western Balkans countries.

The Governor Angelovska Bezhoska pointed out that the crisis caused by the pandemic affected adversely the operations of the corporate sector, but with different intensity depending on the structure of economies, the pre-pandemic situation and the effectiveness of the undertaken monetary and fiscal measures. However, it is noticeable that in all countries in the region, the profitability of the corporate sector during the crisis reduced amid a significant decrease in the revenues, especially in micro and small companies.

As emphasized by the Governor, a recent survey showed that on average half of the companies in the region of the Western Balkans, from the beginning of the pandemic, registered a decline in their revenues of 50%, around 65% of the companies had a liquidity problem and about 60% of the companies used measures for support from the government, as well as bank loans.

However, as pointed out by Angelovska Bezhoska, the measures taken by policy makers provided significant support to the corporate sector. On the one hand, the relaxation of the monetary policy has provided a substantial amount of liquid assets for the real sector, while the interest rates on loans in the region reduced to the historically lowest level. Other measures have also been taken, such as the debt moratorium, in order to currently reduce the liquidity pressure on companies. On the other hand, there are also significant fiscal packages for support of the companies, which in the region reach around 6% of GDP, on average.

As a result of the stimulus obtained through the implemented policies, the number of closed companies in 2020, despite the effects of the pandemic, is decreasing - Angelovska Bezhoska said. This is characteristic both globally and in the region. However, as pointed out by the Governor, this situation might be temporary and there is a need for careful monitoring.

Therefore, in order to further reduce the insolvency risk of the corporate sector, Angelovska Bezhoska considers that one should maintain the strong capacity of the banking sector, so it can provide support to the corporate sector through the credit activity, continue with the target measures for support of the sustainable companies, as well as with the structural reforms for increasing the potential of economies.