Bulgarian non-financial companies continued to accumulate debt in 2009 despite their ambition to reduce costs in the first crisis year for the country's economy, the Bulgarian Industrial Association (BIA) said.
Local firms' combined arrears to the National Revenue Agency (NRA), National Social Security Institute, banks, suppliers, other businesses and staff grew 6.0% on the year to BGN 156.6 billion in 2009 against a 4.9% rise in the country's gross domestic product (GDP) in the period.
Intercompany debt accounted for about two thirds of total liabilities, or BGN 103.6 billion in 2009.
According to BIA's chairman, Bozhidar Danev, the main reason for the increase in liabilities was the contraction in imports and investments.
"In 2011, we expect a rise in bankruptcies due to companies' worsened financial metrics, as well as an increase in bad loans. This will lead to higher indebtedness of businesses," BIA's deputy chairman, Kamen Kalev, said.
As at end-2009, the outstanding debt of Bulgaria's government and municipalities to local businesses came in at BGN 833 million, the bulk of which has already been repaid.
The companies that amassed the largest amounts of debt were entities engaged in the trade sector with BGN 34.6 billion in outstanding liabilities, followed by construction and real estate firms with arrears of BGN 22.6 billion and BGN 21.6 billion, respectively. Source Dnevnik