Macedonia: Companies Keep Billions of Euros in Banks Instead of Investing It

Instead of making investments in new projects that would bring growth, export, and more jobs, the Macedonian firms feel safer to keep their money in banks, daily Utrinski reads.

The companies’ bank deposits in August grew for some incredible EUR 60 million. This is an excellent jump in saving, bringing money to the banks, but the fact that the firms decide to keep their money on their accounts, waiting to get interest from them is baffling. In the past period, the companies mainly withdrew their money from the banks to be able to tackle their liquidation problems, pay off salaries and return old debts. This was particularly frequent practice in the past several years when the deposits of the business sector were decreasing monthly, however this year, they are moving upwards in general. The question that is imposing is why the firms, when they have more means available, keep their money in the bank instead of investing them in new projects, machines, plants?



The employers say that on one hand, the Macedonian companies have difficulties in accessing new markets which would be a logical pursuit, but on the other, in this period, there are other factors that have an impact on companies’ decisions, such as the stagnation in the European economy caused by the Ukraine crisis, and in the region, as well, the disrupted economic courses due to the floods.

"The entire situation shows that the risk of making new investments is great. The firms keep their money in the bank. For a longer period there is a fear of entering into new investments. It’s difficult to make profit from the money if the firm did not provide export of its goods. In that case, it’s not lucrative for the company to make a new debt in the bank with a new credit. It is obvious that is difficult to penetrate new markets. There are several factors, one of them is the stagnation in the European countries. Also, the large foreign companies that operate in the country, obviously, invest their money in our banks so that they would double them by March next year before the dividend is paid off," says Angele Dimitrov, president of the Employers’ Organization of Macedonia.

Banks as well have confirmed that liquidity is the key problem companies have been facing.

"We can draw a general conclusion that companies are abstaining from taking credits for new investments, reconstruction, renewal and investment activities alike. On the other hand, the turnover demands are increasing as a result of the need of current liquidity. On the long run, this condition could lower companies’ competitiveness due to the decreased productiveness, amortization and old technologies. Still, at the moment the liquidity is the key problem that companies need to tackle, and the new investments are usually postponed for the future," officials from Komercijalna Banka told Utrinski.

"According to official data from the National Bank of Macedonia, the percentage of non-functional placements in the last several years is growing. It is a fact that there is an increase in the number of worsened placements, and the possibilities for their solution through a secondary source of payment (security) are limited. We expected mild positive tendencies in this area in the upcoming period, but a real progress and improvement of the condition can only be expected on the middle and long run. The movement of the municipal economic indicators will be the basic determinant of these movements," Komercijalna Banka officials add.

Otherwise, the latest data published on the National Bank of Macedonia internet page show that the companies in the country have left up to EUR 60 million for safekeeping in Macedonian banks. Thus, currently, Macedonian companies keep the total of EUR 977 millions in banks.

The citizens nonetheless, traditionally thought to be solid savers, have invested new EUR 27.5 million in domestic banks in August. At the end of August, the total saving stakes have surpassed the limit of EUR 4.4 billion.

When it comes to granting credits to firms, in August, the same as in July, there was a decrease in the monthly sums of allowed credits. The registered monthly decline in credits in the business sector in July was five million euros, and in August, around EUR 2.5 million. This comes after in the past several months the banks have opened their credit valves for the companies, therefore a significant growth of granted credits to the business sector was registered.

- See more at: http://www.independent.mk/articles/9659/Macedonia+Companies+Keep+Billions+of+Euros+in+Banks+Instead+of+Investing+It#sthash.XdVNThCh.dpuf

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