porast nelikvidnosti

Expected Increase in Illiquidity in 2024

After a series of challenges facing the entire world – persistent inflation, Covid-19, tightening of monetary policy, the war in Ukraine, weak economic growth… the struggle of domestic companies to survive in the market inevitably continues. The economic outlook for 2024 remains weak, with GDP growth only gradually emerging from the recession zone. This will particularly be the case in the three largest sectors that contributed to the recovery from illiquidity – construction, trade, and restaurants/hotels. High illiquidity is expected to continue in 2025, due to only moderate improvements in economic and financial prospects.

The trend of illiquidity in 2024 and 2025 is varied and depends on the region observed. While developed economies will face an increase, developing economies will see a milder increase or decrease depending on the region. In Western Europe, illiquidity will rise for the third consecutive year, with an 11% increase in 2024. This means the number of businesses unable to repay their debts will significantly increase. The largest increases are expected in the Netherlands (+31%), Spain (+28%), and Ireland (+22%), countries that have already faced significant challenges in recent years, including the COVID-19 pandemic, Brexit, and the war in Ukraine. Germany will also experience a significant rise in illiquidity (+13%), while France and the United Kingdom will see a more moderate increase (+7% and +10%). A moderate decrease in illiquidity is expected in Central and Eastern Europe this year and next, due to specific cases such as Poland and Hungary.

Economy in Serbia
and Illiquidity

A challenge that the Serbian economy has faced for years is illiquidity. The banking sector is dealing with problematic loans, while large retail chains and stores, by delaying their payments for three to even nine months, contribute to the concerning practice of illiquidity in the Serbian economy. Payment deadlines for citizens and entrepreneurs are often shorter, yet 79% pay their bills on time, which is in line with the European average. In Serbia, there are many illiquid companies, with Telekom Serbia being one of the larger ones. By not paying their electricity bills, they have reached the sixth or seventh place among the largest debtors on the Electric Power Industry of Serbia’s debtor list.

The complex situation and state of the economy are evidenced by the number of companies in the Republic of Serbia that have ceased operations through liquidation. According to the Serbian Business Registers Agency, there is a pervasive trend of continuous market dynamism. During 2022, liquidation proceedings were initiated for 5,921 companies, and 5,766 companies were officially closed. The trend continued in 2023, with 3,956 liquidations initiated in February and 4,000 companies erased from the register in April. At the end of the year, in December 2023, the Agency identified 3,609 companies with irremovable reasons for compulsory liquidation.

Data from the National Bank of Serbia as of January 31, 2024, provides insight into the records of 46,847 companies and entrepreneurs with a blocked amount of 219,917,298,267 dinars in their accounts. The blocked amount, expressed in euros, is approximately 1.87 billion euros. Of the total number of blocked accounts, 14,791 accounts have been blocked for more than three years.

Comparing the data to the end of 2020, it is noticeable that the number of companies with blocked amounts in their accounts has marginally increased from 40,273 to 46,847.

However, the structure of blocked accounts shows a more significant increase in the number of blocked accounts for entrepreneurs, rising from 13,938 to 19,683. The total blocked amount, up to the observed period in 2024, is almost identical to the amount in 2020 (220.86 billion dinars versus 219.9 billion dinars).

To address these challenges, it is crucial to establish a comprehensive strategy that promotes responsible business practices, transparency in financial transactions, and discipline in payments. Implementing strict payment rules, along with penalties for non-compliance, is an essential component of this strategy from the state’s perspective. It is also necessary to encourage a culture of efficient financial management so that companies are aware of and responsible for their financial obligations.

Establishing financial discipline will not only provide a foundation for sustainable economic growth and stability but will also enable the Serbian economy to manage its resources more efficiently and achieve its full potential in the global market.

Having followed the market dynamics and successfully operated within it for many years, on behalf of EuroSolutions, we are in a position to recognize potential risks to a particular company and provide tailored insurance offers to each client.

Strategic steps for identifying, assessing, and managing risks to ensure stability and prosperity are the main elements of accounts receivable insurance. The first step in this process is a thorough analysis of the financial stability of companies worldwide. Advising clients is undertaken as the second step to optimize contracts and identify risk signals in partners. Finally, accounts receivable insurance provides protection against losses in the event of customer insolvency, giving clients the necessary security for successful operations.

Risk management is not just a necessity but also a key element of competitiveness. This dual insurance, which provides information on the reliability of business partners before concluding deals, not only improves transparency but also facilitates significant decision-making