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May 22, 2022

Croitoru, BNR: Companies in insolvency no longer manage to recover

The advisor to the National Bank of Romania (BNR) governor, Lucian Croitoru, claims that only 0.7 pc of companies in insolvency manage to reorganize, reiterating that companies in insolvency procedure seriously affect payment discipline across the economy, according to Money.ro. Thus, out of the over 70,000 companies which initiated insolvency procedures between 2007 and April 2011, 0.7 pc have managed to continue their activity following a restructuring, bankruptcy procedures were initiated for 72 pc and, out of the latter, approx. 65 pc were expunged from the registry.

“Between 2008 and 2010, major payment incidents created by these companies in the year in which they initiated the insolvency procedure accounted for an average 30 pc out of major incidents reported by companies across the economy,” Croitoru stated, during the conference for the launch of the Romanian Factoring Association (ARF). On the same occasion, representatives of the Association estimated that the factoring market turnover could rise by about 20 pc this year, to approx. EUR 2.2 bln, a growth rate less dynamic than the 2010 one, which amounted to 29 pc.

During the same event, the BNR official also referred to the absorption of European funds, arguing this was not exclusively the job of the state, as the banks or the business community also had a responsibility to draw European funds. Croitoru also claimed, in a presentation delivered on Monday, during a conference on economic topics, that there was a resumption of cash flows in emerging countries, Romania included, which back the economy, but, at the same time, put a strain on inflation. “Until 2015, cash flows will contribute 2.9 pc to GDP growth, according to the IMF, 1 pc below the Romanian authorities’ estimates, of 3.9 pc. (…) In Romania, economic growth largely depends on what’s going on outside Romania. We are a small country and our evolution depends on what’s going on there and on decisions being made there,” Croitoru argued, quoted by Mediafax. He added that the notion that the engines of economic growth should be switched from consumption to investments was an error. The BNR advisor further said that consumption levels should be maintained within the limits set by budget restrictions.

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