In the absence of concrete measures to alleviate the crisis this year, between 140,000 and 160,000 jobs could be lost in Serbia, according to the latest analysis of the International Monetary Fund (IMF) after the fourth revision of the arrangement with Serbia.
It is emphasized that several monetary and fiscal measures taken by the Serbian authorities so far have mitigated the impact of the crisis. The reduction of the interest rate, state guarantees for loans to small and medium enterprises and subsidized loans from the Development Fund have reduced interest costs in the short term, Nova ekonomija reports.
However, it is stated that the approval of new loans could affect the ability of companies to pay interest in the period when they are normalized again.
In addition to good balance sheets in companies in recent years, it should be borne in mind that a pandemic could increase unemployment.
The IMF also notes that from 100 to 120 thousand workers in Serbia are employed in companies that have problems with paying interest and liquidity.
It would be good for the state to continue with the aid measures
Particularly sensitive are sectors such as machinery and equipment, retail, wholesale, transport and catering. The company’s risky debts could also increase by more than 40 percent by the end of 2020, if measures are not taken to mitigate that situation.
The total annual income of the company should increase from 23 to 33 percent this year. Sectors such as utilities, catering and construction benefit greatly from state aid.
In areas such as education, food and beverage production, more benefits are expected from fiscal policy, and in transport, mining and telecommunications, the return on invested capital was 10% higher.
As for the level of indebtedness, it seems that Serbian companies are generally less burdened than firms in similar countries, indicating less developed debt markets.
However, companies in Serbia have also benefited from large inflows of foreign direct investment and retained earnings as a source of funding in recent years.
In the mining, construction, wholesale and retail sectors, the average EBIT (profit before taxes and taxes) covered interest costs 6 to 9 times at the end of 2019.
However, about 15 percent of companies suffered losses during 2018 and 2019, in the construction, machinery and equipment sectors, and the IMF emphasizes that these “zombie companies” held about 20 percent of the total debt of all companies that entered their analysis, Srbija Danas reports.
