In August, 32 billion kuna in unpaid obligations

Unpaid obligations of legal entities and entrepreneurs in Croatia at the end of August amounted to 31.9 billion kuna, which is 613 million kuna more than in the previous month, while on an annual basis, compared to last August, they are higher by 8.6 billion kuna or 37.1 percent, according to data from the Financial Agency.

At the same time, 30,764 insolvent legal entities with 39,808 employees at the end of August had unpaid obligations totaling 26.1 billion kuna, while the unpaid obligations of 39,853 individuals or entrepreneurs with 25,283 employees amounted to 5.8 billion kuna. Data from Fina, which is published in the publication "Economic Trends" of the Croatian Chamber of Commerce, show that the trend of increasing numbers of insolvent legal entities and their unpaid obligations, which has been present for two full years, continued in August, while the number of employees in these entities fluctuates monthly and has recorded a decline in the last two months. Unpaid obligations of legal entities in August amounted to 26.1 billion kuna, što is 565 million kuna more than in the previous month, and 7.5 billion kuna or 40.1 percent more than in last year’s August.

The number of insolvent legal entities (30,764) recorded an annual increase of 29.3 percent or nearly seven thousand, while the number of employees (39,808) is higher by 1.8 percent compared to last year’s August, but on a monthly basis, it is lower by 7.2 percent or 3.1 thousand individuals. For insolvent individuals or entrepreneurs, however, the number and amount of unpaid obligations have a slower growth dynamic on both a monthly and annual basis compared to legal entities. The unpaid obligations of entrepreneurs of 5.8 billion kuna are higher by 48 million kuna compared to the previous month, while on an annual basis, they have increased by 1.1 billion kuna or 24.9 percent. Analysts from the Center for Macroeconomic Analysis of the Croatian Chamber of Commerce note that unpaid obligations of legal entities are growing in all maturity periods, with the fastest growth in the period up to 60 days što indicates an increase in current illiquidity.

In July and August, these obligations are growing at an average rate of 26 percent and are higher by about 296 million kuna. However, they note that the largest growth of insolvent legal entities and the number of employees is recorded in the period from 181 to 360 days. For legal entities, the trend of increasing unpaid obligations based on taxes and contributions has continued, which in August recorded a slightly slower growth dynamic compared to total unpaid obligations. Compared to July, they are higher by 1.3 percent, and on an annual basis by 37.8 percent, totaling 12.7 billion kuna (11.1 billion kuna for taxes and 1.6 billion kuna for contributions). Of the total unpaid obligations, more than 70 percent relates to three activities – trade (34.3 percent), construction (18.9 percent), and manufacturing (17 percent).(H)