Linić promised to halve illiquidity

Croatia plans to reduce unpaid receivables, or illiquidity, from a record 45 billion kuna to just over 20 billion kuna by the end of the year, and from June 1, the state will not owe anyone for more than 60 days, emphasized Finance Minister Slavko Linić today at a seminar on payment delays.

How to solve illiquidity, which is a major problem both in Croatia and in Europe, and familiarization with the new European directive, was the topic of an informative seminar on the issue of delayed payments organized by the European Commission held at the Sheraton hotel in Zagreb.

“In less than five months, since the implementation of the Financial Operations Act, illiquidity has been reduced from 45 to 37 billion kuna, which is a huge success,” said Linić, adding that the law has fully aligned payment rules with the European directive.

Linić reminded that the greatest resistance to the law came from the Croatian Employers’ Association and its leaders who are bothered by payment deadlines, and he believes that efforts here are not appreciated.

“The result of our work is that the 45 billion kuna in debts will be reduced by the end of the year to just over 20 billion kuna in unpaid bills and that after June 1, the state will not owe anyone for more than 60 days. No one in Europe has managed this,” said Linić.

He emphasized that the implementation of the law in Croatia is far superior to that in many EU countries and that Croatia is seriously addressing the problem of illiquidity, reminding that the situation the Government encountered was catastrophic.

The largest portion of blocked accounts, even 65 percent, he said, relates to companies that have no employees or have one employee. By sectors, the largest number is in construction, 31 percent, trade 24 percent, and business services, 12 percent.

Minister of Entrepreneurship and Crafts Gordan Maras stated that small and medium-sized entrepreneurs are particularly sensitive to illiquidity as it prevents them from normal operations, leading to company closures.

“But there is also a visible trend of reduction compared to previous years, of about 20 percent,” said Maras.

The latest data from the European Payment Index for 2013 shows that about 73 percent of Croatian companies have liquidity problems due to delayed payments, and that the average payment was 50 days for transactions between companies and 60 days for transactions between public administration and companies.

In Europe, there are also more and more companies on the brink of collapse due to unpaid bills, and companies in the EU lost as much as 340 billion euros in 2012 due to payment delays, which is more than double the EU budget. Due to the inability to pay, 450,000 jobs were lost, it was emphasized at the meeting where Directive 2011/7/EU was presented, which is the EU’s tool to combat unpaid debts.

Finance Minister Linić also stated that he expects the Government and bankers to find common ground on amendments to the Consumer Credit Act.
“The protection of citizens and a fair relationship towards citizens requires a change in the banking system. Bankers have shown goodwill in many areas, especially in pre-bankruptcy proceedings, and I am convinced that we will find a common solution,” he said.