BNR Survey: The majority of companies cited fiscal problems as their main concern

  In a survey conducted by the National Bank of Romania (BNR), the majority of companies cited fiscal problems as their main concern. High taxation levels were identified as the primary difficulty by 61% of respondents, followed by the unpredictability of the fiscal environment (56%), the high number of fees and taxes (48%), bureaucracy (48%), and mandatory regulations (33%).   The survey is carried out every six months by the NBR in March and September. In the current edition, it took place between March and April 2024.   The importance of these issues varied with company size: SMEs placed greater emphasis on the level of taxation, number of taxes, and bureaucracy, while corporations were more concerned with the unpredictability of the fiscal/legislative environment and mandatory regulations.   More than half (56%) of Romanian companies perceived a deterioration of the economic situation at the national level in the last six months, according to the results of a survey carried out by the National Bank among more than 11,000 companies. The biggest problems facing domestic firms are high costs (54%), competitive pressure (43%), and fiscal or regulatory issues (41%).   Access to financing ranks last among the pressing problems (13%). Labor availability challenges have intensified for large firms (58%) but have eased for SMEs. Low payment discipline, previously the least pressing issue, saw a notable increase this year (+11 percentage points), especially among SMEs. Nearly half of the companies experienced delayed payments from trading partners in the last 12 months, with more than half facing this occasionally and 10% frequently encountering late payments from both public and private entities.   Romanian companies increasingly prefer internal resources for financing. In the past 12 months, 81% of non-financial companies used internal funds (e.g., temporary availability, reinvested profit, or asset sales) for operations, investments, or other projects. Commercial credit remains a popular financing source, with growing interest in bank credit (10% up from 7% in 2021). However, only 10% of companies use bank loans, highlighting the low financial intermediation in the domestic economy. The use of European funds is minimal, with only 2% of companies accessing this financing, leading to significant opportunity costs. Additionally, just 5% of non-financial companies used external resources for hiring or training employees.   The financing practices of SMEs indicate a need for increased financial education. A significant 73% of non-financial companies did not seek financing from banks or IFNs in the past 12 months, a figure that has remained constant since the previous assessment.   Construction firms exhibit the highest degree of optimism across almost every factor analyzed, consistent with previous survey results. In contrast, the services and utilities sector reports the lowest evaluations regarding relationships with business partners, financial institutions, and development prospects.   Most companies in the industry sector perceive a deterioration in both their own situation and their development prospects.   Cost issues are most significant for companies in industry (68%), trade (56%), and construction (54%), while only 45% of agricultural companies consider costs a pressing issue.   The shortage of well-qualified labor and demographic challenges are structural vulnerabilities nationwide. The lack of well-trained labor is particularly problematic for companies in construction and real estate, with a 7 percentage point annual increase in companies highlighting this issue. This problem is most frequently reported by companies in the capital and Ilfov region compared to other regions.   The sectors most affected by insolvency, either their own or that of their partners, are services and utilities (28%) and trade (19%), while agricultural companies are the least affected (2%).   Insolvent companies accounted for more than a quarter of non-performing bank exposures, the stock of companies in insolvency proceedings in December 2023 being approximately 23,000 companies, a level similar to that recorded in 2022.