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Macedonia toughens the fight against insolvency.

Finance Minister Zoran Stavreski informed that the Law on Financial Discipline is in its final stage and will soon be launched in a government procedure.

"This law will help protect the creditors and improve the solvency in the economy by projecting clear and precise deadlines for paying the obligations in the private sector," said Stavreski.

The basic deadline for paying the obligations will be 60 days and the deadline can be extended to a maximum of 120 days if the two entities in the private sector agree.

"The same deadlines are envisaged for payment of the state's obligations toward the private sector in order for them to be paid in due time," Stavreski said.

According to the Minister, it is a matter of European guidelines that will have to be implemented in Macedonia and help improve the discipline in payment as there are many cases where stable companies do not pay to smaller firms.

"Usually smaller and medium firms are mostly struck by such indiscipline and this will introduce systemic order in this sector, that is to say, I expect the solvency to be improved and help all firms that work in accordance with the law and that want to collect their money," Stavreski underlined.

In case that the deadline is not observed, contributions in a form of penal interest will be charged for every day of delay and there will be fines for the responsible person in the firm or the state institution or the firm itself, that is to say, institution.

The fight against financial indiscipline within the EU resulted with a new Guideline that entered into force on 23 February 2011 while the EU member-states states got a deadline of two years until 16 February 2013 to implement it in the national legislations.

The guideline limits the general deadline for payments in all transactions and in the public and private sector to 30 days and only this deadline can be extended to 60 days in isolated cases. Also, this guideline prescribes deadlines and sanctions regardless whether it is about payments between private or state firms. The problem with the delays in the payments is not only seen in Macedonia, because before the adoption of this Guide-line, the EU was trying for many years to reduce the financial indiscipline too.

With the adoption of the Small Business Act, it became clear that the old system does not provide good protection from delays with the payment and that it is important for the EU member-states to additionally promote the culture of payments.

Macedonia is currently only an EU candidate-country but it is slowly adjusting its legislation, especially in the sphere of business climate and finances.

DB 2013      60   DB       56       Change in    [down
Rank             2012               Rank        arrow]-4
                 Rank

Indicator               Macedonia    Eastern     OECD
                                    Europe &
                                    Central
                                     Asia

Time                         2.0        2.4       1.7
(years)

Cost (% of                  10.0       13.0       9.0
estate)

Outcome (0                     0          0       1.0
as
piecemeal
sale and 1
as going
concern)

Recovery                    42.2       36.9      70.6
rate (cents
on the
dollar)

Source: Doing Business 2013
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Title Annotation:BANKING
Publication:Macedonian Business Monthly
Geographic Code:4EXMA
Date:Oct 1, 2013
Words:514
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