The European Investment Bank signed in Luxembourg two loans for up to EUR 268 million for key investments in Cyprus.

EUR 200 million to the Republic of Cyprus will provide timely support for the implementation of the Cypriot National Strategic Reference Framework (NSRF). It focuses on sustainable development, competitiveness and human capital. The operation is structured as a framework loan and will be used by the Cypriot state for investments in priority areas identified in the National Strategic Reference Framework.

The investments to be financed are grouped around selected priorities of two comprehensive Operational Programmes (OPs) of the Republic of Cyprus. The schemes implemented within these OPs are expected to contribute primarily to the achievement of objectives in Sustainable Development and Competitiveness, as well as Employment, Human Capital and Social Cohesion. The investments will address long-term objectives of the Cypriot economy in the sectors of solid waste management, port infrastructure, renewable energy, knowledge economy, human capital, SMEs and sustainable urban development.

The EIB has provided similar loans to other EU countries, including Greece, Romania, Latvia, Lithuania and Hungary. The EIB has also financed the Cypriot national contribution to operational programmes in the 2004 -2006 programming period.

EUR 68 million will support the Limassol-Amathus Sewerage and Drainage Project, which, having commenced in 1992, is being implemented in several phases bringing the system in line with the requirements of the EC Urban Wastewater Treatment Directive.

The project includes an all-round upgrade of the existing main collector system. Upon completion in 2017, the project will extend the service area for wastewater collection, and will provide an additional wastewater treatment plant of 100,000 population equivalent, as well as sludge processing facilities for the existing and new wastewater treatment plant, storm water drainage and retention structures and related works.

Liquidity squeeze as business debt write-offs escalate - Research by leading European credit management services company, Intrum Justitia, shows that European businesses are being severely squeezed by liquidity problems.

57% of businesses claim to have problems with liquidity due to late payments, an increase of 10% in the last twelve months. The Intrum Justitia European Payment Index 2012 (EPI 2012) also shows the debt written off by European businesses reaching a record high of €340 billion.

The EPI 2012 survey of more than 7,800 European businesses in 28 countries shows that the European economy is a mixed picture – both in relation to problems with liquidity and written-off debts. Germany and the Nordic countries show considerable strength, whereas other countries, primarily in South and East Europe, are facing great problems.

“The fragmented picture that appeared in last year’s EPI has even been reinforced this year. Alarmingly high shares of businesses in countries such as Greece, Portugal and Spain have problems with liquidity due to late payments. Written-off debts also continue to rise in several countries. In Greece, Bulgaria and Romania, more than one out of every €20 in sales is written off as bad debt. Larger economies such as the UK and Poland are also displaying surging debt write-offs,” comments Intrum Justitia CEO, Lars Wollung.

The prolonged economic and financial difficulties are starting to take a toll. 55 percent of businesses claim that the recession has lead to problems with liquidity, a 17 percent rise over the previous year.

The eighth edition of the EPI also shows that businesses are trying to handle the liquidity problems by decreasing the contracted days to payment. On average, the number of contracted days to payment in business-to-business payments has decreased from 36 to 32 days. The average number of days in payment delay remains at 20 days.

“Businesses in Europe are trying to cope but are caught in a vicious circle trying to pay their invoices as late as possible and trying to get paid as early as possible”, says Lars Wollung.

The measures taken by European and International bodies to stall the international financial crisis in general and the Euro crisis specifically have to a large extent focused on saving the banks and the financial system. The survey, however, shows that 47 percent of business in Europe claim to have less confidence in banks being able to support them, whilst only 5 percent claim to have more confidence. This indicates that only a small fraction of financial help actually reaches the businesses.

“A working financial system is vital for the economy as a whole, but if the vast sums spent on saving the banks never trickle down to the businesses that produce goods and services, the road to economic recovery will be a long and rough ride. Businesses’ low confidence in banks is very troubling. An even more striking insight is that only three out of ten businesses are confident that governments will be able to support them,” says Lars Wollung.

With low confidence in banks’ and governments’ ability to support them, businesses in Europe are left on their own. Nor does the situation appear to offer any hope of improvement in the near future – 94 percent of businesses see the risks from their debtors increasing or remaining at the same level in the next 12 months. Intrum Justitia therefore suggests the following ten steps to help businesses help themselves:

1. Create and implement a solid credit policy to manage your risks and increase revenue
2. Follow up on every step in your credit management process
3. Make sure you identified the customer you are doing business with
4. Make a clear agreement with your customer stating all conditions for your business
5. Integrate sales, marketing and financial department in avoiding defaults
6. Implement customer address checks regularly
7. Monitor economic & industry information, and the solvency of key customers
8. Implement swift reminders and possibly charge default interest
9. Always extend and balance your customer structure
10. Never, ever wait, always take immediate action to get paid

Download EPI 2012 Europe Map

Download EPI Tables 2012

About the European Payment Index
The survey was conducted simultaneously in 28 countries between January and March 2012. The survey was conducted in written form and more than 7,800 companies responded. This is the eighth year that Intrum Justitia has run the survey. 

The questionnaire was translated into the respective national languages. Dispatch and return of the questionnaires were carried out on a decentralized basis by the countries concerned, whereas the analysis was carried out centrally in accordance with predetermined guidelines. All information has been verified and uncertainties were not included in the evaluation. Furthermore, not all anonymously sent questionnaires were taken into account for the evaluation. Companies in England, Wales, Scotland and Ireland were questioned online by a specialized company (BING Research). Bulgaria, Slovenia and Romania were researched by the countries and double checked against a separate on-line survey by a specialized company (BING Research).

The credit crunch has been tougher for small and medium-sized businesses than for large companies, according to newly compiled OECD data.

An OECD Scoreboard finds that small and medium-sized enterprises (SMEs) requesting loans between 2007 and 2010 faced higher interest rates than for large companies. Loan conditions for SMEs included shortened maturities and increased demands for collateral.

Although interest on loans to SMEs trended downwards throughout the financial crisis, the interest rate spread between SMEs and large firms increased, including during the tentative recovery of 2010. The easier credit terms for large companies suggests that smaller firms were considered to be a higher risk with poorer business prospects, the report says.

SMEs are crucial engines of economic growth, jobs and social cohesion, according to the OECD. In many countries they represent around 99% of all firms. Access to finance remains one of the biggest challenges in the creation, survival and growth of small firms.

Analysing data from 18 countries, the report finds that business loans to SMEs fell sharply during the recession and although they picked up somewhat in 2010, they generally failed to reach their 2007 levels. Venture and growth capital also suffered a big drop during the period studied.

The fall in demand for goods and services during the crisis, combined with tighter credit conditions, hit the cash flow and liquidity of SMEs hard, resulting in increased payment delays. Many firms were forced into bankruptcy, contributing to the continuing high levels of unemployment levels in many regions.

The OECD report fills a longstanding gap in data needed to monitor SME finance using comparable indicators.  To be released annually, it aims to increase understanding of SME financing needs, help in the design and evaluation of policies and monitor the implications of financial sector reforms on access to funding for small businesses. The report provides detailed country profiles of financial conditions for SMEs.

Financial inclusion was identified as a G20 priority at the Seoul Summit in December 2010. In 2011 leaders of the G8 countries meeting at the Deauville Summit tasked the OECD, along with a number of international institutions, to identify impediments to SME growth.

The countries covered in the report include: Canada, Chile, Denmark, Finland, France, Hungary, Italy, Korea, The Netherlands, New Zealand, Portugal, the Slovak Republic, Slovenia, Sweden, Switzerland, Thailand, the UK, and the US.

Get more information here

The Internet economy is growing more than 10 percent per year in the G-20 nations.

No one—no individual, business, or government—can afford to ignore its ability to deliver more wealth to more people more broadly than any economic development since the Industrial Revolution.

This report quantifies the Internet’s economic impact. Read more at Boston Consulting Group – The Connected World

The international rating agency Moody's downgraded euro member Cyprus into junk status Tuesday on heightened concerns over the exposure of its large banking sector to Greece.

Read more here

The European Parliament gave its first green light to the roaming overhaul, reducing the price caps on cross-border mobile telephone services.

Parliament's industry committee voted in favour of a compulsory reduction of cross-border mobile tariffs, which is stricter than what the European Commission proposed.

Instead of the 24-cent cap (excluding VAT) on outgoing calls suggested by the EU commissioner in charge of telecoms issues, Neelie Kroes, MEPs led by Germany's Angelika Niebler (European People's Party) are proposing to bring the ceiling down to 15 cents from July 2014.

Text messages should not cost more than 5 cents, said MEPs, while Kroes had proposed a cap of 10 cents from July 2014.

The deepest cut is on the price of data accessed while abroad. The Commission wanted to put a ceiling of 50 cents per megabyte, while the Parliament more than halved it to 20 cents from July 2014.

The Industry, Research and Energy Committee proposals have to be supported by the plenary of the European Parliament, which is expected to vote on the legislation in April. Negotiations with member states will start shortly in order to find a common ground among the EU institutions. “I count on a deal being done by Easter,” Niebler said.

MEPs proposed to further slash caps in a bid to attract consumer praise – and possibly votes. Indeed, for the industry it remains hard to justify higher prices for roaming than for domestic services. Costs are in fact not very different and often even lower.

Many observers still wonder why a phone call from Brussels to Cologne (some 200 km away) should cost much more than the same call from Cologne to Berlin (over 500 km away) just because there is a border in-between. Switching networks is not a sufficient justification since many operators already operate across the EU. Users often change networks for their domestic calls, too, argue MEPs.

Doing Business in a More Transparent World assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders.

This year’s report data cover regulations measured from June 2010 through May 2011. The report rankings on ease of doing business have expanded to include indicators on getting electricity. The report finds that getting an electrical connection is most efficient in Iceland; Germany; Taiwan, China; Hong Kong SAR, China; and Singapore.

Key findings:

Morocco improved its business regulation the most compared to other global economies, climbing 21 places to 94, by simplifying the construction permitting process, easing the administrative burden of tax compliance, and providing greater protections to minority shareholders. Since 2005, Morocco has implemented 15 business regulatory reforms.

Besides Morocco, 11 other economies are recognized as having the most improved ease of doing business across several areas of regulation as measured by the report: Moldova, the former Yugoslav Republic of Macedonia, São Tomé and Príncipe, Latvia, Cape Verde, Sierra Leone, Burundi, the Solomon Islands, the Republic of Korea, Armenia, and Colombia.

The Republic of Korea was a new entrant to the top 10. 

Governments in 125 economies out of 183 measured implemented a total of 245 business regulatory reforms—13 percent more reforms than in the previous year. In Sub-Saharan Africa, a record 36 out of 46 economies improved business regulations this year. Over the past six years, 163 economies have made their regulatory environment more business-friendly. China, India, and the Russian Federation are among the 30 economies that improved the most over time.

Singapore led on the overall ease of doing business, followed by Hong Kong SAR, China; New Zealand; the United States; and Denmark.

Here can you View the rankings

Download the full report here