Bank of Lithuania
2018-04-09
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Increasingly more enterprises plan business expansion from their own funds, while enterprises that are short of them believe that banks limit crediting, shows the latest survey of the Bank of Lithuania.

‘While crediting in Lithuania has for some time been viable, quite many enterprises still claim that getting a loan is complicated. Such sentiment is rather characteristic of small businesses; however, actual lending data shows that crediting has been growing for them as well – recently even more rapidly than for large enterprises,’ said Andrius Škarnulis, Head of the Macroprudential Analysis Division at the Bank of Lithuania.

About 40% of surveyed enterprises plan business expansion in the foreseeable future, mostly small enterprises and those engaged in the provision of services. It is planned to allocate nearly half of funds necessary for expansion for the upgrading of equipment. This shows that enterprises have been increasing their operating efficiency, thus seeking to offset their wage raising costs. For part of enterprises, investment activity is, however, suppressed by unfavourable expectations about future prospects.

The share of enterprises that are going to finance their business expansion from internal resources has picked up by almost a tenth, to 44%. Trade enterprises planned to choose this mode of expansion most often, production enterprises – most rarely.

The survey also showed that about 5–6% of quoted enterprises intend to finance or are already financing them by attracting funds via initial coin offerings (ICO). Large enterprises and enterprises engaged in trade intend to be most active in using this facility.

Almost half of the surveyed reported that business lending is currently limited. The share of so thinking rose by 7 percentage points over the half-year. According to the survey, bank credits are less easily available to small and trade enterprises: about 20% and 15% respectively complained about completely limited lending. Within the segment of large enterprises, this share accounted for just 6%.

However, enterprises hold the opinion that, when taking a decision regarding granting of a loan, credit institutions consider the borrower’s ability to repay the loan and the existing debt level as the major factors.  

Slightly more than a fourth of enterprises expect the exports of their production are likely to grow over the next twelve months. A third of the surveyed enterprises plan to raise prices for their production or services. Compared to the previous half-year, these proportions remained almost unchanged. One-fifth of the surveyed participants projected though that the internal demand would fall over the next six months. This share increased by 5 percentage points.

When asked which reforms should be implemented first, half of the surveyed enterprises named the tax area, small and medium as well as construction enterprises in particular.