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Tag: coronavirus

  • Garanti BBVA Leasing, EUR 7 million for micro and small enterprises

    Garanti BBVA Leasing, EUR 7 million for micro and small enterprises

    Garanti BBVA Leasing is expanding financing opportunities for micro and small enterprises (MSEs) in Romania, by signing a loan agreement of EUR 7 million with the European Fund for Southeast Europe (EFSE).

    The investment aims to boost the ability of this vital business segment to preserve their operations as well as sustain and generate employment and income in light of the COVID-19 crisis.

    The new funding will be used to expand the institution’s leasing offer for local small businesses, a segment that has been severely negatively impacted by the economic effects of the coronavirus pandemic.

    Leasing provides an important source of long-term financing to smaller businesses which may not have the extensive collateral necessary for bank loans.

  • Central European private equity firms hit lowest confidence level

    Central European private equity firms hit lowest confidence level

    Central Europe’s private equity (PE) firms’ confidence hits lowest level since the global financial crisis, as a result of the COVID-19 impact, but deal-doers are more optimistic than during the 2008 crisis, according to the latest Deloitte CE Private Equity Confidence Survey.

    The confidence index, which has been decreasing since the end of 2017, is now at 62, the second historical lowest after October 2008, when it reached 48.

    Seven in ten professionals in Central Europe private equity houses forecast a decline in market activity and worsening economic conditions, given that the regional economies, which are largely consumer-driven, are expecting significant GDP contraction in 2020 amid demand shrink caused by unemployment rise.

    The survey results also indicate a noteworthy proportion of believers in a quick economic recovery, as 13% of respondents actually expect conditions to improve.

    The pandemic is creating a buyers’ market, with 74% of the survey respondents believing 2020 will be a good vintage.

    Nearly half (45%) of them believe vendors have decreased their price expectations over the last six months, and over half (51%) believe they will continue to do so. As a result, the proportion of PE firms expecting to focus on new investments in the coming months remains relatively high, of 45%.

    In terms of deal sizes, most private equity houses expect them to stay the same (58%) or decrease (43%). Also, 62% of the survey respondents expect liquidity to decrease over the coming months.

    The survey results also show a steep increase in the proportion of respondents who feel the efficiency of their CE financial investments will decline, the second-highest percentage in the survey’s history, after the one reported in the autumn of 2008.

    Nearly a third (30%) expect efficiency to decline, up from just 6% in the previous survey and 0% a year ago.

  • The global transactions landscape has come to an abrupt standstill due to the pandemic

    The global transactions landscape has come to an abrupt standstill due to the pandemic

    The global transactions landscape has come to an abrupt standstill due to the COVID-19 pandemic, as companies preserve cash and grapple with the immediate impact of the crisis.

    EY research, however, reveals that companies that make bold decisions on their transaction and strategic investment plans early on after a crisis are the ones that benefit the most in the long-term.    

    Reviewing transactions in the immediate period (2008-2010) after the Global Financial Crisis (GFC), EY research found that companies that were early movers and made bold choices on portfolio-transforming transactions saw a 25% increase in total shareholder return (TSR) over the following decade, compared to those that didn’t.

    Businesses that made acquisitions saw 26% higher returns for shareholders. Those companies that proactively reshaped their portfolios by taking the harder, but more decisive, step to divest assets also reaped rewards achieving 24% higher returns over the same period.

    In further evidence that companies that invested their capital following the GFC gained in competitive advantage, the research found that they saw two- or three-times higher returns over those that took a cautious approach.

    Industry drivers behind pick up in M&A

    With M&A activity across all sectors affected by the COVID-19 pandemic, the drivers that are likely to lead to a shift up in gear for deals vary considerably by industry, according to EY analysis.

    In the healthcare sector, M&A activity is likely to be boosted by large companies buying innovative players in the cell and gene therapy space, as scientific advances continue to showcase the promise of these personalized therapies. A surge in joint ventures and alliances is also on the cards for the sector, as companies look to build the large-scale manufacturing and supply chain expertise required to scale-up delivery.

    The media and telecoms sectors look set to overcome challenges caused by the shutdown and capitalize on the continued shift in consumer preferences for digital entertainment media.

    Whereas, in the technology sector, established players who are looking to augment their capabilities, especially in cloud and customer engagement, will expand their market share and increase their top line by capitalizing on the attractive pricing of innovative start-ups.

    In retail and industrials, combinations aimed at shoring up balance sheets and companies’ ability to generate higher levels of cash flow and boost cash reserves will help spur up activity. At the same time, transactions in the automotive sector will be driven by existing market trends, such as the shift to fully electric vehicles.

  • Companies redirected almost half of the marketing budgets towards social media

    Companies redirected almost half of the marketing budgets towards social media

    During the COVID-19 pandemic, companies redirected almost half of the marketing budgets (46%) towards social media and mobile activities, according to the latest edition of Deloitte Chief Marketing Officer (CMO) Survey, twice as much as before the pandemic.

    The study also emphasizes that marketers anticipate a continuous growth for mobile spending over the next 12 months, while spending on social media will remain close to the new high level.

    Deloitte CMO Survey was the result of an analysis of almost 300 responses from top marketers active in 13 industry sectors in US.

    Three quarters of the respondents used social media mainly for brand awareness and brand building (84%) and over half of them focused social media activities on the retention of current customers (54%) and the gain of new customers (51%).

    Additionally, the study underlines that social media’s contribution to the company performance spiked during the pandemic, with a 23.5% increase from February 2020.

    Another finding is that marketers make little use of influencers campaigns, as only 8% of their budget is allotted to online influencers on social media such as LinkedIn, company blogs, Instagram, Facebook and others.

    Respondents anticipate that in the next three years they will increase their budget allocated to influencers to 13% of the total marketing budget, and the highest growth is expected in industries such as banking and professional services.

    Despite a 70% increase in mobile spending during the pandemic, marketers observe a very little lift in mobile’s contribution to company performance, as 28% of respondents believe that mobile activities don’t help at all in performance improvement.

    The study also highlights that when investing in mobile activities, marketers demonstrate a clear prioritization of mobile website optimization (70%) over app creation and maintenance (30%).

    The role of the marketing department inside the companies changed during the COVID-19 pandemic, as almost two thirds of the respondents (62%) report that marketing function has increased in importance, with business-to-business (B2B) companies seeing this increase most strongly at 63% (B2B products) and 72% (B2B services).

    Alongside a recognized key role of the marketing function, findings of the study reflect the importance of the priorities set by the organization for the marketing department, such as retaining customers and maintaining brand awareness, as the pandemic raised the marketing budget to 12.6 % of the firm’s overall budget compared to the pre-pandemic period (11.3%).

    This importance is striking given the fact that marketers are doing more with fewer people, as 9% of the marketing jobs were lost during the pandemic. Workforce inside the marketing function could raise concerns in the nearest future, as a quarter of respondents (24%) anticipate that these jobs will never return.   

  • COVID-19 pandemic slows global IPO activity in 2020

    COVID-19 pandemic slows global IPO activity in 2020

    The impact of the COVID-19 pandemic continued to play a significant role in declining IPO activity in the first half of 2020 – as shown in the quarterly report EY – Global IPO trends: Q2 2020.

    Overall, Q2 2020 saw a decline in IPO activity from Q2 2019 across all regions by deal numbers and for the Americas and EMEIA by proceeds.

    Global IPO activity slowed dramatically in April and May, with a 48% decrease by volume (97 deals) and a 67% decrease in proceeds (US$13.2b) compared to April and May 2019.

    This dragged down 1H 2020 regional activities compared with 1H 2019 and overall YTD deal volume (419 deals) and proceeds (US$69.5b) decreased 19% and 8%, respectively, from YTD 2019.

    Despite a late flurry of deals in June, global IPO activity was sluggish on Americas and EMEIA stock exchanges YTD, while Asia-Pacific IPO activity increased.

    Americas deal volume (81 deals) and proceeds (US$24.5b) both fell by 30% compared with YTD 2019, while EMEIA IPO deal volume (68 deals) and proceeds (US$10.1b) fell 50% and 44%, respectively.

    Asia-Pacific IPO activity rose 2% by deal numbers (270 deals) and rose 56% by proceeds (US$34.9b) compared with YTD 2019.

    The technology, industry and health sectors dominated IPO activity in the first half of 2020

    The technology, industrials and health care sectors dominated in YTD 2020. Technology saw 87 IPOs raise US$17.2b, industrials saw 83 IPOs raise US$9.6b and health care had 76 IPOs that raised US$15.9b.

    Americas deal landscape slows

    US exchanges still accounted for the majority of IPOs in the Americas in the first half of 2020, with 79% by deal volume (64 deals) and 91% by proceeds (US$22.3b); this included five unicorn IPOs.

    The health care and technology sectors continued to have the highest level of IPO activity in the US in YTD 2020, representing 55% and 25% by deal volume, respectively. The health care sector dominated in proceeds (US$10.2b), contributing 46%, from 35 IPOs.

    The Mexican stock exchange posted one IPO valued at US$1.1b, making it the eighth-largest IPO globally in Q2 2020.

    Asia-Pacific IPO activity remains stable

    Although year-on-year YTD 2020 IPO activity in Asia-Pacific rose by deal number (2%) and proceeds (56%), Q2 2020 saw a decline of 18% compared with Q2 2019 by deal number, while proceeds rose by 28%.

    Asia-Pacific exchanges accounted for four of the top five exchanges by deal volume and three of the top exchanges by proceeds. Globally, by proceeds, NASDAQ led YTD 2020, followed by the Shanghai Stock Exchange and Hong Kong Stock Exchange. By deal volume, Shanghai, Hong Kong and NASDAQ markets led the way.

    In Greater China, IPO activity was up 29% by volume (179 deals) and 72% by proceeds (US$30.9b) YTD 2020 compared with YTD 2019.

    In Japan, IPO volume (34 deals) declined 17% YTD 2020, while proceeds (US$625m) dropped by 53%. Australia and New Zealand IPO activity was also down YTD — 41% by volume and 82% by proceeds.

    EMEIA also sees IPO deal slowdown

    After a strong start to 2020, YTD IPOs (42) and proceeds (US$7.8b) declined 47% by volume and 48% by proceeds in Europe, as the COVID-19 pandemic significantly curtailed IPO activity from March through to May.

    In the Middle East and North Africa (MENA), IPO activity was down 11% by volume (8 IPOs) and down 43% by proceeds (US$0.9b) YTD 2020.

    Indian exchanges saw 16 IPOs, which raised US$1.4b YTD 2020, a decline of 61% by deal number and 9% decrease by proceeds. There was also one IPO each on the Malawi and Bangladesh exchanges, which raised US$29m and US$7m, respectively.

    H2 2020 outlook: IPO rebound expected

    Given the COVID-19 outbreak and its negative impact on global economic activities, in the short to medium term, governments around the world will continue to implement policies and stimulate economies against rising unemployment.

    At the same time, central banks will inject more liquidity into the financial systems. Both actions bode well for equity markets and IPO activity in 2H 2020.

  • Four out of five CEOs expect remote working to continue on the long term

    Four out of five CEOs expect remote working to continue on the long term

    Four out of five CEOs expect remote working to become more widespread in their businesses, after finding that their prior concerns about productivity losses în lockdown were unfounded, according to PwC’s CEO Panel Survey, conducted in June and July 2020.

    A prior survey of PwC, CFO Pulse, from April showed that nearly half of the surveyed financial executives expected productivity loss because of a lack of remote work capabilities.

    Two months later, when asked again, just 26% of CFOs anticipated productivity loss in the month ahead.

    Two key themes emerged among our respondents, when asked about their priorities. The first one is the plan to make their companies more digital, by digitising core business operations and processes, and adding digital products and services.

    The second theme is that the CEOs plan to develop a more flexible and involved workforce by increasing the share of remote or contingent workers, and expand employee health, safety and wellness programmes.

    In this context, respondents believe shifts towards automation (76% of CEOs), low-density workplaces (61%), supply chain safety (58%), gig economy (54%) and public safety (50%) will have a lasting impact.

    More pessimism about global economy perspectives

    CEOs are significantly more pessimistic about the direction of the global economy over the next 12 months now than they were at the end of 2019, with just 30% saying economic growth will improve in the year ahead.

    And with good reason: The World Bank forecasts that the global economy will shrink by 5.2% in 2020, representing the deepest recession since the Second World War.

    As a result, CEOs also face uncertainty about their own operations, with only 15% indicating that they are very confident in their organisation’s revenue prospects.

  • Italian company launches a device for maintaining social distancing

    Italian company launches a device for maintaining social distancing

    Italian company IK Multimedia, based in Modena, launched Safe Spacer, a lightweight wearable device that helps workers and visitors maintain safe social distancing.

    Able to be worn on a lanyard, wristband or belt loop, Safe Spacer precisely detects when other Safe Spacer units come within 2m, alerting wearers with a choice of visual, vibrating or audio alarm.

    Using Ultra-wideband technology, Safe Spacer offers accuracy up to 10x better than Bluetooth, and can optionally store “collision” data to monitor compliance or perform fast contact tracing.

    Each device also features a unique ID tag and built-in memory to optionally associate with workers’ names for tracing unintended contact.

    For privacy, no data except the device’s ID and proximity is stored.

    Safe Spacer will be available in September directly from IK Multimedia, at the following prices:

    • Safe Spacer – $99.99/€85.00 each;
    • S-Charger – $299.99/€270.00 each;
    • S-Bridge – $139.99/€120.00 each.
  • 53% of entrepreneurs in CEE predict revenue declines over the next 12 months

    53% of entrepreneurs in CEE predict revenue declines over the next 12 months

    More than half (53%) of Central and Eastern European (CEE) entrepreneurs predict revenue declines over the next year due to the pandemic crisis, taking into account cost-cutting measures, employee training, developing new products and expansion into other markets, according to the PwC EMEA Private Business Survey 2020 report.

    Only 7% of CEE entrepreneurs believe that their businesses will grow this year, with 36% thinking they will maintain last year’s level.

    In this context, 31% of entrepreneurs have resorted to layoffs in recent months and 5% mentioned that they could do likewise in the next 12 months.

    Ensuring liquidity has become more important than ever, with 47% of respondents indicating that improved working capital management is needed to get through the crisis period. A quarter of them have increased their use of new technologies.

    Which are the biggest threats to business development

    For CEE entrepreneurial companies, the biggest threats to business development in the coming period are: regulations, as mentioned by 82% of respondents, followed by lack of skilled employees (73%), cyber security and IT (64%), new competitors (64%) and geopolitical uncertainty (64%).

    Coronavirus was mentioned by 45% of those interviewed, level with taxation and supply-chain disruptions.

    The flexibility to respond to disruptions, including pandemics, is limited by factors such as: dependence on several suppliers and partners (62%), need to adhere to regulations (51%) and limited availability of key talent (49%).

    Instead, providing sanitary security is the main success factor in the “new normal”, say 89% of respondents, followed by the efficient use of remote work (73%) and increasing the use of new technologies (67%).

    Other factors mentioned were expanding into new markets, launching new products and services, upskilling staff and more involvement of NextGen members in decision making and management.

    Other conclusions of the survey

    • 50% of entrepreneurs inCEE expect the global economy to decline in the next 12 months, 36% believe it will remain the same and 4% that it will show a moderate improvement.
    • Regarding the business strategy for the next two years, 60% of entrepreneurs said they will continue to develop their core business.
    • 58% of entrepreneurs believe that they have managed the impact of the COVID-19 crisis as well as their main competitors, with 22% saying they have managed it better.
    • The most important measures taken for managing the COVID-19 crisis impact, but also for the future, are enabling remote work (84%), working reduced hours, mandatory use of annual leave, holidays or overtime (67%), implementation of existing crisis plans.
    • The main measures taken in a crisis, before the pandemic, were cost savings (84%), entering new markets (84%), staff training (68%) and layoffs (53%).
  • Central Europe CFOs reach pessimism peak amid uncertainty caused by the COVID-19 pandemic

    Central Europe CFOs reach pessimism peak amid uncertainty caused by the COVID-19 pandemic

    Central Europe chief financial officers have reached a pessimism peak as their confidence about the economic outlook and the wider business environment continues to fall amid the uncertainty caused by the COVID-19 pandemic, according to the latest Deloitte CE CFO Survey.

    The study was conducted on more than 300 leading finance professionals in six countries – the Czech Republic, Estonia, Latvia, Lithuania, Poland and Romania.

    Almost three quarters of the respondents (72%) stated they were less optimistic about their companies’ financial prospects than before the new coronavirus outbreak, with Polish leading the top of the pessimistic (79%), followed by Romanians (75%).

    The study also shows significant shifts in the perceived levels of uncertainty facing respondents’ businesses, considering that an average of 36% respondents felt a high level of external financial and economic uncertainty in the pre-outbreak edition of the survey, compared to almost 70%, in the latest edition.

    In this context, the majority of CFOs across all industries think that conditions in 2020 and in the beginning of 2021 will not be favourable for taking more risk in financial decisions. Romanians are at the top of the risk-averse financial leaders, with 96% of respondents, followed by Estonians (94%) and Polish (92%).

    When it comes to predictions about inflation, most of the respondents foresee growth in consumer price index in their countries, with the highest expected rates in Poland (5.2%) and in Romania (4.7%).

    The most significant threat to business over the next year in CFOs view is the reduction in domestic and foreign demand, according to the survey. As a consequence, 62% of respondents expect their companies’ revenues will decrease.

    When asked about the most appropriate ways to finance the business in the current context, CFOs see internal financing (51%) and bank borrowing (42%) as the most attractive sources of funding.

  • Hotels in Romania record all-time low figures in 2020

    Hotels in Romania record all-time low figures in 2020

    A survey, prepared by Cushman & Wakefield in partnership with FIHR, targeting Romanian hoteliers was launched in April 2020 to understand the impacts the COVID-19 pandemic holds on the commercial lodging industry.

    The survey asses the ways in which business have been affected while identifying the critical factors to prevail from the crisis.

    The first cases of the coronavirus in Romania were announced on the 26th of February 2020, causing the government to call for a state of emergency by March 14 and restrict all international travel.

    While the sector recorded a 5% growth in overnight stays in 2019 compared to 2018, the ongoing COVID-19 outbreak and consequent government restrictions caused an unprecedent crisis for the industry.

    Taking into consideration the current market conditions and limited governmental support provided, 80% of hotels indicated being able to financially survive up to fourth months under the crisis conditions.

    Given that the survey was conducted between the months of April and May and that demand has not yet returned, the survival threshold for the majority of hotels will be reached in August. Although considerable efforts have been made by hoteliers to reduce operational costs, governmental support is urgently needed to protect employment in the hospitality sector.

    Similar to other countries across CEE, COVID-19 required hotels in Romania to shift priorities towards reducing overall operational expenses alongside sales & marketing costs in parallel to managing the influx of booking cancellations.

    On a Human Resource perspective, 80% of respondents focused on utilizing the subsidized leave provided by the government to address the COVID-19 crisis.

    Overall, Romanian hoteliers** revealed the actions taken towards diminishing the headcount to be positioned above average in CEE with hoteliers having reduced staff by 29% compared to a 24% average across CEE.

    Despite borders having reopened to the European Union as of June 1st, the difficult H1 calls for further staff reductions with combined redundancies reaching 38%.

    Government support leaving hoteliers wanting more

    Romanian hotel respondents expressed the highest level of dissatisfaction amongst other CEE countries with 85% of hoteliers stating unclear information being communicated by national authorities.

    Despite the satisfaction level for governmental support being relatively low, it is recorded to be higher than other CEE countries with 15% of hoteliers** being satisfied compared to 10% in other countries.

    As hotels reopen and prepare themselves for a road towards recovery, uncertainty remains on the ability to benefit from the support put forward by the government.

    Only 25% of hoteliers indicated having a clear understanding on how to be granted with access to the proposed support, while the vast majority remains unsatisfied with the ease of accessibility to such aid.

    While in many other countries governments already announced a specific help to tourism and hotel sector, for example direct financial grants in the Czech Republic, travel vouchers in Poland and aggressive campaigns promoting domestic tourism in Germany, there has been limited help to Romanian hotels so far.

    The road towards recovery

    In the weeks between April 24th and May 25th, 75% of hoteliers expressed being either ready or extremely ready to reopen their properties, with 87% being confident on being able to ensure the safety of both guests and employees.

    As hotels have reopened and others continue to prepare for reopening, hoteliers in Romania have expressed placing the safety of guests and employees at the heart of their strategies towards recovery.

    With COVID-19 causing major concerns among travellers and hotel personnel, the vast majority of respondents indicated being in favour of a new health and safety certification being established in Romania.

    Looking ahead

    The opening of European borders and lifting of travel restrictions has enabled the majority of hotels to re-open and enter the recovery phase despite the limited support provided by authorities.

    While very soft demand remains of most concern, hoteliers will also face challenge caused by increasing supply with several notable additions expected to open throughout the summer season.

    In comparison with other markets in CEE, Romanian hotels are less depended on international demand with nearly 80% of arrivals being domestic. While this factor will certainly help with the recovery, the slow anticipated return of business travel remains a concern, due to corporate demand acting as a major driver of occupancy in Romania.

    Nonetheless, multinational companies have recently expressed interest in relocating to Romania which will contribute towards boosting business demand on the medium to long term.

    In addition, while likely to primarily impact hotels in Bucharest, the European Football Championship planned for next year is hoped to have a positive impact on hotel performances and mark the recovery process towards driving healthy occupancy and ADR levels.

    The long-term outlook for the Romanian hotel sector remains positive, underpinned by the healthy tourism growth in recent years as well as continuous attractiveness of the country for international businesses, driving corporate and conference demand.

    Nevertheless, according to Oxford Economics, the number of nights in paid accommodations in Bucharest is expected to reach pre-crisis levels only between 2023 and 2024, but show a healthy growth in the following years.

  • First semester of the “pandemic year” in Bucharest office market

    First semester of the “pandemic year” in Bucharest office market

    New office space delivered in the first half of the year reached nearly 105.000 square meters, in tune with Colliers International’s estimates, but total demand in Bucharest was down by nearly 28%, to a bit over 124,000 square meters, while new demand halved after an exceptional year, to under 45,000 square meters.

    Overall, Colliers International consultants do not expect to see too much in terms of new contracts, except for companies that are actually pressured to relocate or expand, in the context in which their representatives have no clarity on how work processes will take place in the future or how their own business will evolve.

    Building activity in the office market continued almost normally during spring, even in the pandemic lockdown context, and there are no major delays for buildings due in 2020, with a potential pipeline of about 230,000 square meters, mainly already fully contracted or mostly pre-leased, according to data from Colliers International.

    The first half of the year saw a delivery of nearly 105,000 square meters in new modern office spaces, with the bulk coming online in the first quarter of the year. Two thirds of the total surface resulted from Ana Tower and the third phase of Globalworth’s Campus project.

    Besides the drop in demand as companies have to cope with uncertainties, another aspect likely to press new demand in the future should be the rise of spaces for sublease.

    This is because some companies that had relocated in recent years had also leased a large buffer space in case they continued to hire people and expand the business; now that these plans seem out of the window, this may free up quite a bit of spaces for sublease.

    Furthermore, work from home, either a few days a week on a permanent arrangement (during this state of alert), should also free up space going forward.

    No major changes have been seen in terms of rents until now, but Colliers International consultants say that we are likely to see moves.

    Over the near term, there are quite a few forces acting on the rent side: first, because tenants may not feel inclined to move, due to incurring costs, and their current landlords may not be as flexible with offering lower rents; meanwhile, than companies willing to take on new spaces (via a relocation or pure new demand) will likely lead to landlords being sensibly more generous (especially via incentives/gratuities rather than lower contractual rents). Also, there are quite a few major spaces, fully fitted, available for sublease at competitive rents.

    An important observation to make is that without the Pipera Nord submarket and class B buildings, vacancy would still be comfortably in single digit territory for class A office buildings.

    On the other hand, as things stand now, we will likely see lower demand going forward as well as pressures on rents.

    Vacancy is likely to climb towards 13-14% by year-end, with total demand for 2020 likely to cool down to a more mellow figure around 200,000 square meters, roughly half seen in 2019 and below the 300,000 square meter average seen this cycle.

    Because of time needed to negotiate deals, travel difficulties of decision-makers in international companies as well as uncertainties likely to linger into next year, 2021 may not look exceptionally good, but it could still surprise positively if the recovery quickens, with labour market indicators offering some encouraging prospects for now.

  • The coronavirus pandemic will put pressure on the revenues of regional and local governments

    The coronavirus pandemic will put pressure on the revenues of regional and local governments

    Moody’s Public Sector Europe said in a report that the coronavirus pandemic will put pressure on the revenues of regional and local governments in the Czech Republic, Poland, Hungary, Russia and Turkey in 2020, leading to higher deficits and debt burdens.

    The economic contraction caused by the coronavirus shock will translate into falling shared taxes and own-source revenues for RLGs in these five countries.

    Their combined funding needs will exceed €25 billion in 2020, up from €21 billion in 2019, before returning to pre-crisis levels in 2021.

    Regional and local governments in Turkey and Poland are the most vulnerable to a prolonged crisis due to high debt exposure and modest operating performance, respectively.

    Regional and local governments’ debt burdens will increase in all five countries before stabilising in 2021 as revenues pick up, except Turkey.

    Turkey, Poland and Hungary will record the highest debt burden increase in 2020.

    “Regional and local governments in the Czech Republic, Poland, Hungary, Russia and Turkey will be hit hard by the coronavirus shock in 2020,” said Vladlen Kuznetsov, a Moody’s Vice President – Senior Analyst and co-author of the report. “However, they will be able to weather the shock, given their mix of good fiscal flexibility, low debt burdens, and low refinancing risks.”