IMF announces: Turkey ranks 1st in zombie companies report

Birgün newspaper columnist Ozan Gündoğdu evaluated the International Monetary Fund's report on zombie companies in his column titled "The Rise of the Walking Dead: Zombie Companies." Noting that Turkey ranks first in the report, which includes 43 countries, Gündoğdu stated that while no bank would provide loans to companies whose operating income is lower than their debt interest, such loans are obtained in our country through connections, and wrote the following;

"These are called 'Zombie Companies'—firms that have not yet gone bankrupt but whose bankruptcy is so clearly inevitable. By technical definition, zombie companies are businesses whose operating income is lower than their debt interest. The business is in such a state that it must borrow even to continue its operations, and the interest on its debt grows so much that its income remains lower than its interest payments.

Why do 'Zombie Companies' not exist in a healthy, functioning market? Because the banking sector does not extend credit to these companies that have become zombies, resembling walking dead, and these companies are supposed to be purged from the system and go bankrupt.

 However, the picture is different in Turkey. A company becomes a zombie, but thanks to 'intermediaries in Ankara,' zombie companies somehow manage to find credit and continue to live as walking dead, increasing the stress on the financial system.

TURKEY HAS THE HIGHEST SHARE

Especially during the pandemic, the banking sector around the world opened the credit taps. During this process, zombie companies also took advantage of the opened taps and continued to survive. However, after the pandemic ended, these companies began to be scrutinized more closely. Thus, on June 16, 2023, the International Monetary Fund published a report on zombie companies. The title of the report is also quite striking: 'The Rise of the Walking Dead: Zombie Firms Around the World.'

Throughout the report, what zombie companies are, how they harm an economy, and how they increase the risk to the financial system are explained in detail, leading to the global outlook. According to the IMF report, Turkey is the country where zombie companies have the highest share within the total corporate ecosystem. According to the report, which examines data from 43 countries, Turkey's share of zombie companies is 13 percent. It is followed by Indonesia and Romania.

News Source: 12punto