Although the short-term liabilities of Greek firms have grown at a slower pace over the past four years, the rate of increase remains a multiple of the growth of revenues, Hellastat’s annual survey shows. Short-term loans to enterprises grew by an average of 5.9 percent in 2005, against 6.6 percent in 2004 and 9.7 percent in 2003. In contrast, their sales grew by an average of 1.4 percent last year (from 4.8 percent in 2004), while net profits fell sharply, 6.9 percent, against a rise of 2.2 percent in 2004. The survey was based on the results of more than 21,000 firms in the 2002-2005 period, reported under Greek and international accounting standards. In absolute figures, the total short-term liabilities of Greek firms stood at 25.4 billion euros at the end of 2005, from 24.3 percent a year earlier. In contrast, their total long-term borrowing, including bond loans assumed by banks, was 33.6 billion euros at the end of 2005, up 12.7 percent from a year earlier. According to Christos Yiannopoulos, Hellastat’s research and development director, the threefold increase in long-term borrowing as compared to short-term loans reflects the intensive efforts of mainly large firms for a restructuring of their liabilities, chiefly through bond loan issues. Additionally, the fact that about 10 percent of short-term bank liabilities (2.3 billion) represent long-term liabilities that have to be repaid in the current fiscal year, indicates that the net increase in long-term loans is clearly higher. Long-term loans Long-term loans are mainly designed to finance investment, so that the medium- to long-term revenues may run in tandem with the interest and capital repayment schedule. It is, therefore, to be expected that the great bulk of long-term capital will be concentrated among large firms and organizations, the survey notes. Indeed, 46 percent of total long-term borrowing is accounted for by 10 companies, including Hellenic Railways (4.4 billion euros), the Public Power Corporation (3.2 billion), OTE (1.95 billion) and Athens International Airport (1.02 billion euros). On the basis of the latest figures, the ratio of short-term liabilities to sales revenues has deteriorated to 25.6 percent in 2005 from 23.1 percent in 2004, 22.2 percent in 2003 and 20.9 percent in 2002. The Hellastat survey also arrives at two more crucial conclusions: first, that small and medium-size firms (SMEs) have high short-term liabilities in relation to their annual revenues and are generally strapped when it comes to meeting their financial expenses. Second, the group of large firms (annual sales of 3-50 million euros) and very large firms (sales of over 50 million) is a saturated market for banks, as eight in 10 of them have short-term borrowing. In contrast, only two in 10 businesses with sales revenues of up to 300,000 euros a year have taken out short-term loans. This is virtually «virgin» ground for banks, as the firms in this category number more than 12,000. Among the sectors with the highest exposure to short-term borrowing in relation to sales are the retail clothing and footwear business (41 percent ratio), the textiles trade (53 percent) and winemaking (58.9 percent). In contrast, among the least indebted sectors are trucking (8.2 percent), supermarkets (6.6 percent), catering (13 percent) and tourism (12.7 percent).