North Macedonia faces rise of ‘zombie companies’

In North Macedonia, a phenomenon known as ‘zombie companies’ is impacting the national economy. These are businesses that lack sufficient operational profit to cover interest on their debts but continue to operate by securing new loans, utilizing deferred payments, or receiving financial support.

Economists define these entities as older companies that fail to generate enough income to meet financial obligations, often using new credit to pay off old debts. While these firms avoid immediate bankruptcy, they pose risks to suppliers, employees, and business partners.

The European Bank for Reconstruction and Development has previously warned that continued extraordinary financial assistance for companies with no prospect of recovery could harm healthy enterprises. Furthermore, analysis from the International Monetary Fund suggests that such companies can reduce overall economic productivity by trapping capital and labor that could otherwise be used in more productive sectors.