Therefore four years after launching its business environment assessment, Coface announces several upgrades in central Europe, Africa and Latin America. The uniqueness of the business environment assessment consists in the use of Coface's own payment records, thanks to its underwriting and debt collection expertise throughout its international network.
• Central Europe: marked improvement in the business environment
The business environment assessments of three central European countries have been upgraded: Poland (from A3 to A2), Lithuania (from A3 to A2) and Macedonia (from C to B). These three countries have in common an improvement in the access to companies’ financial information.
Poland and Lithuania have benefited from the process of their integration into the European Union. Lithuania has developed its infrastructures. Whereas in Poland, there have been notable improvements in the quality of regulation, due to the streamlining of administrative procedures and tax system and an improved supervision of the banking system. Macedonia, which plans to join the European Union, has made great strides in terms of governance, reducing corruption and increasing respect for the law.
• Greece and Cyprus among the worst rated countries in Europe
In contrast, the business environment assessments of Greece and Cyprus have been downgraded to A3, which places them among the worst rated countries in the European Union. Only Romania and Bulgaria (A4) have worse assessments. Coface finds access to financial information to be difficult and remarks a worsening of companies' payment behaviour, which indicates greater difficulties concerning debt collection. Cyprus also stands out for its opaque banking system.
Greece (B) and Cyprus (A4) have also seen their country risk assessments drop a notch. These downgrades reflect the impact of the Greek sovereign debt crisis on the country's companies, which is conveyed through various channels: bank credit is difficult to obtain by companies and, if obtained, is expensive. The macroeconomic climate deteriorates as the recession deepens. Lastly, companies are bearing the brunt of the austerity budget plan, which, in some cases, could lead to them experiencing overdue payments owed to them by the country's administration. Furthermore, Coface notes deterioration in the payment behaviour of Greek companies in 2011. The country risk for Cyprus has increased because of its banks' exposure to the Greek risk.
• Africa and Latin America: progress has been made in the reliability of financial data
Coface has raised the business environment assessment of Colombia by one notch to A4, placing it above the average of emerging countries and ranking it first in Latin America, in terms of accessibility and reliability of financial data. Despite the country's persistent corruption, Coface notes greater reliability of financial information, thanks to stringent tax audits.
In Sub-Saharan Africa, three countries have seen their business environment assessments raised: Ghana (from C to B), Mozambique and Tanzania (both from D to C). These countries' upgrades are in part due to the progress made in fighting corruption. However, Coface finds that the less-than-stringent legal obligations of Mozambique and Tanzania mean financial information is difficult to access in both countries. Ghana has made noteworthy progress, confirmed by the fact that it is placed above the average of the 212 countries ranked by the World Bank.
• Middle East: the institutional environment impacted by the Arab spring
Bahrain's downgrade from A3 to A4 comes within the context of the Arab spring, in which the government’s efficiency is hampered by the population's strong resentment towards those in power. Though the country remains above the average of emerging countries, Coface points out a worsening access to financial information.
"Since the launch of its business environment assessment in 2007, Coface has revised the assessments of some ten countries, reflecting the improvement in its payment records of companies in emerging countries. Upgrades of 7 emerging countries support our finding of a gradual improvement in country risk of emerging economies, an improvement that is not solely due to a resilient economic situation. It is also due to more structural developments, that is, the improved governance of these countries," comments Yves Zlotowski, chief economist of Coface.
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Coface is a leading provider of country, sector and business climate assessments, providing country risk assessments for 165 countries. The country and sector assessments assess the average level of risk of payment default associated with a country’s companies and business sectors
Coface also provides a ‘business climate’ assessment to assess the overall business environment in a country and the degree and reliability of corporate information and if a country’s legal system provides fair and efficient creditor protection
Coface is a world leader in credit management (http://www.cofaceuk.com/
Coface serves businesses that trade either domestically or overseas on credit terms. Its clients range from multi-nationals to small and medium-sized enterprises (SMEs)
Coface - UK & Ireland is part of the Coface Group headquartered in Paris and owned by Natixis, a top five investment and corporate bank in France
Coface - UK & Ireland has offices in London, Watford, Leeds, Birmingham, Cardiff and Dublin.
Coface's mission is to facilitate global business-to-
In the UK and Republic of Ireland Coface has been a leading provider of credit management services since 1993 - its objective being to enable businesses to trade securely at home and overseas. Operating from offices in London, Dublin, Watford, Birmingham, Leeds and Cardiff allows Coface to provide a local service.
The company’s credit insurance offer integrates credit assessment, collection services and cover for unpaid debts. Multinational businesses can protect their worldwide subsidiaries through Coface’s international network.
The company also provides access to domestic and international business information and a collection network at home and overseas. Coface is also a recognised operator in the London political risk market.
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