* Czech firms facing problems securing funds
* Corporate orders drop up to 50 pct, more for car sector
* Stabilisation seen in the second half of the year
* Large crown volatility another burden for companies
* Companies call for earlier setting of euro entry date
By Martin Dokoupil
PRAGUE, March 18 (Reuters) - Czech companies are struggling
to secure financing for their operations and the volatile crown
is exacerbating problems tied to the economic downturn, the head
of a leading national industry lobby said.
The export-driven Czech economy has been badly hit by
deepening recession in Western Europe, which has led to a sharp
drop in output and job losses in the key manufacturing sector.
"The companies are having problems getting money from
investment and operational loans. If someone lends you the money
it is at conditions that are hardly acceptable," Confederation
of Industry chief Jaroslav Mil told Reuters in an interview.
"When the banks ... do not want to lend, it leads to a
serious worsening of the situation for business."
Czech banks have withstood the global financial turmoil
relatively unscathed but, despite interest rate cuts by the
central bank to an all-time low, they have raised borrowing
costs and tightened conditions for corporate loans.
Mil said that most companies had booked up to a 50 percent
plunge in orders at the start of the year with some, mainly in
the automotive industry, being hit even harder. But he said the
industry could see the bottom in the second half of the year.
"The situation will stabilise but at a low level with fewer
cars produced and higher unemployment," he said.
Volkswagen's <VOWG.DE> Skoda Auto, the top Czech firm by
turnover, returned to a five-day working week in March after
cutting output to four days earlier this year.
However, a survey by the Chamber of Commerce showed the
number of Czech firms pessimistic about economic outlook jumped
to nearly 62 percent in February, from 17 percent in September.
In February, new orders measured by the Purchasing Managers'
Index remained well below the no-change mark of 50, indicating a
seventh successive month of decline. []
The country's exports slumped by 24 percent in January,
their fastest annual pace on record, and companies slashed jobs
due to the plunge in euro zone demand, pushing unemployment to a
two-year high of 7.4 percent in the same month. []
CROWN HURTS
Poor exports -- which amount to about 70 percent of gross
domestic product -- led the government to slash its prediction
for economic growth. It is now working with a scenario of up to
a 2 percent fall in GDP this year, the first since 1998.
The central bank also looks likely to cut its latest
projection for a 0.3 percent contraction, after 3.1 percent
growth last year [].
Mil also said increased volatility in the crown made it
tough for firms to cope with the turmoil, adding the government
should announce a euro entry date as soon as possible.
"You cannot hedge against this (crown moves) and a small
firm ... has neither people to do it, nor the money," he said.
Central bank Vice-Governor Miroslav Singer told Reuters on
Tuesday that losses in the corporate sector from exporters'
hedging contracts, a problem in neighbouring Poland, were not
large compared with overall export volumes. []
The crown had firmed to a record high of 22.925 per euro
<EURCZK=> in July, before correcting to 29.690 last month due to
the worsening economic outlook. It stood at 26.795 as of 0856
GMT.
Last year's jump prompted industry calls on the government
to seek a swift euro adoption. But the cabinet has said it would
only announce a possible entry date in November.
"The government's decision on euro entry in the second half
of the year is too late," Mil said. "I dare say if it's not by
May, then we will have missed the January 2012 entry date, and
delayed it to sometime around 2020."
(Editing by Toby Chopra)
