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Government support for small and medium-sized businesses will be crucial to avoid a wave of insolvency that could threaten a new wave unemployment, according to a new study by the International Monetary Fund.
According to the IMF, the share of companies with negative equity is likely to increase by 6 percentage points in 2020 and 2021, threatening up to 10% of jobs in small and medium enterprises.
"The pandemic is expected to increase the share of insolvent small and medium-sized businesses from 10% to 16% in 2021 in 20 mostly advanced countries in Europe and the Asia-Pacific region
"This increase is similar to that observed over the next five yearsthe global financial crisis, but it would occur over a much shorter period. In a downward scenario with prolonged lockdowns and ever lower demand, the share of insolvent SMEs would increase by 8 percentage points. "
This would threaten 13 to 21% of jobs in small and medium-sized businesses. medium-sized companies, the Fund said.
Most difficult sketch sectors International Monetary Fund
The Fund also warns of the implications for bank debt risks, especially in southern Europe.
“ The rise in small and medium bankruptcies companies could fail and lead to significant write-offs, draining banks, "the IMF said.
The IMF recommends that" countries with fiscal space, transparency and 'adequate accountability can consider injections of quasi-equity into small and medium-sized enterprises. "
In addition, this hasCalls to speed up the insolvency process of companies.
“Even with public support measures, insolvencies of small and medium-sized businesses are likely to increase. Therefore, a full set of insolvency and debt restructuring tools will be needed for the insolvency proceeding system to cope with the additional strain, the Fund said.
"These tools include dedicated out-of-court restructuring mechanisms, hybrid restructuring and enhanced insolvency proceedings, for example, streamlined reorganization for small businesses.
A The Federal Reserve's survey of small businesses run by its regional district banks in February found that 64% of businesses would seek more government assistance if they became available.
“Among these businesses, 39% expected it to be unlikelye that they survive until sales return to "normal" (ie to 2019 levels) without additional government assistance ".