As central banks raise rates to control inflation, the cost of corporate debt will rise, with corporate vulnerabilities being exposed as governments reduce the fiscal support they extended to hard-hit companies at the height of the crisis. International Monetary Fund (IMF).
In a blog post by the organization, the fact that governments face difficult decisions as they manage these risks to the economy is highlighted.
In the IMF’s view, financial support should become more focused amid shrinking fiscal space. Effective insolvencies make economies more resilient, productive and competitive, assesses the article.
Sustaining such systems is critical, as there are deficiencies in many important areas at the moment, and countries may need to deal with many insolvency cases at once, he warns.
“Governments may need to continue to provide financial support to companies that can recover, while withdrawing support from companies that are so damaged that they should be restructured or liquidated,” the organization said.
In the IMF’s assessment, many countries continued to strengthen their insolvency systems, either with specific reforms, including Brazil, as well as France, India, South Korea, Turkey and the United States; or with far-reaching reforms that affect key elements of their systems, a situation pointed out in Germany, the Netherlands and the United Kingdom).
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
