Reviving and Restructuring the Corporate Sector Post-Covid: Designing Public Policy Interventions
Author(s): G30 Working Group on Corporate Sector Revitalization
This report assesses the policy response to the Covid-19 crisis to date and provides a set of recommendations to mold economic policy going forward. The authors stress that while illiquidity has characterized the Covid-19 economic crisis heretofore, insolvency may come to bear on many businesses as economic strain from the pandemic continues. In view of this, the report recommends shifting policy from broad-based liquidity support to more targeted measures aimed at maintaining the health of the financial system as well as supporting firms that will likely be viable in a post-pandemic economy.
Recommendations contained within the report revolve around the core principles of securing the long-term health of the corporate sector, efficiently allocating resources, and preventing collateral damage. This requires engaging levers in both the private and public sectors to support the corporate sector while ensuring that financial systems are not adversely impacted by the flagging financial positions of corporate firms. Where necessary, the report presses governments to provide publicly-funded support. However, in view of potential insolvency lurking beneath the surface of the corporate world, the authors simultaneously highlight the need to allow market forces to at least partially guide future economic support. This is in keeping with a broader theme of reducing the scope and sheer volume of support that characterized economic policy frameworks in earlier phases of the pandemic. The report stresses that if comprehensive actions are taken early, corporate distress will not restrain the return to strong growth in a post-Covid world.
To read the full press release on the preliminary report, click here.