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Ensure paychecks for workers, cash flow for firms: Report
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SME Times News Bureau | 30 Mar, 2020
As global recession seems inevitable with demand shock becoming much
larger than the initial supply shock, governments must ensure that
workers get paychecks and firms receive enough cash flows to avoid
bankruptcy, else the present health crisis will turn into a mega
financial crisis within no time, a new report from London Business
School has warned. Government spending should be now and as
large as the predicted economic costs, focusing directly on cash
disbursement to firms and households, said the report titled 'The
economics of a pandemic: the case of Covid-19'. The immediate
tasks at hand must be to ensure households delay mortgage/rental
payments and have cash-on-hands, workers receive paychecks even in
quarantine or if temporarily laid off; firms have enough cash flows (to
pay workers and suppliers), especially small and young businesses and
can avoid bankruptcy.
According to the International Monetary
Fund (IMF) chief Kristalina Georgieva, the new coronavirus has taken the
world economy to a recession, that will be as bad or worse than the
financial meltdown of 2009. The LBS report said that governments must support financial system to avoid the health crisis becomes a financial crisis. "Central
banks should provide financial backing to the government, not just
through their own reserves but also by printing money if necessary.
Global shock needs global response. No country has fiscal capacity to
stand alone," the findings showed. To avoid a financial meltdown, governments must start from health expenditure. "Invest
in testing and expansion of supply. Too late now for the first peak but
still time to contain the second peak in the fall of 2020," said the
report. Use a coordination of fiscal and monetary interventions
to maximize and multiply impact and provide financial backing to each
other policy and be global -- interconnected society and economy
requires global coordination. "Government spending should be now
and as large as the predicted economic costs, focusing directly on cash
disbursement to firms and households," it added. The IMF chief
has said that though in recession, a recovery is very much possible in
2021 if the virus is contained across the globe. "We do project a
recovery in 2021. In fact, there may be a sizeable rebound but only if
we succeed in containing the virus everywhere and prevent liquidity
problems from becoming a solvency issue," Georgieva said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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