SME Times is powered by   
Search News
Just in:   • Market rises for 3rd day straight, Nifty above 9,500  • Sri Lankan brewery resumes exports after 2 months  • Core sector output plunges by over 38% in April  • Galaxy Note 20 may feature Exynos 992 SoC  • Include Discom liability while fixing states' borrowing, Minister tells finance panel 
Last updated: 30 Mar, 2020  

Rupee.9.Thmb.jpg Ensure paychecks for workers, cash flow for firms: Report

   Top Stories
» Core sector output plunges by over 38% in April
» GDP growth down to 3.1% in fourth quarter on manufacturing slump
» Need to reform Finance Ministry to facilitate exports, imports: Amitabh Kant
» FDI inflows rise 18% to $73 bn in FY20
» Goyal urges exporters to provide quality products, diversify
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.
Print the Page
Add to Favorite
Share this on :

Please comment on this story:
Subject :
(Maximum 1500 characters)  Characters left 1500
Your name:

  Customs Exchange Rates
Currency Import Export
US Dollar
UK Pound
Japanese Yen 58.85 56.85
As on 30 May, 2020
  Daily Poll
COVID-19 has directly affected your business
 Can't say
  Commented Stories
» Starting an import export business: Basic guide for beginners(1)
» China's forex reserves reach USD 2.85 trillion(1)
» FM reviews macro-economy in FSDC meet(1)
» Appoint distributors, expand your business(1)
» MSME stimulus(1)
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter