Governments must support firms that can survive the Covid-19 crisis and restructure or liquidate those that cannot, as interest rates rise and lead to an increase in companies' borrowing costs, the International Monetary Fund said.
Companies racked up record debt during the Covid-19 pandemic: corporate debt stood at $83 trillion, or 98 per cent of the world’s gross domestic product, at the end of 2020, the IMF said in a blog post on Wednesday. Advanced economies and China accounted for 90 per cent of the $8.9tn increase in 2020.
“Now that central banks are raising rates to check inflation, firms’ debt servicing costs will increase,” the Washington-based fund said. “Corporate vulnerabilities will be exposed as governments scale back the fiscal support that they extended to stricken firms at the height of the crisis.”
Last month, the IMF cut its world economic growth forecast for 2022 by 0.5 percentage point to 4.4 per cent because of rising inflation, supply chain disruptions, the Omicron variant and concerns related to China’s real estate sector.
The IMF said it observed the largest one-year debt surge since the Second World War in 2020, with global debt — both public and private — rising to $226tn.
Governments around the world must continue extending financial support to firms that can recover, but are unable to raise the private financing required to do so, while withdrawing support from companies that need to be restructured or liquidated.
“Effective insolvency systems make economies more resilient, productive and competitive,” the fund said. “Shoring up these systems is critical as there are shortcomings in many important areas at present and countries may need to tackle many cases at once. There is not much time to prepare.”
The IMF is using a new indicator to measure how far countries’ insolvency and restructuring systems are prepared for a crisis. Covering 60 economies that account for 91 per cent of the world’s GDP and 84 per cent of the global population across all continents, it shows countries’ preparedness to handle large-scale corporate crises.
“Across all levels of income, economies can do more to prepare for a corporate debt crisis,” the fund said. “Corporate vulnerabilities tend to be more pronounced in economies where our indicator shows that there are shortcomings in crisis preparedness.”
Low-income countries are the least prepared, according to various measures of readiness, to restructure, reorganise or liquidate troubled firms.
Two thirds of the emerging market economies whose corporate debt was more vulnerable to adverse economic conditions than average also had systems of crisis preparedness that were weaker than average, the IMF said.
Almost 40 per cent of advanced economies with vulnerable corporate debt had below-average crisis insolvency systems that could struggle in the case of a large number of restructurings.
“These countries should step up efforts to improve insolvency systems. But all countries can improve crisis preparedness,” the multilateral lender said.
The IMF offered recommendations that governments can put in place to support viable firms and the legal reforms they should undertake to facilitate debt restructuring, liquidation and the reorganisation of distressed companies.
Governments should set clear objectives to address specific market failures. They should include strong governance and transparency safeguards to mitigate risks and put in place clear exit plans.
Burden-sharing and debt-restructuring plans should make use of the access to information and skills of private creditors, it said. Public creditors should actively participate in debt restructuring.
Insolvency systems should be prepared to handle a large increase in cases, with each country facing different priorities in this area.
Countries with limited fiscal tools and ineffective insolvency systems should rely more on out-of-court or hybrid restructuring, where the courts play a limited role to support negotiations between debtors and major creditors.
They should also tackle deeper reforms over the medium term to improve legal and institutional frameworks.
Countries with fiscal space can provide continued support but should be mindful of the risks of moral hazard and “zombie” firms that survive only with state assistance, the IMF said.
“Policymakers should calibrate financial support and direct it efficiently to companies that are in need. They should also be prepared to restructure or liquidate badly scarred firms,” it added.
Green ambitions
- Trees: 1,500 to be planted, replacing 300 felled ones, with veteran oaks protected
- Lake: Brown's centrepiece to be cleaned of silt that makes it as shallow as 2.5cm
- Biodiversity: Bat cave to be added and habitats designed for kingfishers and little grebes
- Flood risk: Longer grass, deeper lake, restored ponds and absorbent paths all meant to siphon off water
The specs: 2019 Mini Cooper
Price, base: Dh141,740 (three-door) / Dh165,900 (five-door)
Engine: 1.5-litre four-cylinder (Cooper) / 2.0-litre four-cylinder (Cooper S)
Power: 136hp @ 4,500rpm (Cooper) / 192hp @ 5,000rpm (Cooper S)
Torque: 220Nm @ 1,480rpm (Cooper) / 280Nm @ 1,350rpm (Cooper S)
Transmission: Seven-speed automatic
Fuel consumption, combined: 4.8L to 5.4L / 100km
Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
UAE currency: the story behind the money in your pockets
The specs: 2018 Chevrolet Trailblazer
Price, base / as tested Dh99,000 / Dh132,000
Engine 3.6L V6
Transmission: Six-speed automatic
Power 275hp @ 6,000rpm
Torque 350Nm @ 3,700rpm
Fuel economy combined 12.2L / 100km
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
J%20Street%20Polling%20Results
%3Cp%3E97%25%20of%20Jewish-Americans%20are%20concerned%20about%20the%20rise%20in%20anti-Semitism%3Cbr%3E%3Cbr%3E76%25%20of%20US%20Jewish%20voters%20believe%20Donald%20Trump%20and%20his%20allies%20in%20the%20Republican%20Party%20are%20responsible%20for%20a%20rise%20in%20anti-Semitism%3Cbr%3E%3Cbr%3E74%25%20of%20American%20Jews%20agreed%20that%20%E2%80%9CTrump%20and%20the%20Maga%20movement%20are%20a%20threat%20to%20Jews%20in%20America%22%3Cbr%3E%3C%2Fp%3E%0A
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
Indian origin executives leading top technology firms
Sundar Pichai
Chief executive, Google and Alphabet
Satya Nadella
Chief executive, Microsoft
Ajaypal Singh Banga
President and chief executive, Mastercard
Shantanu Narayen
Chief executive, chairman, and president, Adobe
Indra Nooyi
Board of directors, Amazon and former chief executive, PepsiCo
ARSENAL IN 1977
Feb 05 Arsenal 0-0 Sunderland
Feb 12 Manchester City 1-0 Arsenal
Feb 15 Middlesbrough 3-0 Arsenal
Feb 19 Arsenal 2-3 West Ham
Feb 26 Middlesbrough 4-1 Arsenal (FA Cup)
Mar 01 Everton 2-1 Arsenal
Mar 05 Arsenal 1-4 ipswich
March 08 Arsenal 1-2 West Brom
Mar 12 QPR 2-1 Arsenal
Mar 23 Stoke 1-1 Arsenal
Apr 02 Arsenal 3-0 Leicester
The specs: 2018 Ducati SuperSport S
Price, base / as tested: Dh74,900 / Dh85,900
Engine: 937cc
Transmission: Six-speed gearbox
Power: 110hp @ 9,000rpm
Torque: 93Nm @ 6,500rpm
Fuel economy, combined: 5.9L / 100km
In numbers
1,000 tonnes of waste collected daily:
- 800 tonnes converted into alternative fuel
- 150 tonnes to landfill
- 50 tonnes sold as scrap metal
800 tonnes of RDF replaces 500 tonnes of coal
Two conveyor lines treat more than 350,000 tonnes of waste per year
25 staff on site
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Nick's journey in numbers
Countries so far: 85
Flights: 149
Steps: 3.78 million
Calories: 220,000
Floors climbed: 2,000
Donations: GPB37,300
Prostate checks: 5
Blisters: 15
Bumps on the head: 2
Dog bites: 1
Killing of Qassem Suleimani
The%20specs
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Results:
5pm: Maiden (PA) Dh80,000 1,400m | Winner: Eghel De Pine, Pat Cosgrave (jockey), Eric Lemartinel (trainer)
5.30pm: Maiden (PA) Dh80,000 1,400m | Winner: AF Sheaar, Szczepan Mazur, Saeed Al Shamsi
6pm: Sheikh Zayed bin Sultan Al Nahyan National Day Cup (PA) Group 3 Dh500,000 1,600m | Winner: RB Torch, Fabrice Veron, Eric Lemartinel
6.30pm: Sheikh Zayed bin Sultan Al Nahyan National Day Cup (TB) Listed Dh380,000 1,600m | Winner: Forjatt, Chris Hayes, Nicholas Bachalard
7pm: Wathba Stallions Cup for Private Owners Handicap (PA) Dh 70,000 1,400m | Winner: Hawafez, Connor Beasley, Ridha ben Attia
7.30pm: Handicap (PA) Dh 80,000 1,600m | Winner: Qader, Richard Mullen, Jean de Roaulle
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
UAE currency: the story behind the money in your pockets
