Governments should prepare to restructure, liquidate badly scarred firms, says IMF

[WASHINGTON] Governments across the world should beef up their insolvency systems and prepare to restructure or liquidate badly scarred firms as they withdraw massive support provided during the height of the Covid-19 crisis, the IMF said in a new blog.

The International Monetary Fund said corporate debt reached US$83 trillion, or 98 per cent of global gross domestic product, at the end of 2020, with advanced economies and China accounting for 90 per cent of the nearly US$9 trillion increase in 2020.

Now that central banks are raising interest rates to check inflation, firms' debt servicing costs will increase and declining fiscal support will expose corporate vulnerabilities, the IMF said. REUTERS