Calvinio Is Ready To Take Measures To Prevent Bankruptcy

2021-02-01   |   by CusiGO

There is still a curve in the first half of the year. The government is aware that there are still weeks and months of hard times ahead of a comprehensive and intensive economic recovery. It all depends on the vaccine. In response to these remaining efforts, the administration has been developing new measures to avoid the widespread bankruptcy problem that hinders the resolution of the crisis during this period. Industry and employers, Spanish banks and financial institutions have all exerted pressure. The government has reversed the situation and started to take measures to reduce excessive debt.

The executive analyzed solutions to problems such as debt restructuring or equity lending. According to government sources consulted, they are not closed and will in any case be surgery and priority treatment. The Ministry of finance, agencies and the Bank of Spain are working together to monitor the timeliness of these measures. Reform of the bankruptcy law will be safe to speed up the process of rapidly liquidating infeasible enterprises and making it easier to recover viable enterprises. The transposition of European directives will be used to achieve early and effective debt restructuring. These measures will include improving debt relief in the pre-trial phase and speeding up the process of signing out of court withdrawal agreements. In any case, the size and depth of the package remains to be seen.

Nadia Calvi ó o, the vice president in charge of economic affairs, told Congress on Friday that measures would be taken to address solvency issues in the coming weeks. “A key factor is to continue to avoid a structural impact on our economy, that is, to continue to take decisive action on the structure of production and employment, especially in the hardest hit sectors, as we have done so far. We need to continue to take measures in the next few weeks to prevent liquidity problems from becoming solvency problems for viable companies. We must continue to provide targeted support to the most affected sectors, businesses and workers. We need to ensure flexible business restructuring mechanisms, and we also need to restore the pulse of investors, “he said.

There are still some hard days. In November, the economy began to show bad signs. However, the reopening in December and the strong activity in Madrid that month provided enough breathing space for GDP. But now, December’s easing was paid for by new restrictions, which are already reflected in advanced indicators. The latest liquidity data on gasoline and credit cards indicate a relapse. Recovery delay. “The data are mixed: electricity and manufacturing are relatively good; liquidity and spending power are poor,” explains Antonio Merino, chief economist at Repsol.

However, the government has reason to be more optimistic. The executive’s source explained three factors to consider: first, the strong rebound in the third quarter showed that these measures worked and that the economy was ready to resume activity as soon as restrictions were relaxed. Second, the restrictions on passage are far less stringent than the big restrictions. Third, enterprises and workers have adapted to and are able to operate at a low level of liquidity. Rafael DOM é nech, an economist at BBVA, also pointed out this point: “although this is a country with different production structures, China can recover its liquidity level by reducing it by 20%.”

In addition, despite the delay in vaccination, some analysts pointed out that people over 65 years old infected with covid-19 are the main ICU infected people. As a result, their vaccination can reduce the pressure on hospitals and greatly increase people’s expectations before the cattle are immunized.

Because of Erte, the decline in household income is not so serious. Some time in the second half of the year, consumption, driven by accumulated savings, is expected to be boosted significantly. The government also expects spending from the European fund to power the economy by the end of the year. These are already in the budget and will start bidding as soon as they are approved by Brussels. As long as the behavior of the virus does not change, with the expansion of vaccination, the pressure on hospitals will increase, and part of the economy can be released: business, hotels and tourism will no longer hibernate, and will integrate into society with the gradual abolition of restrictions. Therefore, despite the slowdown in the recovery, analysts generally believe that by the second half of the year, all these factors should be adjusted to achieve a strong rebound.

But at the same time, there are still many risks. In addition to the development of pandemics and vaccinations, important sectors will suffer losses in a few months. Despite the high deposit liquidity of SMEs, the use of ICO loans has slowed down, which may be a sign that enterprises no longer want to be in debt to make a living. And a strong recovery could be dragged down by bankruptcies, heavily indebted companies that neither invest nor employ, or so-called labor market lag, which means that unemployed workers are hard to come back.

To avoid all this, Spanish banks, the banking sector and various sectors have been calling for more government assistance, especially since Spain has less direct support than other eurozone countries. Calvinio has been holding on so far that he won’t leave a bigger hole in the bead. Focusing on the state of the entity, the Bank of Espa NIA is preparing a study to enable the government to determine which companies can help and how. The bank’s employer is working with Oliver Wyman, a consultancy, to develop another similar exercise to analyze which are not feasible, which are feasible and which are problematic Liquidity and feasibility, no financing difficulties, but excess debt. At the same time, the administration began to be open to measures because it believed that ERT and ICO were sufficient.

The European Commission has relaxed the allowed national aid framework: since January, it has agreed to convert repayable aid directly into 800000 euros. Since October, it can help companies achieve at least 30% business decline at a fixed cost of up to 3 million euros.

The Bank of Espa NIA has repeatedly called for measures to strengthen its own resources when certain industries face the risk of bankruptcy and debt overhang. In Spain, participatory lending has always been a formula for improving solvency, paying the least. These claims are based on the profits of the company. They are the last to go bankrupt. Therefore, they mean the improvement of the company’s capital and solvency.

France has approved a mechanism to develop such participatory lending. The Valencia Institute of finance did the same thing. Enisa and cofides use them in central management, although they don’t have enough muscle. These credits are ideal for medium-sized enterprises, but not small ones. In the latter case, there are only two ways to satisfy the necessary Liturgy: the tax office and the banking industry.