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The capital levels of Latin American companies are still 20% lower than before the pandemic

MADRID, 3 Ago.

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The capital levels of Latin American companies are still 20% lower than before the pandemic


The capital levels of companies in Latin America and the Caribbean continue to be 20% below pre-pandemic levels, according to a report prepared by the Inter-American Development Bank (IDB) and the Center for Global Development.

Both organizations have warned of the risk that companies in Latin America and the Caribbean face due to the reduction of their investments after the pandemic, which, in turn, would limit the economic recovery of the region.

In this sense, the document highlights that in order to avoid a kind of "long-term economic Covid", where a weak private sector fails to create jobs or stimulate economic growth, Latin American and Caribbean governments should actively apply a series of policies to help companies drive investment and hire new employees.

The study has collected a sample of the balance sheets of the largest companies in Latin America and the Caribbean and has revealed that investment fell sharply in the region, while debt levels remain high, particularly in the most affected sectors. for the coronavirus. Furthermore, the demand for formal workers decreased and informal employment increased considerably during the recovery.

On their side, small businesses, which often have limited access to credit, were hit the hardest by the crisis. The report finds that smaller businesses continue to face more financial problems and are more likely to fall behind on debt payments, leading a significant portion of them to close.

Among the recommendations of the text are the creation of a new independent and transitory public-private institution with the mandate to identify and support companies that suffered during the pandemic but are still viable and need investments; in addition to the promotion of digitalization strategies in each country, with a focus on effective policies in terms of cost and that foster growth, such as the prioritization of investment in digital infrastructure.

The document also mentions policies to promote and incubate young companies; simpler, more transparent and efficient legal procedures; Greater court flexibility, better insolvency frameworks and an international bankruptcy assistance forum would help failed companies reform or wind down.

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