{
  "title": "Portugal: Selected Issues",
  "publication": "IMF Staff Country Reports, June 30, 2022",
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  "summary": "This Selected Issues paper on Portugal focuses on how could the coronavirus disease 2019 pandemic affect firm productivity and the speed of the recovery. The pandemic eroded equity positions of Portuguese firms with varying impacts across firms’ size and sectors.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Focus: How the coronavirus disease 2019 pandemic could affect firm productivity and the speed of the recovery.\n- Central concern: The pandemic eroded equity positions of Portuguese firms with varying impacts across firms’ size and sectors."
    },
    {
      "heading": "Key findings",
      "content": "- The authorities’ swift policy response mitigated immediate liquidity shortages.\n- The pandemic left a large share of Portuguese corporates with a debt overhang and at risk of insolvency.\n- Estimated change in zombie firms: share rose from about 1 percent prior to the pandemic to 4 percent.\n- Banco Portuguese de Fomento managed recapitalization scheme—Strategic Recapitalization and Consolidar Programs—has many promising features but may need augmentation and enhanced incentive structures.\n- Past crisis recoveries indicate zombie firms reduce aggregate productivity irrespective of the performance of non-zombie incumbents, thereby congesting reallocation."
    },
    {
      "heading": "Policy recommendations and implications",
      "content": "- Augment and enhance incentive structures of recapitalization schemes to improve effectiveness.\n- Implement broad-based economic recovery policies underpinned by structural reforms to:\n  - Spur firm dynamism.\n  - Raise productivity growth.\n  - Strengthen financial health metrics.\n- Maintain continued strong growth to bolster the operational environment across the corporate spectrum and help reduce balance-sheet vulnerabilities.\n- Strengthen restructuring and insolvency regimes to:\n  - Facilitate effective reorganization and exit of businesses.\n  - Optimize resource reallocation without overwhelming the financial system.\n\nSource: Portugal: Selected Issues (IMF Staff Country Report, June 30, 2022).\n\n---\n\n Content in this bundle\n\n- Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022\n  - Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: June 30, 2022",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400215070.002",
    "Focus: How the coronavirus disease 2019 pandemic could affect firm productivity and the speed of the recovery.",
    "Central concern: The pandemic eroded equity positions of Portuguese firms with varying impacts across firms’ size and sectors.",
    "The authorities’ swift policy response mitigated immediate liquidity shortages.",
    "The pandemic left a large share of Portuguese corporates with a debt overhang and at risk of insolvency.",
    "Estimated change in zombie firms: share rose from about 1 percent prior to the pandemic to 4 percent.",
    "Banco Portuguese de Fomento managed recapitalization scheme—Strategic Recapitalization and Consolidar Programs—has many promising features but may need augmentation and enhanced incentive structures.",
    "Past crisis recoveries indicate zombie firms reduce aggregate productivity irrespective of the performance of non-zombie incumbents, thereby congesting reallocation.",
    "Augment and enhance incentive structures of recapitalization schemes to improve effectiveness.",
    "Implement broad-based economic recovery policies underpinned by structural reforms to:",
    "Maintain continued strong growth to bolster the operational environment across the corporate spectrum and help reduce balance-sheet vulnerabilities.",
    "Strengthen restructuring and insolvency regimes to:",
    "**Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022**"
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