## Portugal: Selected Issues

_IMF Staff Country Reports, June 30, 2022_

## Source details

**Canonical URL:** [Portugal: Selected Issues](https://www.imf.org/en/publications/cr/issues/2022/06/30/portugal-selected-issues-520194)

## Other formats

- [Markdown version](/en/publications/cr/issues/2022/06/30/portugal-selected-issues-520194/index.md)
- [Structured JSON version](/en/publications/cr/issues/2022/06/30/portugal-selected-issues-520194/index.json)
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## Bibliographic details
- Published: June 30, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400215070.002

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### Overview
- 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.

### Key findings
- 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.

### Policy recommendations and implications
- Augment and enhance incentive structures of recapitalization schemes to improve effectiveness.
- Implement broad-based economic recovery policies underpinned by structural reforms to:
  - Spur firm dynamism.
  - Raise productivity growth.
  - Strengthen financial health metrics.
- 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:
  - Facilitate effective reorganization and exit of businesses.
  - Optimize resource reallocation without overwhelming the financial system.

*Source: Portugal: Selected Issues (IMF Staff Country Report, June 30, 2022).*

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## Content in this bundle

- **Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022**
  - [Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022 (Markdown version)](/-/media/files/publications/cr/2022/english/1prtea2022002.pdf.md){rel="alternate" type="text/markdown"}
  - [Portugal: Selected Issues; IMF Country Report No. 22/204; June 7, 2022 (PDF)](/-/media/files/publications/cr/2022/english/1prtea2022002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2022/06/30/portugal-selected-issues-520194_