{
  "title": "The State as Financier of Last Resort",
  "publication": "Staff Discussion Notes, October 13, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/staff-discussion-notes/issues/2022/10/11/the-state-as-financier-of-last-resort-523706",
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  "summary": "During the COVID-19 pandemic and global financial crisis, governments swiftly served as financiers of last resort through large financial support measures (FSMs) such as loan and guarantee programs and equity injections in firms.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- During the COVID-19 pandemic and global financial crisis, governments acted as financiers of last resort through large financial support measures (FSMs) such as loan and guarantee programs and equity injections in firms.\n- FSMs are argued to have prevented bankruptcies and attenuated the recession by:\n  - increasing firms’ liquidity,\n  - reducing risk premiums,\n  - boosting confidence.\n- FSMs also carry large and long-lasting fiscal costs and risks.\n- The note emphasizes that ideally FSMs should be assessed and included in budget plans, while recognizing the need to balance speed and scrutiny during crises."
    },
    {
      "heading": "Key findings and analysis",
      "content": "- FSMs provided rapid support via loan programs, guarantee programs, and equity injections.\n- Macroeconomic effects attributed to FSMs include:\n  - fewer bankruptcies,\n  - a milder recession,\n  - improved firm liquidity,\n  - lower risk premiums,\n  - higher confidence.\n- Trade-offs highlighted:\n  - Immediate stabilization benefits versus large and persistent fiscal costs and risks."
    },
    {
      "heading": "Policy recommendations and management guidance",
      "content": "- Manage legacies of COVID-19 FSMs with targeted policy actions (high-level recommendations presented).\n- Prepare for future crises by:\n  - establishing frameworks to assess FSMs,\n  - including FSMs in budget plans where feasible,\n  - striking a balance between the need for rapid deployment and the need for scrutiny and assessment."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subject: Economic sectors, Financial crises, Financial institutions, Financial sector policy and analysis, Health, Money, Public financial management (PFM)\n- Keywords: Bailout, Below the line, COVID-19, Credit, credit guarantees program, equity injection, Equity injections, equity purchase, Fiscal policy, Fiscal risks, Global, Government guarantees, government loan, Government loans, Loans, pre-existing FSM framework, Public sector balance sheet, Solvency\n\n---\n\n Content in this bundle\n\n- Staff Discussion Note\n  - Staff Discussion Note (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Staff Discussion Note (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/staff-discussion-notes/issues/2022/10/11/the-state-as-financier-of-last-resort-523706"
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    "Authors: Bryn Battersby, Raphael A Espinoza, Jason Harris, Gee Hee Hong, Sandra Lizarazo, Paolo Mauro, Amanda Sayegh",
    "Published: October 13, 2022",
    "Series: Staff Discussion Notes",
    "DOI: https://doi.org/10.5089/9798400220692.006",
    "During the COVID-19 pandemic and global financial crisis, governments acted as financiers of last resort through large financial support measures (FSMs) such as loan and guarantee programs and equity injections in firms.",
    "FSMs are argued to have prevented bankruptcies and attenuated the recession by:",
    "FSMs also carry large and long-lasting fiscal costs and risks.",
    "The note emphasizes that ideally FSMs should be assessed and included in budget plans, while recognizing the need to balance speed and scrutiny during crises.",
    "FSMs provided rapid support via loan programs, guarantee programs, and equity injections.",
    "Macroeconomic effects attributed to FSMs include:",
    "Trade-offs highlighted:",
    "Manage legacies of COVID-19 FSMs with targeted policy actions (high-level recommendations presented).",
    "Prepare for future crises by:",
    "Subject: Economic sectors, Financial crises, Financial institutions, Financial sector policy and analysis, Health, Money, Public financial management (PFM)",
    "Keywords: Bailout, Below the line, COVID-19, Credit, credit guarantees program, equity injection, Equity injections, equity purchase, Fiscal policy, Fiscal risks, Global, Government guarantees, government loan, Government loans, Loans, pre-existing FSM framework, Public sector balance sheet, Solvency",
    "**Staff Discussion Note**"
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