This World Bank Group series explored solutions for heading off the rising threat to economic recovery due to pandemics. We brought together public and private sector stakeholders to discuss the state and outlook of firms’ financial health in developing countries and the regulatory regimes affecting the restructuring of private-sector debt for businesses.
Session 1: Managing a Rising Threat to Global Recovery
(March 4, 2021)
The scale and scope of the COVID-19 economic crisis has delivered an unprecedented shock to the global economy with impacts on firms’ credit and the financial sector. How prepared emerging markets and developing economies are to handle rising credit default risks and how to better target scarce resources? The discussion Corporate Debt in Developing Countries: Managing a Rising Threat to Global Recovery covered the most urgent needs, and which institutions are best placed to take action.
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Session 2: Critical Building Blocks for Reform and Restructuring
(March 19, 2021)
This high-level panel discussion looked at the experiences and challenges experienced by senior policymakers in developing countries. Panelists examined the conditions for preserving value in corporate restructurings and how countries are adapting legal and regulatory structures to the COVID-19 crisis, including insolvency and out-of-court workout mechanisms. They discussed what has worked and what has not, as well as what is still needed to ensure that viable businesses can restructure and that those that need to exit the market can do so efficiently.
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Session 3: The Big Picture: Fostering Systemic Financial Stability in Developing Countries in a Pandemic
(April 22, 2021)
This panel explored how effects of the pandemic on the private sector can transmit to the financial sector. It assessed which tools multilateral and national policy makers have (or consider essential to have) to preserve the financial system stability. We looked at potential financial system risks and whether rising distressed assets in the financial sector are threatening stability. The panel also discussed how emerging markets can manage increasing levels of non-performing loans—through bank-level solutions or other systemwide solutions or multilateral solutions.
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Session 4: Custom Restructuring Solutions for Smaller Firms
(May 6, 2021)
World Bank surveys indicate that micro, small and medium enterprises (MSMEs) have been hit hardest by the COVID-19 crisis. This panel looked at whether the tools for managing credit-default risks work well for both large and small firms or if specific tools and solutions need to be tailored for different types of firms. We discussed how banks can manage large portfolios of MSME loans and the implications of their insolvency for personal and household debt.
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Session 5: Managing Risks Posed by COVID-19 on Financial Institutions
(May 12, 2021)
Rising corporate defaults can quickly undermine health of financial institutions and limit their ability to lend and support economic recovery. This panel looked at how governments and the private sector can collaborate to ensure a sound environment for distressed asset resolution. Panelists discussed how to share international best practices for managing credit default risks with local banks. They looked at what is needed to create an active distressed asset market that can speed up resolution of debt issues and improve conditions for economic activity.
