Cover Staff Discussion Notes
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The State as Financier of Last Resort
Author:
Bryn Battersby
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Mr. Raphael A Espinoza
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Jason Harris null

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Mr. Gee Hee Hong null

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Mrs. Sandra V Lizarazo Ruiz
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https://orcid.org/0000-0003-1124-8039
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Mr. Paolo Mauro
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Amanda Sayegh
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Series:
Staff Discussion Notes
Volume/Issue:
Volume 2022: Issue 003
Language:
English
Publication Date:
13 Oct 2022
DOI:
https://doi.org/10.5089/9798400220692.006
ISBN:
9798400220692
ISSN:
2617-6750
Pages:
36
Keywords:
Fiscal policy; Below the line; Equity injections; Government guarantees; Government loans; Bailout; Fiscal risks; Public sector balance sheet; equity injection; credit guarantees program; pre-existing FSM framework; government loan; equity purchase; Loans; COVID-19; Solvency; Credit; Global
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
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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. This Staff Discussion Note argues that such FSMs prevented bankruptcies and attenuated the recession by increasing firms’ liquidity, reducing risk premiums, and boosting confidence. But FSMs also carry large and long-lasting fiscal costs and risks. The note presents recommendations for managing the legacies of the COVID-19 programs and preparing for future crises. Ideally, FSMs should be assessed and included in budget plans, though a balance needs to be struck between speed and scrutiny.
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Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund