COVID-19: Ibec publishes proposed solutions to liquidity crisis
Ibec, the group that represents Irish business, is calling for significant new emergency cashflow and liquidity measures from Government in order to support vulnerable businesses. The package outlined in a new report (see below), if fully utilised, would increase the total Irish Government crisis response support to the economy to about 10% of GDP, bringing Ireland into line with other countries.
Ibec Director of Policy and Public Affairs Fergal O’Brien said: “COVID-19 is having a significant impact on liquidity in the economy. For many businesses, payment timelines are stretched, credit facilities provided by large firms are coming under strain, and the need for cashflow has greatly increased.
“Left without intervention, this will result in a significant spike in liquidations over the coming months and have the knock-on effect of a far slower return to normal operations, investment and expansion for firms who stay open through the crisis.
“The recent announcement by the European Commission on a new temporary framework on State Aid in order to combat the economic effects of COVID-19 provides an opportunity for Government to be much more aggressive in supporting enterprises. The State can now provide the benefit of low cost money directly into Irish SMEs and larger businesses in ways that are not possible in normal times. Solutions to rents and local rates challenges facing businesses must also be addressed.
“The total programme of guarantees, loans, and other supports in this Ibec report would help ensure €26.4 billion of liquidity to the economy, but at a maximum would leave the Exchequer exposure at €5.9 billion. Although these are significant sums, there are no cheap alternatives. Without the implementation of these measures the road to recovery from the crisis will be longer and more expensive.”