World Bank: Without The Private Sector, A Country's Economy Will Not Be Able To Recover

Illustration. (Photo: Doc. Antara)

JAKARTA - World Bank Managing Director Mari Elka Pangestu said a country would not be able to recover from a pandemic without private sector growth, so all companies, both small and large, must continue to be supported at this time.

"Access to policy support has almost doubled since the early months of the pandemic, but it is still given unequally in various parts of the world," Mari said at the B20 Indonesia Inception Meeting, quoted from Antara, Friday, January 28.

Only half the companies in low-income countries can benefit from public assistance, possibly due to the limited fiscal space of low-income countries compared to high-, middle- and high-income, and upper-middle-income economies.

Thus, he assesses that even micro and small enterprises in low-income countries are even less likely to receive public support.

"So when we come out of the crisis, it is very important to unravel this problem because a dynamic private sector is needed in emerging markets to lead the economic recovery," she stressed.

Let's assess the need for timely support for private companies, especially the most vulnerable, otherwise, there may be a persistent danger as healthy companies will close and related jobs will be permanently lost.

Therefore, in the short term policy support for the private sector will immediately help overcome the liquidity challenges to safeguard companies and limit the possibility of closures and bankruptcy.

This type of support, he said, must be provided quickly, transparently, and time-bound, and in the recovery phase, policies must be directed to support growth-oriented companies, promote the reallocation of resources to more efficient companies, and avoid actions that risk sustaining unworthy "zombie" companies.

On the other hand, it is very important to protect the ability of the financial sector to continue to lend to companies both small and large appropriately, especially to strengthen the restructuring and bankruptcy framework.