Colombian businesses on Monday asked the government to secure a loan from the central bank for between 30 trillion and 50 trillion pesos ($7.84 billion to $13.1 billion) to bail out companies at risk of collapse due to the impact of coronavirus.
Proposals include a rescue package in which companies could issue bonds for future conversion to shares, as well as a capitalization program under which the government would take part ownership of businesses, Colombian Business Association President Bruce Mac Master said.
“We’re in an extraordinary situation which requires us to throw everything we have at it,” Mac Master said at the group’s annual congress. “We should play with everything we’ve got.”
Colombia’s companies regulator said in April the number of businesses declaring insolvency could double in the coming months due to the decline in economic activity in the wake of coronavirus.
“It is much better to save companies than to try to find new investments; it’s cheaper and we must try to do it,” Mac Master said.
According to the Bogota and Cundinamarca chapter of the National Federation of Retailers some 58,000 businesses in the capital have shut down indefinitely, equal to 31%, while another 40% of retailers’ sites are currently closed.
Mac Master also called for an increase in state subsidies to support companies to make payroll, buy-back programs and tax exemptions for the most desperate sectors.
The government raised the possibility it could acquire stakes in companies in June, but has yet to publish further details.
The central bank has directed billions of dollars in liquidity measures to Colombia’s banks for providing loans to businesses laid low by the spread of COVID-19, as well as cutting the benchmark interest rate by 200 basis points to a record low of 2.25%.