20220629-IMF-Portugal_Selected_Issues_44页_1mb

Introduction
The report analyzes the economic impacts of the COVID-19 pandemic on Portuguese non-financial corporations (NFCs), particularly focusing on firm demographics, corporate financial health, and the role of liquidity and solvency support. It also examines the prospects for the tourism sector, a vital component of the Portuguese economy, and explores strategies for reducing greenhouse gas (GHG) emissions to meet climate goals.

COVID-19 Impact on Corporate Sector

1. Firm Vulnerability

   • Pre-pandemic, about 25.5% of Portuguese NFCs had negative equity (insufficient assets to cover liabilities). By 2020, this rose slightly, but policy support mitigated the situation.
   • The share of firms unable to cover financing expenses surging from 22% in 2019 to 33% in 2020.
   • Liquidity support (moratoria, credit guarantees) covered ~6.5% of GDP, helping stabilize insolvent firms but insufficient to address solvency gaps.

2. Zombie Firms

   • Define as firms with ICR < 1 (interest coverage ratio) for three consecutive years. Their share increased from ~1% pre-pandemic to ~4% in 2020, posing medium-term risks to productivity and reallocation.

3. Policy Recommendations

   • Phased carbon pricing reform, coupled with subsidy elimination and coverage expansion, could significantly reduce GHG emissions and align with the 2050 carbon neutrality goal.

Tourism Sector Developments

1. Pre-Pandemic Importance

   • Tourism contributes ~15% to GDP and ~18% to employment. In 2019, it accounted for ~25% of international tourist arrivals globally.

2. Pandemic Effects

   • International tourist arrivals fell by ~60% in 2020, severely impacting employment and GVA in tourism-related sectors.
   • Domestic tourists (~30% of arrivals) provided partial offset, but the sector remains vulnerable.

3. Post-Pandemic Outlook

   • Gradual recovery expected by 2023–2024, led by vaccination rates and border reopenings. However, ~7–12% cumulative GVA shortfall despite earlier projections.
   • Structural reforms and digital transformation are critical for competitiveness and sustainability.

Climate Change and GHG Reduction

1. Current Emissions

   • Total GHG emissions (55 mts in 2022) show a declining trend since 2005, aided by renewable energy (30% of gross final energy demand).

2. Future Trajectory

   • To meet carbon neutrality by 2050, emissions need to drop to ~48 mts by 2030. A carbon price of ~US$100/tCO2 with broader coverage and subsidy removal is needed.

3. Energy Transition

   • Ambitious plans under the Recovery and Resilience Plan (RRP) include investments in renewable energy, green hydrogen, and building renovation, targeting ~47% renewable energy share by 2030.

Policy Conclusions

• Corporate Sector: Strengthened restructuring tools for zombie firms and viability checks to mitigate fiscal risks.
• Tourism: Targeted liquidity support for small firms and policies to boost international confidence, including sustainability certifications.
• Climate Change: Carbon-pricing reforms, green investments, and energy poverty mitigation to support decarbonization by 2050.

All references and technical notes detailed in the original report support the above summaries.