Businesses struggle to pay their bills during Covid-19 Crisis

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Almost 3 million businesses in Brazil struggled to pay their bills in June, as the economic shocks of the Covid-19 pandemic continue to reverberate around the country. Almost half of them had to postpone paying their taxes in order to manage their accounts, according to a survey by the Brazilian Institute of Geography and Statistics.

The crisis is leading to a major increase in defaults in the country, as demand remains low — and costs high. But evidence suggests that the worst may be yet to come, as there is still no way to envision a proper resumption of many business while the pandemic continues to ravage the country, requiring social distancing measures in Brazilian cities.

According to the institute, 52.9 percent of the companies operating in Brazil struggled to make routine payments during June. The rate is higher among small businesses — with up to 59 employees — than medium-sized or large corporations with over 500 employees: 53, 42, and 29 percent, respectively.

Among the companies that managed to find an emergency credit line to meet their payroll obligations, 76.4 percent relied on government assistance.

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