The most important measures to help an economy suffering from the coronavirus pandemic should be of a fiscal and employment nature.
This stems from a poll carried out by the American Chamber of Commerce (AmCham) in Slovakia among 54 CEOs of its member companies between March 19 and 26.
They mostly called for reducing payroll tax or postponing its due date, delaying the due date for corporate income tax and VAT deposits, increasing the Labour Code flexibility, reducing red tape, and making e-communication with public institutions work better.
Companies expect drop in revenues
The poll suggests that most companies have approached the coronavirus threat responsibly. As many as 75 percent of CEOs were at least partially ready and had internal crisis scenarios to secure their operations prepared on the first day after the virus outbreak.
Neither responsible approach or thorough preparation can help prevent the rapid worsening of economic results and the drop in revenues, however. About 40 percent of respondents expect their revenues to drop by at least 30 percent. This will have a fundamental impact on the operation and survival of many companies.
Many investors may drop away
At the same time, 40 percent of companies will be unable to work under the current conditions for more than three months, while 67 percent of companies will not survive more than six months.
If the current situation continues and the government fails to prepare targeted measures, many important investors in Slovakia will most probably drop away during the summer.
This situation would have a negative effect on employment and public finances. First of all, it will result in a significant drop in state budget incomes and the budgets of municipalities in the form of missing income taxes. Secondly, lower incomes of people and reduced purchasing power of households will be reflected in lower incomes from VAT.
In the case of companies going bankrupt, hundreds of thousands of people will become unemployed, resulting in a steep increase in the payments from the state-run social insurer Sociálna Poisťovňa, which will place a burden on the public finance budget.
2. Apr 2020 at 22:37 | Compiled by Spectator staff