Weekly Digest: SOEs Faces Massive Debt Pressures

debt risk

  • Several state-owned enterprises are experiencing financial difficulties due to their inabilities to pay short-term debts amid the Covid-19 pandemic, successfully putting the economy into an induced coma. As a result, the government’s involvement in corporate debt restructuring is necessary, especially in handling loans that will mature this year.
  • All this time, state-owned banks are among the primary funders of the projects carried out by various state-owned companies. Financial troubles leading to debt restructuring will ultimately distress them, too, considering they are using short-term funds for such projects.
  • Asset sales conducted by state-owned enterprises will keep happening since many of them need quick liquidity amid inflating debts. Besides, the government’s budget to provide capital injections is also limited.

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