FT News Briefing Small business aid deal, ECB bad bank idea, emerging market debt
Apr 20, 2020
Negotiations are heating up in Congress over a $300 billion aid package aimed at supporting small businesses struggling from the pandemic. As states face unprecedented revenue shortfalls, discussions around federal assistance are intensifying. Meanwhile, the European Central Bank considers creating a bad bank to tackle the issue of non-performing loans. On the global stage, investors are hesitating in response to calls from the G20 for emerging markets to receive a respite on debt repayments.
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State Budget Crisis
- States face a $500 billion budget shortfall due to the pandemic.
- This is because of lost tax revenue and increased public health costs.
States Need Unrestricted Aid
- States need unrestricted federal aid to offset revenue losses.
- They want this instead of targeted funding for specific expenses.
Illinois's Lack of Reserves
- Illinois has no rainy day fund, compared to states like Texas with 70 days and Wyoming with a year's worth.
- Many states have under 30 days of reserves.