Pandemic Effect on Company Sustainability and Debt Policy: The Case of Portugal

The COVID-19 pandemic, has underscored the critical importance of sustainability across various sectors, particularly within the global economy and corporate responses to pandemic-induced challenges. Companies worldwide have grappled with unprecedented financial and operational hardships, pushing some to the brink of closure. A crucial dimension of sustainability in this context pertains to corporate financing policies. Analyzing how the pandemic has impacted these policies reveals significant insights. Government support has been instrumental in mitigating pandemic-induced disruptions, but often proved insufficient for severely affected companies. Companies, seeking financial resilience, turned to state-guaranteed lines of credit as a lifeline. Additionally, moratoriums on existing credits provided temporary relief, but long-term consequences, particularly regarding corporate indebtedness. As companies adapted financing strategies, corporate indebtedness increased. Coupled with rising interest rates in late 2022, corporate financing costs surged, emphasizing the need for sustainable financial approaches addressing both short-term crises and long-term stability. In conclusion, corporate sustainability during the ongoing COVID-19 pandemic necessitates a comprehensive approach. Governments must provide adequate support, companies should pursue sustainable financing solutions, and a careful consideration of the long-term consequences of financial policy changes is essential. Prioritizing sustainability in the corporate sector prepares businesses for future crises while safeguarding global economic stability.