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Japan’s small hotels and restaurants struggle with funding Coronavirus virus pandemic

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The index to measure the financing conditions of small hotels and restaurants shows that many companies are still suffering from the pandemic.

Japanese hotels and small restaurants continue to suffer from funding strains COVID-19 crisis, a survey has shown that it is difficult for central banks to decide when to end pandemic mitigation financing programs.

The index, which measures funding conditions between small and medium-sized hotels and restaurants, fell 33 percent in the three months to December, according to a full version of the Bank of Japan (BOJ) Tankan Business Confidence Survey.

Although the previous survey read better than minus 46, it showed that many more companies saw the financial conditions as dire, compared to those they thought were easy.

The situation of small businesses in the service sector highlights the growing gap between the companies that have been hit by the pandemic and those that are still falling.

The index, which measures the financing conditions of companies of all sizes and industries, has improved over the three months to December, according to a scheme in the Tankan survey released on Monday.

The results, which the BOJ will discuss at this week’s meeting, include a decision to cut funding for last year’s emergency in response to a cash cut caused by the pandemic, which expires in March 2022.

The council is keen to curb BOJ’s corporate bond and commercial paper purchases, but leaves part of a small business loan scheme untouched, sources told Reuters.

“The BOJ could end its purchases of corporate bonds and commercial paper. Given the uncertainty surrounding the Omicron variant, however, central banks can act safely and extend other sections of the program beyond March,” said Takashi Miwa, chief economist at Nomura Securities.



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