worsening by reduced access to finance, and firms face significant uncertainties about the future. A substantial group of firms indicate that they are on the brink of insolvency, potentially leading to more employment losses, and uncertainty is exceptionally high which also is likely to lead to lower investments and more job losses. Against this backdrop, public policies play a key role to mitigate these negative impacts, help firms weather the initial storm, and support recovery.

In response to the shock countries have introduced a wide variety of support programs for firms and workers, varying from covering wage payments for workers (e.g., Brazil’s _MP936_ scheme or South Africa’s _Temporary Employer-Employee Relief Scheme_ ), offering subsidized loans (e.g., Ghana’s _Adom_ and _Anidaso_ loans scheme) to allowing deferrals of tax payments (e.g., deferral of corporate taxation in Brazil and Mexico).<sup>21</sup> Many of these early stage policies are aimed to help firms in “keeping the lights on” by improving cash flow, often with limited targeting.

Cirera et al. (2020) show that despite these efforts, access to support programs is very limited, especially in poorer countries and among smaller firms. Their results also highlight a critical challenge for policy makers: it is difficult to identify which firms should be targeted. We show that in a crisis of this magnitude, targeting variables that are relatively easy to observe, such as size and sector, might be a poor proxy to identify the firms most in need of support. This is because most of the variations in sales drops are not explained by the variables we can usually observe in a data set. Given how widespread the shock is across the economy, similar cautions regarding targeting criteria for policy interventions supporting businesses pre-COVID19 are needed, by taking into account the large heterogeneity between firms belonging to the same sector and of similar size. In future research, it is very important to assess the distribution of policy support programs and how these interventions can support the recovery, or even further spurring technological adoption and productivity growth.

With COVID-19 cases still increasing globally, countries and their firms will continue to be affected by health and economic shocks in the foreseeable future. As this survey was conducted during the initial stages of the pandemic, the ability of firms to adapt to the new reality will become a more important factor determining performance and survival. For this reason, continued and high-frequency data collection efforts have a crucial role to play in helping us to better understand longer-term effects of the crisis.

Finally, a concern for many countries is the extent to which the crisis could have scarring effects and worsen growth prospects. We think productivity growth could be an especially important channel to analyze as the crisis could effectively impair productivity growth through different mechanisms, by reducing incentives or resources for investment in innovation as well as by worsening misallocation of resources between firms and sectors (Di Mauro and Syverson, 2020).

> 21As shown by World Bank (2020) more than 140 countries had announced some sort of policy to support SMEs by end of April 2020.

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