The International Monetary Fund warned that the rate of bankruptcy for small- and medium-sized businesses may triple this year in the absence of sufficient government support, threatening to stall the economic recovery and cause financial instability.

A staff analysis of 17 countries suggests that bankruptcies for the firms could surge to 12 per cent, from 4 per cent before the pandemic, the IMF said in a report on Thursday.

Italy would see the biggest increase due to a large drop in aggregate demand and high share of production in contact-intensive industries. Across the Group of 20, relief from taxes and social security contributions, grants and interest rate subsidies have been an important salve, the IMF said.