Fiscal Monitor, April 2020: Policies to Support People During the COVID-19 Pandemic

Fiscal Monitor, April 15, 2020

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Fiscal policies are at the forefront of responding to the COVID-19 pandemic.
Fiscal measures can:
- save lives,
- protect the most-affected people and firms from the economic impact of the pandemic,
- prevent the health crisis from turning into a deep long-lasting slump.
Key priorities and actions:
- fully accommodate spending on health and emergency services;
- pursue global coordination for a universally low-cost vaccine and to support countries with limited health capacity;
- provide large, temporary and targeted support for affected workers and firms until the emergency abates.
Transition as shutdowns end:
- broad-based, coordinated fiscal stimulus—where financing conditions permit—will become more effective in fostering the recovery.

Fiscal policies are at the forefront of facilitating an economic recovery from the COVID-19 pandemic once the Great Lockdown ends.
Policymakers can achieve recovery objectives with IDEAS:
- Invest for the future—in health systems, infrastructure, low carbon technologies, education, and research;
- adopt well-planned Discretionary policies that can be deployed quickly;
- Enhance Automatic Stabilizers, which are built-in budgetary tax and spending measures that automatically stabilize incomes and consumption.
Protective reforms:
- improving unemployment benefit systems and social safety nets can protect household incomes from adverse shocks and strengthen resilience against future epidemics.

Over the past decade, SOEs have doubled in importance among the world’s largest corporations.
Roles of SOEs:
- often deliver basic services such as water, electricity, and loans for families and small businesses;
- at their best, can help promote higher economic growth and achieve development goals.
Risks and public costs:
- many SOEs are a burden to taxpayers and the economy.
Policy directions to get the most out of SOEs:
- ensure the firm’s managers have the right incentives;
- provide effective oversight;
- require a high degree of transparency of their activities.