Policy Tracker

Browse by Country

This policy tracker summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic as of end-March 2020. The tracker includes 186 economies. More countries will be added soon.

NOTE: The tracker is not meant for comparison across members as responses vary depending on the nature of the shock and country-specific circumstances. The tracker focuses on discretionary actions that supplement existing social safety nets and insurance mechanisms. These existing mechanisms differ across countries in their breadth and scope. The information included is publicly available and does not represent views of the IMF on the measures listed.


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Afghanistan, Islamic Republic of

Afghanistan has reported 40 positive cases (no deaths, one recovery) as of March 23. The government adopted containment measures, including screening at ports of entry, strict quarantine for those tested positive, social distancing, and closure of public places for gathering. It postponed the launch of a new school year and cancelled Nowruz celebrations, while the Hajj and Religious Ministry called on people to pray at homes and avoid holding mourning ceremonies at mosques. The government has also taken steps to replace wheat imports lost due to border closures with Pakistan with purchases from Central Asia.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government has allocated $25 million in the budget to cover immediate expenses related to the epidemic. It is monitoring the situation closely and working on additional fiscal and support measures to be activated in response to the developing situation.

Monetary and macro-financial
  • The Financial Stability Committee is meeting regularly to assess evolving risks to the financial and monetary stability. DaB is in regular contact with banks.

Exchange rate and balance of payments
  • DaB is in discussions with money-service providers to ensure uninterrupted services, including transactions in foreign currency, and to encourage enhancement of their remote services.


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Albania

As of March 25, Albania has 146 confirmed cases, and 5 deaths. Since detecting its first case on March 8th, due to its proximity and close links to Italy, Albania adopted a series of containment measures. These include closing schools and universities, banning all large events, closing restaurants and cafes, halting public transport, and imposing curfew on movements of private cars and pedestrians. Albania has effectively shut its borders, halting almost all flights, passenger maritime transport and land crossings for all passenger vehicles. On March 24th the government declared the state of natural catastrophe, which gives the government extended powers to deal with the situation. The government has urged everyone to work from home if possible and has granted public servants with young children paid leave. Pensioners will receive their pensions at home by post, while late penalties for electricity bills have been waived.


Key Policy Responses as of March 25, 2020

Fiscal
  • On March 19th the government amended the 2020 budget through a normative act announcing a package of support measures of Lk 23bn (1.3 percent of GDP). The package is a combination of spending reallocations, spending increases and sovereign guarantees to support affected businesses. The key measures are: (i) additional funding for health sector in the amount of Lk 3.5 billion (ii) Lk6.5bn for the support of small businesses/self-employed that are forced to close activities due to the COVID-19 pandemic by paying them twice the amount of tax-declared salaries, doubling of the unemployment benefits and social assistance layouts. (iii) LK 2bn of defense spending reallocated toward humanitarian relief for the most vulnerable (iv) deferral of profit tax installment payments for small companies and, (v) Lk11bn (0.6 percent of GDP) sovereign guarantee fund for companies to access overdrafts in the banking system to pay wages for their employees.

Monetary and macro-financial
  • To address the liquidity bottlenecks of companies and individuals, the Bank of Albania announced a temporary change on the provisioning requirements, effective from March 12th to May 31st, enabling clients to ask banks and other financial institutions to defer loan installments without penalties. On March 25th, the Bank of Albania cut its key policy rate-the weekly repo, by 50 basis points to a new historic minimum of 0.5 percent. The Governor announced that the banking sector is liquid and well capitalized, and the central bank stands ready to provide unlimited liquidity for as long as needed.

Exchange rate and balance of payments
  • Albania has a floating exchange rate. The Bank of Albania intervenes only in pre-announced purchases to boost reserves or to smooth excessive and disruptive short-term volatility. No measures regarding the exchange rate market have been announced.


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Algeria

Algeria is being hit by two shocks—the spread of COVID-19 and the sharp decline in oil prices. Government policy is responding to both shocks. As of March 25, Algeria had 302 confirmed COVID-19 cases, and 21 deaths. The authorities have been implementing containment measures since early February (e.g., cancelling flights, and imposing quarantines to repatriated Algerians). Most recent confinement measures include closure of schools, universities, restaurants, and shops; cancellation of public and private events; shut down of transportation services (internal and external); putting on mandatory leave half of civil servants and private workers with full compensation. Demonstrations and religious activities have been cancelled, a lockdown of affected areas has been ordered and a curfew has been put in place in several cities including Algiers.


Key Policy Responses as of March 25, 2020

Fiscal
  • In response to the oil price shock, authorities have announced their intention to lower current spending by 30 percent (7.2% of GDP or USD 12 bn), while keeping wages intact and protecting health and education spending. The government is also preparing a supplementary finance law, which will incorporate measures to mitigate the economic impact of the virus. The law will notably include compensation measures for losses incurred by businesses. In the meantime, declaration and payments of income taxes for individuals and enterprises have been postponed, except for large enterprises.

Monetary and macro-financial
  • On March 15, the Bank of Algeria lowered the reserve requirement ratio from 10 percent to 8 percent, and its main policy rate by 25 basis points to 3.25 percent.

Exchange rate and balance of payments
  • The authorities announced several measures to cut the import bill by at least USD 10 bn (6 percent of GDP).


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Angola

Angola has reported two confirmed cases of COVID-19 a few days ago. No death has been reported. Passengers arriving from high-risk countries are quarantined for 14 days. All flights into and out of the country have been suspended with few exceptions. Same restrictions for passenger ships. Trade transportation continues.


Key Policy Responses as of March 25, 2020

Fiscal
  • The Government is working on a package of measures to fight the coronavirus outbreak in the country and its economic fallout.

Monetary and macro-financial
  • At this point, monetary policy has not been changed in response to the COVID-19 pandemic. Policy rates and other monetary policy instruments have been kept unchanged since 2019Q4. The central bank has provided no indication that any change is being contemplated at this point.

Exchange rate and balance of payments
  • The central bank continues to allow the exchange rate to clear the market during foreign exchange auctions. It is expected that the exchange rate will continue to play a shock-absorbing role.


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Argentina

The outbreak of COVID-19 in Argentina has been relatively limited so far, with 387 confirmed cases and 6 mortalities (as of March 25). The authorities have adopted measures to prevent a rapid growth in infections, involving a full closure of borders and a nation-wide quarantine, beginning on March 20th and lasting until at least March 31st. Capital Flow Management Measures (CFMs) that were already in place since August 2019 have largely protected Argentina so far from the impact of capital outflows.


Key Policy Responses as of March 23, 2020

Fiscal
  • Adopted measures (costing about 1 percent of GDP based on preliminary estimates) have focused on providing: (i) increased health spending, including for improvements in virus diagnostics, purchases of hospital equipment; and construction of clinics and hospitals; (ii) support for workers and vulnerable groups, including through increased transfers to poor families, increased social security benefits (especially to low-income beneficiaries), higher unemployment insurance benefits, and payments to minimum-wage workers; (iii) support for hard-hit sectors, including an exemption from social security contributions, and subsidized loans for construction activities; (iv) demand support, including spending on public works; (v) anti-price gouging policies, including price controls for food and medical supplies; (vi) ringfencing of essential supplies, including certain export restrictions on medical supplies and equipment, and support for R&D in pharmaceutical firms; and (v) forbearance, including continued provision of utility services for households in arrears; a stay on bank account closures due to bounced checks and credit extension to companies with payroll tax arrears. In addition, credit guarantees will be provided to banks’ lending to micro, small and medium enterprises (SMEs) for the production of foods and basic supplies. Part of these measures might be financed through reallocation from lower priority spending.

Monetary and macro-financial
  • Measures have been aimed at encouraging bank lending through (i) lower reserve requirements on bank lending to households and SMEs; (ii) regulations that limit banks’ holdings of central bank paper to provide space for SME lending; and (iii) temporary easing of bank provisioning needs and of bank loan classification rules (i.e. extra 60 days to be classified as non-performing).

Exchange rate and balance of payments
  • A broad set of CFMs have been in place since August 2019, aimed at restricting financial account transactions (limits on purchase of dollars, limits on transfers abroad and limits on debt service in foreign currency), and some current account transactions (surrender requirements on export proceeds, restrictions on imports of services and interest payments on foreign currency debt). Although CFMs have helped limit outflows and reduce exchange rate volatility, since March 9th the central bank has intervened in the foreign exchange market (selling a cumulative of US$1.0bn or 2.2 percent of gross reserves) to avoid disorderly conditions.


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Armenia

Armenia has reported 265 cases of COVID-19 (no deaths) as of March 25, 2020. The government declared a national state of emergency on March 16, and imposed strict containment measures, including school closures, travel bans on foreign citizens from high risk countries, and imposed fines to those who violate isolation orders during the state of emergency. The government announced an assistance package with a headline amount of $300 million (2 percent of GDP) to mitigate the socio-economic issues related to the pandemic, although this includes a variety of direct spending, state-sponsored loans and increased investment.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government promised an increase in health-related spending, social assistance and will offer subsidies to support small and micro business loans for firms, particularly those in heavily affected sectors, to cover in part the salary of workers in danger of being laid off and other operational costs.

    Measures will be taken to reprioritize public and private investment and activate the implementation process.

Monetary and macro-financial
  • The Central Bank of Armenia reduced the policy rate by 25 bps to 5.25 percent on March 17. The interbank market has been active, and the central bank has easily met liquidity needs so far and provided a few FX swap operations to assure sufficient liquidity in dram and in FX. The central bank has not used macroprudential policies actively yet. The CBA’s authorities are supervising banks’ liquidity positions and will act swiftly if required to safeguard the financial stability.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly and has depreciated around 3 percent against the US$ since the end of February. No balance of payment or capital control measures have been adopted.


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Aruba

Aruba has reported 17 positive cases (with no deaths) as of March 25, 2020. The Coronavirus outbreak will affect Aruba through two key channels—the spread of COVID-19 and a sharp decline in tourism. The authorities have adopted containment measures, including a compulsory dusk-to-dawn curfew, travel restrictions, suspension of non-vital government work, closures of schools and non-essential business activities, and limits on social gatherings.


Key Policy Responses as of March 25, 2020

Fiscal
  • On March 12, the government announced that it is preparing a fiscal stimulus package to absorb the potential negative economic effects of the Coronavirus. The amended 2020 budget, sent to parliament for approval, contains two supporting programs: a relief package for employees who lose their jobs due to the virus outbreak; and a package to support small and medium-sized enterprises. Moreover, on March 20, the authorities announced that the planned fiscal consolidation reforms for 2020 have been postponed.

Monetary and macro-financial
  • On March 17, the central bank of Aruba (CBA) lowered: the reserve requirement on commercial bank deposits from 12 to 11 percent; the minimum capital adequacy ratio from 16 to 14 percent; and the prudential liquidity ratio from 18 to 15 percent. Furthermore, the maximum allowed loan-to-deposit ratio was increased from 80 to 85 percent. See https://www.cbaruba.org/cba/readBlob.do?id=6307.

Exchange rate and balance of payments
  • On March 17, the CBA announced that it would not grant any new foreign exchange licenses related to outgoing capital transactions, and that it stands ready to take further measures to preserve the peg.


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Australia

Australia has reported 2,136 confirmed cases of COVID-19, claiming 8 lives, as of March 24, 2020. New cases jumped during the past week, compared to the confirmed cases of 270 as of March 16. Social distancing measures are increasingly tightened, including by limiting non-essential gatherings, preventing places of social gatherings from opening, shutting down some non-essential businesses, and banning overseas travel. Other measures, including declaration of states of emergency, have been in place.


Key Policy Responses as of March 24, 2020

Fiscal
  • Two economic stimulus packages have been approved in March 2020. The headline figure of the combined stimulus package amounts to a cumulative of A$189 billion (9.7 percent of GDP) in net over FY2024, which includes support for households (A$25 billion or 1.3 percent of GDP) and businesses (A$38.8 billion or 2.0 percent of GDP), as well as balance-sheet support to ensure the flow of credit in the economy (up to A$125 billion or 6.4 percent of GDP). The latter includes loan guarantees between the Commonwealth government and participating banks to cover the immediate cash flow needs of SMEs (up to A$20 billion or 1.0 percent of GDP). A package of RBA measures (A$90 billion or 4.6 percent of GDP) is also included in the headline figure. Excluding the RBA measures, the total net fiscal package amounts to A$101.6 billion (5.2 percent of GDP) over FY2024. In addition, parliament approved an advance authorization of A$40 billion for unforeseen events.

    In addition, the Commonwealth government has committed to spend an extra A$2.4 billion (0.1 percent of GDP) to strengthen the health system and protect the vulnerable people from the outbreak of COVID-19. The Commonwealth government has also agreed with the States and the Territories to share the public health costs incurred by the States and Territories in treating the COVID-19. Temporary measures to ensure the continuity of aged care, amounting to an additional A$444.6 million, have been introduced.

Monetary and macro-financial
  • The policy rate was cut by 25 basis points twice on March 3 and 19, to 0.25 percent. RBA has announced yield targeting on 3-year government bonds at around 0.25 percent through purchases of government bonds in the secondary market. To support liquidity, RBA will conduct one-month and three-month repo operations daily until further notice. Repo operations of longer-term maturities (six-months or longer) will be held at least weekly, as long as market conditions warrant. RBA has established a swap line with U.S. Fed for the provision of US dollar liquidity in amounts up to US$60 billion. To allow banks to lend more to SMEs during the period of disruption caused by COVID-19, RBA has established a term funding facility of at least A$90 billion for SMEs lending, and the government is allocating up to A$15 billion to invest in residential mortgage backed securities and asset backed securities. The Australian Prudential Regulation Authority has also provided temporary relief from its capital requirement, allowing banks to utilize some of their current large buffers to facilitate ongoing lending to the economy as long as minimum capital requirements are met. In addition, the Australian Banking Association has announced that Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly to absorb economic shocks.


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Austria

As of March 23, there were over 4,300 registered COVID-19 cases and 21 deaths in Austria, with numbers rapidly on the rise. The authorities have progressively tightened containment measures. Initially they targeted travel to and from Italy and self-quarantine for people with symptoms, the measures progressed to banning large gathering in public spaces, suspension of schools, and isolation of several ski resorts. By March 16, leaving home was banned by law with limited exceptions, and enforced by administrative and police measures, and a number of communities and regions were declared risk areas and put under quarantine. These measures were extended subsequently to mid-April. For all judicial and administrative procedures, the clock was put on hold so as to avoid hardship due to missed deadlines.


Key Policy Responses as of March 22, 2020

Fiscal
  • The total fiscal package amounts to 38 billion euros (about 9 percent of GDP). A crisis management fund was initially endowed with 4 billion euros on March 15 to address liquidity pressures from additional claims on the health care system, fund short-time work, and compensate self-employed, family- and micro-business for the loss of earnings related to the sickness. A 2 billion euro guarantee scheme for exporting companies was established under the existing limits for export credits. An additional 34 billion euros (8½ percent of GDP), of which up to 15 billion were targeted to companies in the export sector, 7 billion for more generalized credit guarantees and 10 billion for deferral of personal and corporate income tax payments for 2020. The General Civil Code was enacted on the same day declaring COVID-19 a force majeure enabling companies to force workers to take up to two weeks of leave accumulated in previous years. On March 22, €22 million were earmarked for research and short-term work was extended to 3 months (until May) with the possibility to extend it by another three months (to August). Under this provision working hours may be reduced to up to 10 percent, at 80 to 90 percent of regular pay. Employers will only pay hours worked, while the rest will be paid from the budget.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    The Oesterreichische Nationalbank (OeNB) has declared readiness to supply sufficient cash to banks, ATM operators, and the economy in response to increased withdrawals. Working hours were extended to meet the increased demand. On March 18, the Financial Market Authority prohibited short sales for one month following the massive drop in prices on the Vienna Stock Exchange due to betting on covered share price losses.

Exchange rate / capital flow management
  • No measures.


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Azerbaijan

Azerbaijan has been adversely affected by COVID-19 and a collapse of oil prices. The authorities have reported 87 confirmed cases, with 10 recoveries and 1 death as of March 25. Some cases have resulted from local transmission. To contain the spread of COVID-19, the authorities have introduced a special quarantine regime (until April 20, 2020). It includes border closures, required quarantine of returning citizens, prohibition of mass gatherings, restriction on domestic movements; closure of retail outlets, airports, and transportation hubs; social distancing, and disinfection of public spaces. The Central Bank of Azerbaijan (CBA) and commercial banks have shifted to a seven-day work week, including to allow individuals and businesses to convert their manat holdings into foreign currency. The COVID-19 Operational Headquarters has been created under the Cabinet of Ministers, and working groups within various ministries and at the CBA have been tasked with developing specific measures.


Key Policy Responses as of March 25, 2020

Fiscal
  • The authorities have increased spending on public health (AzN 8.3 million) to contain the spread of the CV. They have also announced support to the affected businesses in the amount of AzN 1 billion (1 percent of GDP). Azerbaijan's government has provided $5 million to the COVID-19 Fund as part of the WHO’s Strategic Preparedness and Response Plan.

    Measures will be taken to reprioritize public and private investment and activate the implementation process.

Monetary and macro-financial
  • On March 19, the CBA left the refinancing rate unchanged at 7¼ percent, but raised the floor of the interest rate corridor (within a de facto floor system) by 125 bps to 6¾ percent. The authorities have announced their intention to extend the blanket deposit guarantee until December 4, 2020. The guarantee covers all manat (foreign currency) deposits within a 10 (2½) percent interest rate cap.

Exchange rate and balance of payments
  • The CBA, with the participation of the State Oil Fund, has conducted scheduled and extraordinary foreign exchange auctions, and has satisfied all demands for foreign currency at the announced 1.7 AzN/US$ rate.


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The Bahamas

COVID-19 comes on the heels of the devastation caused by Hurricane Dorian six months ago. The Bahamas has so far reported 5 confirmed cases of COVID-19 (as of March 25). The government imposed a general lockdown and a nightly curfew. The reduction in oil prices can provide a buffer for the shock.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government’s fiscal response is under preparation. So far, support measures totaling is B$24 million (0.2 percent of GDP) have been announced, including (i) B$4 million (0.03 percent of GDP) for the health sector and (iii) B$ 20 million (0.16 percent of GDP) in support for business loans to SMEs.

Monetary and macro-financial
  • The Central Bank of The Bahamas has arranged with domestic banks and credit unions to provide a 3-month deferral against repayments on credit facilities for businesses and households that were negatively impacted by the pandemic. Forbearance will be provided for borrowers who maintained their accounts in good standing before the onset of the pandemic.

Exchange rate and balance of payments
  • No measures.


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Bahrain

Bahrain has been hit by the spread of COVID-19 and by the recent sharp decline in oil prices. As of March 23, 377 confirmed cases have been reported in Bahrain, of which 164 have recovered and 2 have died. To contain the rapid spread of COVID-19, the authorities have expanded social distancing and stay-at-home measures over the past few weeks: closing educational institutions, retail shops, restaurants and cinemas; suspending flights to infected areas; suspending prayers in mosques; rescheduling major events; restricting gathering to 5 people; and switching to remote working at public entities.


Key Policy Responses as of March 23, 2020

Fiscal
  • A BD 560 million ($1.5 billion or 4.0 percent of GDP) stimulus package to respond to the economic distress due to the COVID-19 pandemic was announced on March 17. The package, effective for a period of three months from April, comprises seven initiatives: (i) payment of salaries for Bahrainis working in the private sector to be financed from the unemployment fund; (ii) payment of electricity and water bills for Bahraini individuals and companies; (iii) exemption of commercial entities from municipalities' fees; (iv) exemption of tourist facilities from tourism fees; (v) exemption of industrial and commercial entities from paying rent to the government; (vi) doubling of the size of the liquidity fund to support SMEs; (vii) and redirection of Tamkeen (a semi-autonomous government agency that provides loans and assistance to businesses) programs to support adversely affected companies, as well as restructuring of all debts issued by Tamkeen. In addition, to respond to urgent health needs created by COVID-19, the Cabinet has authorized the Minister of Finance and National Economy to withdraw from the general account up to BD 177 million or 1.3 percent of GDP.

Monetary and macro-financial
  • On March 17, the Central Bank of Bahrain (CBB) expanded its lending facilities to banks by up to BHD 3.7 billion (26 percent of GDP) to facilitate deferred debt payments and extension of additional credit. The CBB has also followed the Fed’s interest rate cuts in response to the COVID-19 pandemic: the one-week deposit facility rate was cut (in two steps) from 2.25% to 1.0%, the overnight deposit rate from 2.0% to 0.75%, and the overnight lending rate (in one step) from 4.0% to 2.45%. Other key measures to support banks and their clients include: (i.) reducing the cash reserve ratio for retail banks from 5% to 3%; (ii.) relaxing loan-to-value ratios for new residential mortgages; (iii.)capping fees on debit cards; (iv.) requesting banks to offer a six-month deferral of repayments without interest or penalty and to refrain from blocking customers' accounts if a customer has lost his or her employment. The CBB is also following up with banks on suitability of banks' contingency plans.

Exchange rate and balance of payments
  • No measures.


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Bangladesh

As of March 26, 2020, Bangladesh has reported 44 confirmed cases and 5 deaths following the identification of the first imported case on March 8th. On March 23rd, the government declared a general holiday from March 26th to April 4th: government offices, private offices, and courts will be closed, commercial banks will operate shorter hours. Individuals have been requested not to leave their homes except to collect daily necessities and emergency supplies. Beyond the domestic impact of the health crisis, the two main channels through which the Bangladesh economy will be impacted are remittances and exports of ready-made garments (RMG). Remittances represent over 5 percent of GDP (close to $17 billion in FY 19), and a majority of migrant workers are based in Gulf countries that are affected by the abrupt decline in oil prices. Close to half a million migrant workers have returned since the outbreak of the pandemic. The RMG sector accounts for more than eighty percent of the country’s exports. The industry has been reportedly hit by the cancellation of $1.5 billion in garment orders from major retailers in advanced countries, affecting more than a thousand factories.


Key Policy Responses as of March 26, 2020

Fiscal
  • To face expected increased demand for health care spending, the Finance Division of the Ministry of Finance is preparing a revised FY20 budget. Since March 11th, the Finance Division has allocated an additional Taka 2.5 billion (about US$29 million) to the Health Services Division, Ministry of Health & Family Welfare in order to fund the COVID-19 preparedness and response plan. The government is also considering measures to cushion the impact of the crisis on the economy, including the expansion of existing transfer programs that benefit more vulnerable households, as well as mechanisms to support exporting industries. Increased allocation has been made to the Open Market Sale (OMS) program to ensure adequate food supply for lower-income class households, particularly those dependent on daily wages. The government also plans to declare a support package for different export-oriented industries employing in excess of 4 million workers. The National Board of Revenue has suspended temporarily duties and taxes on imports of medical supplies, including protective equipment and test kits.

Monetary and macro-financial
  • The focus of Bangladesh Bank is to ensure that there is adequate liquidity in the financial system to support the operations of financial institutions, and it has announced that it will buy treasury bonds and bills from banks. Bangladesh Bank has also issued circulars to delay non-performing loan classification, extend tenures of trade instruments, and ensure access to financial services. Effective March 24th, the repo rate has been lowered from 6 percent to 5.75 percent, while the CRR has been reduced to 4.5 percent from 5 percent on a daily-basis requirement and from 5.5 percent to 5 percent for the bi-weekly requirement.

Exchange rate and balance of payments
  • No capital flow management measures have been introduced. Exchange rate has been relatively stable so far.


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Barbados

Barbados has confirmed 24 positive cases (no deaths) of COVID-19 as of March 26, 2020. In response to escalating coronavirus cases, the government has moved into its final phase of the National Coronavirus Response Plan. Measures to activate isolation and treatment centers, impose limits on public gatherings (maximum 25 people), and launch supplementary medical facilities have been supplemented with a nightly curfew that restricts the movement of all non-essential personnel. The government has enhanced screening at all ports of entry and a 14-day self-quarantine protocol is in place for all travelers. Spillovers from the global pandemic to the critical tourism sector has been significant in terms of a reduction in commercial airlift capacity and forward bookings , which has culminated in labor furloughs and temporary hotel closures.


Key Policy Responses as of March 24, 2020

Fiscal
  • The Government of Barbados (GoB) has identified upfront emergency health and capital expenditures needed to manage and mitigate the spread of infection (0.6 percent of GDP). This includes resources to refurbish the hospital and clinics, build isolation centers, and provision critical medications and supplies. In addition, the GoB intends to boost priority capital spending and introduce social programs for displaced workers to mitigate the effects of COVID-19 on the economy. This includes infrastructure investment to renovate schools, government buildings, and a key industrial complex (0.6 percent GDP) and the introduction of a Household Survival Program (0.2 percent of GDP). The latter involves a minimum income for households made unemployed by COVID-19 and supplemental unemployment benefits though the National Insurance Scheme.

Monetary and macro-financial
  • Following negotiations with the GoB, commercial banks have agreed to provide forebearance in the form a 6-month debt-payment moratorium for individuals and business directly impacted by COVID-19.

Exchange rate and balance of payments
  • No measures.


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Belarus

COVID-19 has been spreading across Belarus with 86 confirmed cases but no deaths as of March 25, 2020. The government has been implementing a range of measures to delay the spread of the disease and to support individuals and businesses. Containment measures currently in place include travel restrictions (e.g., cancelations of international flights and ground transportation) and social distancing (e.g., a ban on gatherings/events with international participation). Policy measures are elaborated below. In addition, Belarus faces adverse consequences from the gradual loss of the subsidy on oil imported from Russia (internal tax changes in Russia), current oil-price shock which has negative impact on prices of Belarus exports of refined products and tighter global financing conditions.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key spending measures amount to about US$1 million, which are reallocated from other expenditure to increase spending on mitigation policies and wage increases for healthcare workers.

Monetary and macro-financial
  • Key measures include: (i) credit holidays, i.e., guidance to banks to postpone principal repayments and interest on loans; (ii) mitigation of a number of prudential requirements: softening of assets classification requirements (including looser prudential requirements on FX loans); increasing the maximum risk standard for one debtor; suspending indexation of regulatory capital of banks or other financial corporations; (iii) softening of recommendations on interest rate ceilings on deposits and credits, and the associated risk assessment. See also: https://www.nbrb.by/press/10042 (Russian only)

Exchange rate and balance of payments
  • Key measures include: (i) central bank foreign exchange interventions to smooth sharp fluctuations in the exchange rate (within the floating exchange rate regime); (ii) discouraging banks to: (a) keep large margin between FX sales and purchases or overstating the exchange rate for currency withdrawals; (b) provide additional restrictions or charge extra fees for banking operations. See also: https://www.nbrb.by/news/10048 and https://www.nbrb.by/news/10051 (Russian only)


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Belgium

COVID-19 has been spreading rapidly across Belgium with over 4,269 confirmed cases and claiming 122 lives as of March 25. The temporary minority government—which has been granted enhanced executive powers—has implemented a range of measures to reduce the spread of the coronavirus, including school and retail shop closures, a ban on all gatherings, limiting movement to essential needs, ban of non-essential travel abroad.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government announced a fiscal package of €8-10 bn (about 2 percent of GDP) and €50 bn (about 10 percent of GDP) of guarantees for new bank loans to companies and self-employed. Key fiscal support measures include: (i) boosting health expenditure; (ii) increasing support for those in temporary unemployment and self-employed; and (iii) liquidity support through postponements of social security and tax payments for companies and self-employed. Regional governments have also announced additional subsidies to affected firms and sectors and further bank-loan guarantees.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Other measures taken by the Belgian authorities include: (i) reducing the counter-cyclical bank capital buffer to 0 percent (an increase to 0.5 percent was to become effective by June); (ii) a ban on short-selling stocks until April 16; and (iii) postponement of debt repayment due to banks by affected households and companies to September 30, 2020.

Exchange rate / capital flow management
  • No measures.


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Belize

The COVID-19 pandemic comes as the economy is already in recession due to drought and a slowdown in tourism in the second half of 2019. Belize has so far one confirmed case of COVID-19 (as of March 24). The government has closed all schools across the country for 14 days and declared a state of emergency in San Pedro—the main island for tourism where all restaurants and casinos are in lockdown.


Key Policy Responses as of March 24, 2020

Fiscal
  • Belize has announced fiscal stimulus amounting to BZ$25 million (about 1 percent of GDP) in 2020, funded by the central bank and partly through reallocating resources within the budget. The government has also introduced a bill to parliament that seeks to increase the maturity of treasury notes by an additional ten years.

Monetary and macro-financial
  • The Central Bank of Belize has instituted macro-prudential measures to maintain the flow of credit in the economy: (i) reducing the statutory cash reserve requirements; (ii) extending the time period to classify targeted non-performing loans in sectors such as restaurants, transportation and distribution companies, and other affected areas, from 3 months to 6 months; (iii) encouraging domestic banks and credit unions to provide grace periods for servicing interest and/or principal components of commercial loans and ancillary loans, as needed and where commercially viable; (iv) reducing risk-weights for banks on loans in the tourism sector from 100 percent to 50 percent; and (v) reviewing financial institutions’ business continuity and cybersecurity plans to ensure that an adequate level of financial services will be available to the public.

Exchange rate and balance of payments
  • No measures.


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Benin

There are 5 confirmed COVID-19 cases in Benin as of March 24, 2020. The authorities are taking significant measures to suppress the nascent virus outbreak. For a two-week period starting on March 19, the authorities have decided to: (i) significantly limit transit of people across land borders; (ii) restrict the issuance of entry visas to the country; (iii) introduce a systematic and compulsory quarantine of all people coming to Benin by air; and (iv) suspend all public gatherings including conferences, funerals, festivals, political rallies, sporting events, and religious activities. In addition to COVID-19, Beninese economy has also been affected by the closure of border with Nigeria since end-August 2019. Government policy is responding to both developments.


Key Policy Responses as of March 24, 2020

Fiscal
  • The mitigation and prevention measures taken so far by the authorities amount to CFAF 10 billion (about $17 million or 0.1 percent of GDP). They are also considering more ambitious measures provided that they can garner financing from donors.

Monetary and macro-financial
  • On March 21, 2020, the BCEAO (the regional central bank) announced the following monetary and macro-financial measures with the aim of mitigating the negative economic impact of the COVID-19 crisis by: (i) providing FCFA 340 billion additional liquidity to bring the total liquidity made available to banks by weekly and monthly auctions to 4750 billion FCFA; (ii) extending the collateral framework to access the BCEAO’s refinancing to include CFAF 1,050 billion of bank loans to prequalified 1,700 private companies that could thus benefit from better financing conditions; and (iii) setting-up a framework with the banking system to support firms with repayment difficulties.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No measures.


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Bhutan

Bhutan confirmed its first imported case of COVID-19 on March 6, 2020, a tourist who traveled to Bhutan from India. The affected individual and his partner along those who came into contact with them were traced and quarantined. As of March 25, there are three imported cases in total, but no reported case of local transmission. Bhutan started imposing containment measures immediately after the first case, with restriction of entry of foreign tourists initially for two weeks but extended afterwards and closure of schools in three cities. On March 22, Bhutan sealed off its land borders as a precautionary measure to prevent the spread of COVID-19. Authorities are now deliberating on a package of fiscal and monetary measures to protect the vulnerable and minimize the adverse impact on employment, growth, and financial stability.


Key Policy Responses as of March 21, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Bolivia

The first two cases of COVID-19 were confirmed in Bolivia on March 10, 2020. As of March 27, there are 61 confirmed cases, but no deaths have been reported so far. The government has taken a series of measures to prevent the spread of the virus, including a generalized lockdown, entailing the temporary closure of many businesses, border closure and suspension of school, and postponed the general elections originally scheduled on May 3. On March 25, the authorities announced the state of health emergency until April 15 and further tightened the quarantine orders, completely closing the borders, restricting the movement of people to once a week, and prohibiting movements of vehicles except for security and health reasons.


Key Policy Responses as of March 26, 2020

Fiscal
  • The authorities have proposed direct relief payments of about $US 73 per child to be paid to households with children in public schools, a measure calculated to provide most of its benefits to poorer households. In addition, the government plans to deliver food to 1.5 million of families ($US 58 per family), pay the electric energy bills of for three months for the consumers with lower consumption, and pay 50 percent of the potable water for all households. The authorities also postponed the payment of some taxes (corporate income tax, VAT and transaction tax) with the possibility to pay them in tranches. Efforts are also underway to strengthen Bolivia’s health care system which is likely to struggle to accommodate the demands arising from the pandemic.

Monetary and macro-financial
  • The Central Bank of Bolivia (BCB) injected 3.5 billion Bolivianos (more than $500 million) by purchasing bonds from the pension funds, which, in turn, are expected to deposit the money at banks, increasing the banking system liquidity by about 50 percent. The authorities have also announced a 2-month moratorium on loan repayment (principal) in the financial system for natural persons and small companies. Most commercial banks announced that they are suspending borrowers’ loan repayments for 2-4 months, with the delayed installments to be paid at the end of the loan closure date.

Exchange rate and balance of payments
  • No measures.


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Bosnia and Herzegovina

Bosnia and Herzegovina (BiH) has reported 168 COVID-19 positive cases, claiming three lives as of March 25, 2020. The government has declared a state of emergency throughout the country, closed schools and universities, shuttered restaurants and shops, suspended public transportation, banned public gatherings, and imposed severe restrictions on the movement of people. Border are closed to non-BiH citizens. Incoming BiH citizens are quarantined for 14 days.


Key Policy Responses as of March 25, 2020

Fiscal
  • The entity governments have allocated around KM 50 million (0.15 percent of GDP) for dealing with COVID-19, including purchasing medical equipment and supplies. FBIH will transfer KM 30 million (0.1 percent of GDP) to hospitals. RS announced the health fund will cover health care costs for all patients and has postponed payments for business tax from end-March to end-June, while speeding up tax and SSC refunds. FBIH announced that total amount about KM 1 billion (3% of GDP) will be secured to support the economy, through: (1) setting up a special fund to stabilize the economy, mainly aimed at supporting exporting companies; (2) establishing a guarantee fund which will be serve to maintain and improve the liquidity of companies, and (3) tasking the Development Bank to establish a credit line for improving the liquidity of companies.

Monetary and macro-financial
  • Banking Agencies have announced a six-month loan repayment moratorium for restructuring credit arrangements for individuals and legal entities which are found to have aggravated circumstances for loans repayments due to COVID-19. Banking Agencies have instructed banks to track clients and exposure portfolios affected by COVID-19. Banks are also instructed to consider additional customer relief, including reviewing current fees for services and avoiding charging fees to handle exposure modifications.

Exchange rate and balance of payments
  • No measures.


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Botswana

Botswana has not reported any case as of March 24, 2020. The government has adopted a list of containment measures, including social distancing, travel bans on visitors from high-risk countries, and screening and suspension of visas at ports of entry. Recently, the authorities also closed the borders with Zimbabwe after the first death from COVID-19. On the economic front, diamond sales, and tourism and travel activities have fallen sharply, and lockdowns in neighboring countries will disrupt activity.


Key Policy Responses as of March 24, 2020

Fiscal
  • The initial budget allocated to deal with this outbreak was P31 million of which P22 million has already been spent. The authorities are updating this plan and anticipate increasing spending to around P500 million (1/4 percent of GDP).

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures. The central bank maintains a crawling peg vis-à-vis basket of currencies.


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Brazil

According to authorities’ data, there were 1,891 cases and 34 deaths in Brazil as of March 23. Most of the cases, including the number of casualties, were from the state of Sao Paulo which entered a 15-day quarantine mode on March 24. Several other regional governments have implemented mitigation measures, including school closures and restrictions on non-essential services. Foreigners’ entry through airports is now restricted and borders are closed except for freight, Brazilians and foreign residents, and professionals from international organizations.


Key Policy Responses as of March 23, 2020

Fiscal
  • To mitigate the impact of COVID-19, the authorities announced a package of fiscal measures adding up to 3½ percent of GDP—mostly reallocations within the 2020 budget. With congress declaring a state of “public calamity” on March 20, the government’s obligation to comply with the primary balance target in 2020 has been lifted. The government has also invoked the escape clause of the constitutional expenditure ceiling to accommodate exceptional health spending needs. The fiscal measures include temporary income support to vulnerable households (bringing forward the 13th pension payment to retirees, expanding the Bolsa Familia program with the inclusion of over 1 million more beneficiaries, cash transfers to informal and unemployed workers, and advance payments of salary bonuses to low income workers), temporary tax breaks and credit lines for firms with the aim of protecting employment, lower taxes and import levies on essential medical supplies, and new transfers from the federal to state governments to support higher health spending and as cushion against the expected fall in revenues. A plan assist states and municipalities with a temporary stay of debt payments, debt renegotiation, and support for credit operations through government guarantees was also announced. Public banks are expanding credit lines for businesses and households, with a focus on supporting working capital (credit lines add up to over 2½ percent of GDP). The National Treasury responded to pressures in the interest rate futures market by announcing a program for the simultaneous auctions (buying and selling) of government securities.

Monetary and macro-financial
  • The central bank lowered the policy rate (SELIC) by 50bps a historical low of 3.75 percent. Measures to increase liquidity in the financial system (reduction of reserve requirements and capital conservation buffers, and a temporary relaxation of provisioning rules, among others) have been implemented. The reserve requirement has been reduced from 25 to 17, on top of a reduction of 6 bps in early March. The central bank also opened a facility to provide loans to financial institutions backed by private corporate bonds as collateral. In addition, the Fed has arranged to provide up to US$60 billion to the central bank through a swap facility that will remain in place for the next six months. The five largest banks in the country agreed to consider requests by individuals and SMEs for a 60-day extension of their maturing debt liabilities.

Exchange rate and balance of payments
  • The exchange rate has depreciated by close to 15 percent since mid-February and by 21 percent since end-2019. The central bank has intervened various times in the foreign exchange market over the last three weeks (both with spot and derivative contracts sales), by a total of nearly 22 USD billion (6 percent of gross reserves). The central bank is resuming repo operations of Brazilian sovereign bonds denominated in US dollars, which could potentially release US$10 billion into the money market.



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Brunei Darussalam

Brunei Darussalam has been hit by two shocks—the spread of COVID-19 and the sharp decline in global oil prices. The first confirmed case of COVID-19 in Brunei was detected on Mar 9, 2020, and has since increased to 88 cases as of March 23, 2020 (WHO). The government is actively responding to the risks of the pandemic from spreading further by implementing a range of measures, including strict inbound and outbound travel restrictions and banning all mass gatherings, including weddings and sporting events. The Ministry of Health (MOH) is also stepping up efforts to track close contacts of positive cases. Since the emergence of COVID-19 in early January 2020, a total of 3,011 laboratory tests for COVID-19 have been conducted. On March 22, the Sultan of Brunei announced that the MOH will be expanding its testing capacity, while a new virology laboratory is being built with the hope to increase the country's testing capacity by 10-fold to meet the testing need.


Key Policy Responses as of March 23, 2020

Fiscal
  • On March 13, the Ministry of Finance and Economy (MOFE) proposed a budget of BND853 million (USD587 million) for the 2020/2021 financial year, up by 0.5 percent from the previous financial year. This proposed budget (including its growth and revenue forecasts), does not take into account the recent plunge in global oil prices. The MOFE will continue to monitor its fiscal position while calling for sustainable spending programs across all ministries, moving forward.

Monetary and macro-financial
  • On March 19, the Autoriti Monetari Brunei Darussalam (AMBD), working closely with MOFE as well as the financial industry, announced a six-month interim measures to alleviate the financial burden on sectors hit hard by the COVID-19 pandemic. Effective April 1, (i) businesses in the tourism, hospitality/event management, restaurants/cafes, and air transport sectors (“Affected Sectors”) will be given a six-month deferment of their principal repayments of financing/loans; (ii) the deferment is also extended to importers of food and medical supplies; and (iii) all bank fees and charges (except third party charges) that are related to trade and for payments of transactions in those Affected Sectors will be waived for a period of six months. To encourage social distancing and promote the usage of digital banking, online local interbank transfer fees and charges will be waived for a period of six months for all customers. Banks are also encouraged to review their lending rates in this current environment.

Exchange rate and balance of payments
  • No measures, so far.

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Bulgaria

Compared to the state of contagion in western Europe, COVID-19 is relatively less spread in Bulgaria with 220 confirmed cases and 3 deaths as of March 24. The government has implemented a range of measures, which are mainly focused on containing the spread of coronavirus, including social distancing and travel restrictions. Economic policies to mitigate the negative impact of the COVID-19 include increased liquidity supply, employment support, and deferral of various tax and utility payment deadlines.


Key Policy Responses as of March 24, 2020

Fiscal
  • Key tax and spending measures include i) coverage of 60% of the wages of the employees in affected sectors that would have been otherwise laid off (over 0.8 percent of 2019 GDP); ii) deferment of the payment of corporate taxes until June 30 (about 0.5 percent of 2019 GDP); and (iii) additional remunerations in the ministries of health, interior and defense (0.4 percent of 2019 GDP.

Monetary and macro-financial
  • Key measures include i) capitalization of the 2019 profit in the banking system (about 1.4 percent of 2019 GDP); ii) increase in liquidity of the banking system by BGN 7 billion (6 percent of 2019 GDP) by reducing foreign exposures of commercial banks; iii) cancellation of the increase of the countercyclical capital buffer planned for 2020 and 2021 with effect amounting to BGN 0.7 billion, or about 0.6 percent of 2019 GDP. (See http://www.bnb.bg/PressOffice/POPressReleases/POPRDate/PR_20200319_BG#, available only in Bulgarian); and iv) capital increase of the state-owned Bulgarian Development Bank (BDB) by BGN 700 million (0.6 percent of 2019 GDP), of which BGN 500 million to be used for the issuance of portfolio guarantees to commercial banks for the extension of corporate loans and the remaining BGN 200 million to provide interest-free loans to employees on unpaid leave (up to BGN 1500).

Exchange rate / capital flow management
  • No measures.


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Burkina Faso

Burkina Faso has reported 146 positive cases and 4 deaths of COVID-19 as of March 24, 2020. The government has adopted several containment measures, including social distancing, a nationwide curfew, closure of schools, cancelation of major public events, closure of terrestrial borders, and the suspension of commercial flights and key government services.


Key Policy Responses as of March 22, 2020

Fiscal
  • The government is currently weighing potential countercyclical fiscal measures to address the socio-economic impacts of the outbreak. An emergency response plan for the health sector has been prepared. The plan focuses on strengthening human and technical capacities of public hospitals, increasing available hospital beds, expanding testing capacities and purchasing medical supplies to facilitate the implementation of hygiene measures. The plan will be regularly updated to reflect local and global developments and will inform potential fiscal measures.

Monetary and macro-financial
  • Measures have been announced at the level of the BCEAO (Central Bank of West African States) on March 21, 2020. They include (i) provision of additional liquidity to banks; (ii) extending the collateral framework; (iii) setting-up a framework with the banking system to support firms with repayment difficulties; (iv) increasing the amount of concessional loans to finance urgent investment and equipment expenses; (v) communicating on the special program for refinancing bank credits granted to SMEs; (vi) initiating negotiations with firms issuing electronic money to encourage its usage; and (vii) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No measures.


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Burundi

No case of COVID-19 has been officially reported as of March 24, 2020. A few suspected cases tested negative according to the authorities.

Measures taken to minimize the risk of the pandemic breaking out in Burundi have been very limited: The population has been instructed to follow some basic rules of limited social distancing and frequent handwashing. Hand sanitizers and water for handwashing have been installed in public places. Travelers from high-risk countries are required to undergo quarantine, and commercial flights were banned on March 22, 2020 for one week (cargo flights still operate).

Burundi’s health care system is weak. The authorities have asked hospitals to make beds available for potential cases (20 for each national hospital and 5 for each local one). Only one lab in the nation can do COVID-19 tests with minimal capacity. The country reportedly only has 15,000 masks and 70,000 gloves (the population is about 12 million). The authorities are currently working with the WHO and World Bank to strengthen capacity in the health sector.


Key Policy Responses as of March 24, 2020

Fiscal
  • No measures have been officially announced. The COVID-19 contingency plan could cost USD 14.5 million (0.5 percent of GDP) as of March 24, 2020. The cost would increase rapidly if the first case is reported.

Monetary and macro-financial
  • No measures have been officially announced.

Exchange rate and balance of payments
  • No measures have been officially announced. Burundi has been engaged in multiple currency practices, with a parallel market exchange rate that is substantially more depreciated than the official exchange rate.


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Cabo Verde

Cabo Verde has reported 4 confirmed COVID-19 cases and 1 death as of March 25, 2020. Prevention measures taken by the authorities include: installation of body temperature scans in airports, suspension of official travel and flights to China and other heavily affected countries, preparation of quarantine areas in hospitals, suspension of flights from European countries affected by COVID-19, the United States, Brazil, Senegal and Nigeria, as well as maritime traffic (with few exceptions), and quarantine of the island of Boa Vista where 3 of the 4 confirmed cases were located. The fourth case is in the capital city, Praia (Santiago island). The authorities have also prepared a contingency plan and put in place a rapid response team.


Key Policy Responses as of March 24, 2020

Fiscal
  • The authorities stand ready to reprioritize spending, notably through a revised budget to be tabled in parliament by June. However, the likely fall in revenue from the expected economic contraction in 2020 will further constrain fiscal space. In the meantime, they have taken measures to support the private sector, including loan guarantees and tax obligations facilities as follows: loan guarantees of up to 50 percent for large companies in all sectors (CVE 1 billion, about €9 million); up to 80 percent for companies in the tourism and transport sectors (CVE 1 billion); up to 100 percent for small-and medium-sized enterprises in all sectors (CVE 300 million, €2.7 million) and for micro-enterprises in all sectors (CVE 700 million CVE, about €6.7 million). Other measures include faster settlement of invoices and VAT refunds, extension of the tax payment period, payment in installments for VAT and other withheld taxes, exemption for contributions to the Social Security Fund, and funding of an emergency plan with CVE 76 million through the reallocation of budgetary appropriations, to cover additional expenses for personnel, training and medical equipment.

Monetary and macro-financial
  • No measures taken.

Exchange rate and balance of payments
  • No measures taken.


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Cambodia

The number of confirmed COVID-19 cases in Cambodia has been low, but has recently escalated to 91 as of March 24, 2020. There have been no deaths so far. Travel bans are enforced for visitors from France, Germany, Iran, Italy, Spain, the United Kingdom, the United States, and Vietnam. Schools are closed and the government has banned public events with more than 50 participants.


Key Policy Responses as of March 24, 2020

Fiscal
  • Additional fiscal resources to the health sector of around USD 70 million USD (around 0.2 percent of 2019 GDP) are expected. The government has announced a package of tax concessions, expenditure support, and credit support. Savings on current spending of about USD 30 million are also planned, and capital spending is to be streamlined by around USD 370 million.

Monetary and macro-financial
  • The National Bank of Cambodia has implemented four measures to improve liquidity in the banking system: (i) delaying additional increases in the Capital Conservation Buffer; (ii) cutting the interest rate in its Liquidity Providing Collateralized Operations, decreasing banks’ funding costs in domestic currency; (iii) cutting the interest rate on Negotiable Certificates of Deposit (the collateral for LPCOs), to encourage banks to disburse loans; and (iv) lowering required reserves that banking and financial institutions must maintain at the National Bank of Cambodia both for local (riel) and foreign currencies.

Exchange rate and balance of payments
  • Cambodia continues to maintain a managed floating system.


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Cameroon

The number of positive COVID-19 cases in Cameroon reached 56 (no fatalities) as of March 23, 2020, of which 16 new cases were reported in the past 24 hours. Two infected persons have fully recovered and have been released from hospital early this month. The government announced a package of containment measures early this week, including closure of land, air and sea borders, quarantine for travelers returning from a country with a high level of infection, closure of schools and universities, prohibition of gatherings of more than 50 persons, closure of bars, restaurants and entertainment spots after 6 pm, suspension of missions of civil servants and parastatals abroad, cancellation of school and university games, and a ban on overloading taxis and public transportation.

The authorities updated its preparedness and response plan to the coronavirus and further encouraged social distancing and sanitation measures, including the use of electronic communications and digital tools for meetings of more than 10 persons, compliance with hygiene measures recommended by the WHO such as systematic hand washing with soap and/or use of disinfectant hand gel in public offices, avoiding close contact such as shaking hands or hugging, and covering the nose when sneezing in public places.


Key Policy Responses as of March 22, 2020

Fiscal
  • The fiscal stance envisages measures to contain the spread of the virus and the impact on growth. The authorities’ preparedness and response plan envisage COVID-19-related health spending to reach CFAF 6.5 billion (or US$11 million) over the next three months (about 0.1 percent of GDP on an annualized basis). The increase in health and other crisis-related spending coincides with declining oil and non-oil revenues due to the global slowdown. The authorities plan to maintain the level of oil production and investment to protect growth.

Monetary and macro-financial
  • On March 24, 2020, BEAC announced that it will suspend its main absorption operations on the monetary market for the coming week in order to better assess the impact of the COVID-19 pandemic on banking liquidity in CEMAC. However, banks with financing needs will be able to satisfy their requests at the marginal lending facility under the usual conditions. Further measures are expected to be taken following the Monetary Policy Committee meeting scheduled on March 27.

Exchange rate and balance of payments
  • No measures.


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Canada

Coronavirus has been spreading rapidly across Canada, with over 4,000 cases and 39 deaths as of March 26. Canada is also being hit by the sharp decline in global oil prices. Federal and provincial governments have implemented a range of measures to mitigate the spread of the virus, including travel restrictions, social distancing, and declarations of states of emergency and closures of non-essential businesses in some provinces. More information can be found here.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key tax and spending measures (6.0 percent of GDP, $138 billion CAD) include: i) $1.125 billion (0.05 percent of GDP) to the health system to support increased testing, vaccine development, medical supplies, mitigation efforts, and greater support for Indigenous communities; ii) around $52 billion (2.3 percent of GDP) in direct aid to households, including payments to workers without sick leave and access to employment insurance, an increase in existing GST tax credits and child care benefits, and a new distinctions-based Indigenous Community Support Fund; and iii) around $85 billion (3.7 percent of GDP) in direct support to businesses, including tax deferrals and wage subsidies. The federal government is expected to announce additional measures with the release of its budget for 2020/21, due on March 30. More information can be found here.

Monetary and macro-financial
  • Key measures adopted by the Bank of Canada include: i) reducing the overnight policy rate by 100 bps in March (to 0.75 percent); ii) an extension of the bond buyback program across all maturities; iii) launching the Bankers' Acceptance Purchase Facility; iv) expanding the list of eligible collateral for Term Repo operations to the full range of eligible collateral for the Standing Liquidity Facility (SLF), except the Non-Mortgage Loan Portfolio (NMLP); v) supporting the Canada Mortgage Bond (CMB) market by purchasing CMBs in the secondary market; vii) announcing a temporary increase the amount of NMLP a participant can pledge for the SLF and for those participants that do not use NMLP; vii) announcing an increase in the target for settlement balances to $1,000 million from $250 million; viii) together with central banks from Japan, Euro Area, U.K., U.S., and Switzerland, announcing further enhancing the provision of liquidity via the standing US dollar liquidity swap line arrangements; ix) announcing the launch of the Standing Term Liquidity Facility, under which loans could be provided to eligible financial institutions in need of temporary liquidity support; and x) announcing the Provincial Money Market Purchase (PMMP) program is an asset purchase facility that will acquire provincially-issued money market securities. More details here.

    Other measures in the financial sector include: i) OSFI, the bank regulator, lowered the Domestic Stability Buffer for D-SIBs to 1 percent of risk weighted assets (previously 2.25 percent); ii) under the Insured Mortgage Purchase Program, the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC); iii) the federal government announced a $10 billion (around 0.4 percent of GDP) credit facility at 2 Crown Corporations to lend to firms under stress; and iv) Farm Credit Canada will receive support from the federal government that will allow for an additional $5 billion in lending capacity to producers, agribusinesses, and food processors.

Exchange rate and balance of payments
  • No measures.


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Central African Republic

The impact of the COVID-19 pandemic has so far been limited in the Central African Republic (C.A.R.), with only 5 confirmed cases (no deaths), as of March 25, 2020. Despite the limited number of reported cases, the government of C.A.R. has paid close attention to the evolution of the outbreak and imposed some measures, notably at the points of entry such as the international airport of Bangui. As a landlocked fragile state, C.A.R. is very vulnerable to international trade and security conditions.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government of C.A.R. intends to implement an announced response plan for the health sector that was prepared in strong collaboration with the WHO, with an estimated cost of 27 billion of FCFA (1.9 percent of GDP). This plan goes beyond an immediate response plan and contains measures to strengthen the ability of the healthcare system to deal with such pandemics in the future. It notably aims at: (i) providing medical care of confirmed cases; (ii) improving the monitoring of the country’s points of entry; and (iii) strengthening the capacities of the medical staff, laboratories and hospitals. The government has requested the help of its development partners to finance this plan through grants and loans.

Monetary and macro-financial
  • On March 24, 2020, the Bank of Central African States (BEAC) announced that it will suspend its main absorption operations on the monetary market for the coming week in order to better assess the impact of the COVID-19 pandemic on banking liquidity in the Central African Economic and Monetary Community (CEMAC). However, banks with financing needs will be able to satisfy their requests at the marginal lending facility under the usual conditions. Further measures are expected to be taken following the Monetary Policy Committee meeting scheduled on March 27.

Exchange rate and balance of payments
  • No measures.


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Chad

As of March 25, Chad has reported 3 cases (no deaths) of COVID-19. Chadian authorities have adopted containment measures, including passenger flight suspension (starting in March 19), closure of borders with CAR and Sudan, quarantine for nationals returning from high risk countries, cancellation of events and gatherings of more than 50 people, as well as schools and universities closures. A hospital in N’Djamena was designated to receive infected cases. An inter-ministerial management committee meets daily to monitor developments.


Key Policy Responses as of March 25, 2020

Fiscal
  • An estimated CFAF 15 billion (0.3 percent of non-oil GDP) of fiscal measures have been approved and are being implemented. Key measures include: (i) training of medical and technical staff, (ii) purchase of necessary medical equipment, (iii) construction of seven health centers in remote areas, (iv) construction of three mobile hospitals, and (v) securely managing entry points. The authorities are also considering fiscal measures to help the private sector weather the shock.

Monetary and macro-financial
  • On March 24, 2020, BEAC announced that it will suspend its main absorption operations on the monetary market for the coming week in order to better assess the impact of the COVID-19 pandemic on banking liquidity in CEMAC. However, banks with financing needs will be able to satisfy their requests at the marginal lending facility under the usual conditions. Further measures are expected to be taken following the Monetary Policy Committee meeting scheduled on March 27.

Exchange rate and balance of payments
  • No measures.


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Chile

Chile has reported 1,142 confirmed COVID-19 cases and 3 deaths as of March 24, 2020. In response to COVID-19, the authorities have implemented a range of measures, including declaration of state of catastrophe, travel restrictions, closure of schools, curfews and bans on public gatherings, and a Law on teleworking. The authorities have also unveiled measures to support employment and provide liquidity, elaborated below. The COVID-19 outbreak comes only a few months after the social unrest that started in mid-October 2019.


Key Policy Responses as of March 24, 2020

Fiscal
  • The authorities presented a package of fiscal measures of up to US$11.75 billion (about 4.7 percent of GDP) focused on supporting employment and firms’ liquidity. The set of measures includes: (i) higher healthcare spending; (ii) enhanced subsidies and unemployment benefits; (iii) a set of tax deferrals; (iv) liquidity provision to SMEs, including through the state-owned Banco del Estado; and (v) accelerated disbursements for public procurement contracts.

Monetary and macro-financial
  • The key measures undertaken by the Central Bank of Chile include: (i) policy rate cut by 75 basis points to 1 percent; (ii) introduction of a new funding facility for banks conditional on them increasing credit; (iii) inclusion of corporate securities as collateral for the Central Bank’s liquidity operations; (iv) initiation of a program for purchase of bank bonds (up to US$4 billion); and (v) expansion of the program for providing liquidity in pesos and US$ through repo operations and swaps. The Financial Market Commission unveiled a package of measures to facilitate the flow of credit to businesses and households, which includes: (i) special treatment in the establishment of provisions for deferred loans; (ii) use of mortgage guarantees to safeguard SME loans; (iii) adjustments in the treatment of assets received as payment and margins in derivative transactions; and (iv) start of a review of the timetable for the implementation of Basel III standards.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly. The Central Bank of Chile has extended until January 9, 2021 the window for possible resumption of FX sales that was opened in November 2019 (during the social unrest).


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China, People's Republic of

China has been hit hard by the outbreak with over 81,171 confirmed COVID-19 cases and 3,277 deaths as of March 23, 2020 (mainland). The government imposed strict containment measures, including the 1-week extension of the national Lunar New Year holiday, the lockdown of Hubei province, large-scale mobility restrictions at the national level, social distancing, and a 14-day quarantine period for returning migrant workers. There have been very low or no local infections reported recently.


Key Policy Responses as of March 23, 2020

Fiscal
  • An estimated RMB 1.3 trillion (or 1.2 percent of GDP) of fiscal measures have been approved and are being implemented. Key measures include: (i) Increased spending on epidemic prevention and control. (ii) Production of medical equipment. (iii) Accelerated disbursement of unemployment insurance. (iv) Tax relief and waived social security contributions. The overall fiscal expansion is expected to be significantly higher, reflecting the effect of already announced additional measures—including higher infrastructure investment and improvements of the national public health emergency management system—and automatic stabilizers.

Monetary and macro-financial
  • The PBC provided monetary policy support and acted to safeguard financial stability. Key measures include: (i) liquidity injection into the banking system, including RMB 3 trillion in the first half of February, (ii) expansion of re-lending and re-discounting facilities by RMB 800 billion to support manufacturers of medical supplies and daily necessities (RMB 300 billion) as well as micro-, small- and medium-sized firms (RMB 300 billion) and the agricultural sector (RMB 100 billion) at low interest rates, (iii) reduction of the 7-day and 14-day reverse repo rates as well as the 1-year medium-term lending facility rate by 10 bps, (iv) targeted RRR cuts by 50-100 bps for banks that meet inclusive financing criteria which benefit smaller firms and an additional 100 bps for eligible joint-stock banks to support private SMEs, and (v) policy banks’ credit extension to micro- and small enterprises (RMB 350 billion).

    The government provided measured forbearance to provide financial relief to affected households, corporates, and regions facing repayment difficulties. Key measures include (i) delay of loan payments and other credit support measures for eligible SMEs and households, (ii) tolerance for higher NPLs for loans by epidemic-hit sectors and SMEs, (iii) flexibility in the implementation of the asset management reform, and (iv) easing of housing policies by local governments.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly. A ceiling on cross-border financing under the macroprudential assessment framework was raised by 25 percent for banks, non-banks and enterprises.


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Hong Kong Special Administrative Region

Hong Kong SAR has reported 410 confirmed COVID-19 cases and 4 deaths as of March 25, 2020. The government imposed strict containment measures, including (i) closure of schools; (ii) remote work arrangement for civil servants; (iii) cancelation of large-scale events; (iv) 14-day compulsory quarantine for travelers from overseas countries and Mainland China; (v) temporary entry ban on Hong Kong SAR non-resident from overseas countries from March 25; and (vi) reduction and partial suspension of cross-border transport and border control point services, including suspension of transit services at Hong Kong International Airport.


Key Policy Responses as of March 25, 2020

Fiscal
  • An estimated HK$152 billion (or 5.3 percent of GDP) of fiscal measures have been approved and are being implemented. Key measures include (i) establishment of a new Anti-Epidemic Fund (HK$30 billion or 1.0 percent of GDP) to enhance anti-epidemic facilities and services; (ii) tax and fee reliefs and other one-off relief measures (HK$51 billion or 1.8 percent of GDP); and (iii) cash payout to Hong Kong SAR permanent residents aged 18 or above (HK$71 billion or 2.5 percent of GDP).

Monetary and macro-financial
  • Under the currency board arrangement, the Base Rate was adjusted downward to 1.50 and 0.86 percent on March 4 and March 16, respectively, according to a pre-set formula, following the downward shifts in the target range for the US federal funds rate. The jurisdictional countercyclical capital buffer for Hong Kong SAR was reduced further from 2.0 to 1.0 percent on March 16. Key measures to provide financial relief include: (i) the introduction of low-interest loans for SMEs with 100 percent government guarantee; and (ii) other measures by banks to the extent permitted by their risk management principles, including delay of loan payment, extension of loan tenors, and principal moratoriums for affected SMEs, sectors, and households as appropriate.

Exchange rate and balance of payments
  • No measures.


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Macao Special Administrative Region

Macao SAR has reported 30 confirmed COVID-19 cases and no deaths as of March 25, 2020 (Macao SAR time). The government imposed strict containment measures soon after the first case was registered on January 21, including (i) closure of schools; (ii) temporary closure of casinos and other types of entertainment premises (including cinemas, restaurants, and gyms); (iii) rationed distribution of masks to all residents; (iv) temporary mandatory remote work arrangement for civil servants; and (v) cancelation of large-scale events. More recently, travel restrictions include a temporary entry ban on foreign visitors and foreign non-resident workers, and entry restrictions to visitors from Mainland China, Hong Kong SAR and Taiwan Province of China who have traveled overseas in the previous 14 days.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key fiscal measures include (i) additional health spending handouts to all permanent residents (600 patacas per resident) amounting to an estimated 400 million patacas (or 0.09 percent of GDP); and (ii) handouts to all residents (3,000 patacas per resident, with a 3-month expiration) to be used in retail and groceries, amounting to about 2,200 million patacas (or 0.5 percent of GDP). In addition, other measures include free utility fees for Macao SAR residents (for 3 months); utility fee subsidy for enterprises other than gaming operators and 3-star (or above) hotels (for 3 months); interest-free loans and interest subsidy for SMEs; and tax exemption/deductions for residents and local enterprises.

Monetary and macro-financial
  • Under the exchange rate peg in place, the Base Rate of the discount window was adjusted downward on March 4 and 16, by 50 and 64 basis points respectively, reaching 0.86 percent on March 16. With the pataca pegged to the Hong Kong dollar, changes to the Base Rate follow those in Hong Kong SAR’s Base Rate that in turn followed the downward shifts in the target range for the US federal funds rate according to a pre-set formula.

Exchange rate and balance of payments
  • No measures.


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Colombia

Colombia has over 300 confirmed COVID-19 cases and three deaths as of March 24, 2020. The government declared a state of emergency on March 17. A 19-day mandatory quarantine started on March 24. Other measures to contain virus transmission include travel bans, border closures, mandatory closures of bars, prohibition of events with over 50 people, and a suspension of classes. The government has also announced economic measures as part of the response.


Key Policy Responses as of March 24, 2020

Fiscal
  • A state of emergency decree created a National Emergency Mitigation Fund, which will be partially funded from regional and stabilization funds. Additional budgetary support for health has been announced. The authorities estimate that the fiscal impact of COVID-19 could be between 0.3-0.5 of GDP. Authorities have also announced faster direct contracting for services associated with the emergency response, a new credit line providing liquidity support to all tourism-related companies, delayed tax collection for the tourism and air transportation sectors, a reduction of tariffs for strategic health imports, and expanded transfers for vulnerable groups.

Monetary and macro-financial
  • The Central Bank has not changed the policy rate but has implemented several measures to boost liquidity in both the financial market and foreign exchange rate markets. These include: (i) an extension of access of their liquidity overnight and term facilities to managed funds, stock brokerage companies, trusts, and investment companies, (ii) an expansion of their liquidity operations (REPOS) allotment from COP 20 to 23.5 trillion, (iii) COP 10 trillion program to purchase securities issued by credit institutions, and (iv) COP 2 trillion in TES purchases.

Exchange rate and balance of payments
  • To provide liquidity in FX markets, the central bank auctioned USD 400 million of FX swaps (in US dollars) through which reserves are sold and bought back in 60 days. In addition, a new mechanism of exchange-rate hedging was introduced through a USD 1 bn auction of Non-Deliverable Forwards with a 30-day maturity.


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Comoros

Comoros has no officially COVID-19 identified cases as of March 25, 2020. However, first impacts on the economy are apparent, in particular a slowdown of tourist arrivals.

In recent days, the government declared a travel ban, which added to measures such as closing schools, prohibitions of gatherings of more than 20 people, and suspension of traditional ceremonies. The authorities have prepared a public-health related plan that describes the measures to be taken to minimize risks from pandemics. Implementation of the plan appears to be proceeding slowly, however, reflecting the authorities’ severe financial and capacity constraints.The WHO ranks the health system’s preparedness at the lowest level in international comparison.


Key Policy Responses as of March 25, 2020

Fiscal
  • The authorities intend to fully implement their pandemic preparedness plan. Their top priority will be to substantially expand spending on health care in line with pandemic-related needs, trying to overcome to the greatest extent possible the health care system’s capacity constraints. If financing is available after raising spending on health care, the authorities intend to raise transfers to vulnerable households.

Monetary and macro-financial
  • The authorities intend to monitor the impact of the COVID-19 shock on banks’ asset quality.

Exchange rate and balance of payments
  • The authorities intend to monitor inflation developments and continue preserving the peg against the euro.


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Congo, Democratic Republic of

The Democratic Republic of Congo has reported 48 positive cases (3 deaths) as of March 25, 2020 of COVID-19. On March 24th, the government declared a state of emergency and imposed the confinement of the capital, Kinshasa, which includes restrictions to travel between Kinshasa and the rest of the country and the prohibition of all gatherings of people in public spaces. Passenger flights from abroad are not allowed and border posts are closed to non-cargo shipments. These measures add to previous restrictions, such as closure of all education centers, suspension of all religious and sporting events, and closure of bars and restaurants. In 2020, the effects of the COVID-19 pandemic are projected to reduce real GDP growth (including through lower mining activity), increase consumer prices (particularly of imported products), reduce fiscal revenue (both mining and non-mining), and increase fiscal spending through the implementation of a COVID-19 response plan soon to be approved.


Key Policy Responses as of March 24, 2020

Fiscal
  • A preparedness and response national plan is being finalized with support from development partners to deal with the pandemic. The plan mainly focuses on actions to (i) strengthen early detection and surveillance and foster technical and operational coordination within the government; (ii) improve the quality of medical care to infected patients; and (iii) develop effective preventive communication strategies and enhance medical logistic platforms. The plan’s budget is estimated at $130 million (0.3 percent of GDP).

Monetary and macro-financial
  • On March 24, the central bank (BCC) announced several measures to ease liquidity conditions by: (i) reducing the policy rate by 150 bps to 7.5 percent; (ii) eliminating mandatory reserve requirements on demand deposits in local currency; and (iii) extending the maturity of emergency liquidity loans to up to 24 months. The BCC has also postponed the adoption of new minimum capital requirements and encouraged the restructuring of non-performing loans. In addition, the BCC announced measures to reduce contamination risks in bank notes and promote the use of e-payments.

Exchange rate and balance of payments
  • No specific policy responses have been set to date.


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Congo, Republic of

Congo, as most of oil producers, is being hit by two shocks—the potential spread of COVID-19 and the sharp decline in oil prices. The country has reported 4 positive cases (no deaths) as of March 23, 2020. The authorities’ s policy is towards responding to these two developments. The Ministry of Health has prepared a national contingency plan in collaboration with WHO and other international partners. In the meantime, the authorities started to adopt containment measures, including social distancing, travel bans on visitors from high-risk countries and quarantine for nationals/expatriates returning from those countries, screening at ports of entry, and school closures.


Key Policy Responses as of March 25, 2020

Fiscal
  • The overall cost of the response plan to the COVID 19 epidemic has been estimated at US$35 million. To date the government has made available to the Ministry of Health the amount of US$1.4 million.

Monetary and macro-financial
  • Congo is a member of CEMAC. As such, monetary and macroprudential policy decisions are taken at the regional level. On March 24, 2020, BEAC announced that it will suspend its main absorption operations on the monetary market for the coming week in order to better assess the impact of the COVID-19 pandemic on banking liquidity in CEMAC. However, banks with financing needs will be able to satisfy their requests at the marginal lending facility under the usual conditions. Further measures are expected to be taken following the Monetary Policy Committee meeting scheduled on March 27.

Exchange rate and balance of payments
  • No measures.


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Costa Rica

Costa Rica reported its first confirmed case of COVID-19 on Mar 6, and as of March 24, the country has registered 177 confirmed cases and two deaths. In response, the government has implemented a range of measures to contain the spread of coronavirus, including declaration of a state of yellow alert and a national emergency, curfews, international travel restrictions, mandatory quarantines for close contacts and those who enter the country, closures of schools, churches, beaches, national parks, bars, clubs and casinos, and increased testing.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government announced a package of revenue measures to protect workers and companies against the economic effects of COVID-19, including an interest-free three-month moratorium on the payment of value-added taxes, business income taxes, and customs duties, and making social security contributions proportional to the time worked, as well as a deferral of payment of social security contributions. In addition, salary increases for public employees (except for the police) are suspended this year to direct more resources to the attention of COVID-19.

Monetary and macro-financial
  • The Central Bank cut its policy rate by a full percentage point to a record low of 1.25 percent to soften the economic damage caused by the pandemic and to improve credit conditions for households and businesses. The rate decision builds on a series of recent rate cuts (nine since March 2019) designed to stimulate the economy, as well as on the package of measures taken on March 14 to protect workers and companies, including by reducing the cost of credit, relaxing the regulation on restructuring of loans and on buybacks, and a moratorium on the payment of principal and/or interest for three extendable months—particularly for most affected sectors. See Link.

Exchange rate and balance of payments
  • The BCCR continues to maintain exchange rate flexibility and intervenes in the FX market to limit disorderly market conditions.


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Côte d’Ivoire

Côte d’Ivoire is being hit by COVID-19 with 82 confirmed cases as of March 25, 2020. The authorities swiftly adopted containment measures including (i) declaring a state of emergency and establishing a curfew from 9pm to 5am; (ii) banning all international travels, except for humanitarian aid purpose; (iii) prohibiting public gatherings of more than 50 people; (iv) closing schools, nightclubs, restaurants, bars, theatres and other recreational facilities; and imposing restrictions on public transportation and movements between regions in the country.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government is working on an emergency response plan of 96 billion CFAF (or 0.3 % of GDP). It will (i) provide free care for those with the infection and equipping intensive care units; (ii) strengthen epidemiological and biological surveillance (virus testing; creation of a free call center, rehabilitating and equipping laboratories); (iii) reinforce capacities of pharmaceutical industries and financing research on the virus.

Monetary and macro-financial
  • On March 21, the central bank (BCEAO) announced measures to ease liquidity conditions by (1) increasing central bank liquidity by 340 billion FCFA; (2) broadening the BCEAO’s collateral framework to 1,700 listed private companies (this extension will allow eligible firms to benefit from better financing conditions and banks to access additional resources of 1.050 billion FCFA); (3) setting up, with the banking system, a framework to support firms affected by the COVID-19 and which are encountering difficulties in repaying their liabilities.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No measures.


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Croatia

The Croatian economy is expected to be significantly affected by COVID-19, given its dependence on tourism and its largest trading partner being Italy. As of March 25, the number of infected cases was 418 and one dead. Containment started early and has been gradually tightened from border controls, to closure of schools, universities, open markets, and restrictions on intercity travel. Croatia has adopted 63 different economic measures to preserve jobs and alleviate the impact of COVID-19.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key measures include: deferment of public obligations, free of interest for three months, which can be extended by additional three months if necessary; temporary suspension of payments of selected parafiscal charges; interest free loans to local governments, the Croatian Health Insurance Institute, and the Croatian Pension Insurance Institute to cover the deferred payments; subsidization of net minimum wages for three months for up to 400,000 workers to preserve jobs, which could potentially amount to one percent of 2019 GDP; and early refund of taxes for individuals. Beneficiaries of some EU Structural and Investment Funds will be able to receive larger advance payments. Part of the EU funds envelope has been reallocated to micro loans, a new credit line was introduced, accompanied by measures to facilitate faster disbursements of loans with lower interest rates, and larger partial risk guarantees. The government has also resorted to purchases of unsold stocks of finished goods in agriculture, food processing industry, medical equipment, and similar strategic goods.

Monetary and macro-financial
  • The Croatian National Bank (CNB) has provided additional liquidity, supported the government securities market, and temporarily eased the regulatory burden on banks (https://www.hnb.hr/en/home). Liquidity was provided via: (i) the structural repo facility, used for the first time since December 2018 (5-year kuna liquidity of HRK 3.8 billion at a fixed interest rate of 0.25 percent); (ii) regular weekly repo used by banks for the first time since December 2017 (HRK 750 million at 0.30 percent). This rate has since been reduced to 0.05 percent; and (iii) a reduction of the reserve requirement ratio (from 12 to 9 percent). The CNB has supported the domestic bond market twice (by almost HRK 4.3 billion).

    A moratorium for three months on obligations to banks has been introduced. Banks will not apply enforcement measures during this period. The CNB has temporarily adjusted its supervisory practices in line with the EBA statement of March 12 (https://eba.europa.eu/eba-statement-actions-mitigate-impact-covid-19-eu-banking-sector). Banks will not distribute dividends.

    The Croatian Bank for Reconstruction and Development (HBOR) has issued a moratorium on debt service for three months, can provide liquidity loans, export guarantees, and restructure obligations.

Exchange rate and balance of payments
  • The CNB has intervened during March 9–16, to mitigate depreciation pressures. (In total €1.6 billion, about 8½ percent of total reserves at end-January.)


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Cyprus

COVID-19 has been spreading across Cyprus with 124 confirmed cases as of March 24, 2020. The government has implemented a range of measures to limit the spread of coronavirus, including travel and mobility restrictions, a 14-day mandatory quarantine for travelers to Cyprus, and closure of schools, hotels and businesses.


Key Policy Responses as of March 23, 2020

Fiscal
  • A support package of €700 million (3 percent of GDP) for the health sector, households and businesses was announced on March 15. The package includes: (i) a €100 million support for the health sector to combat the pandemic; (ii) income support for households including leave allowance for parents and those with health issues, unemployment allowance for workers made redundant by affected businesses, and a temporary reduction of VAT rates; (iii) support for affected businesses to maintain jobs, support for the tourism sector, and deferring VAT payments due in two months, and (iv) two-month suspension of a scheduled increase in the contribution to the General Healthcare System, which benefit both businesses and households. The government is working on additional fiscal measures to be presented to parliament.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    The Central Bank of Cyprus (CBC) announced additional measures. They include a release of capital and liquidity for banks directly supervised by the CBC (€100 million), simplification of documentation requirements for new short-term loans and other credit facilities, encouraging banks to restructure loans to affected credit-worthy borrowers including providing payment moratorium for nine months and to apply favorable interest rates for new loans and newly restructured loans, and simplification of approval processes for loan restructuring.

Exchange rate and balance of payments
  • No measures.


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Czech Republic

The Czech Republic has recorded over 1,100 confirmed cases of Covid-19, as of March 23, 2020. The government has declared a state of emergency and a nationwide quarantine limiting free movement and international travel to contain the spread of the virus. It further implemented a range of measures to support the population, jobs and businesses.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government announced a fiscal package of CZK 100bn (€3.7bn, 2 percent of GDP). While details are being determined, the measures will likely include income support of 60 percent of gross wages of employees sent into quarantine and up to 80 percent of gross wages of employees of businesses, that had to close because of containment requirements. The government further granted a credit line for businesses through the state development bank (CMZRB) of CZK 10bn and further pledged CZK 900bn (EUR 33.3bn, 16 percent of GDP) in guarantees. Advance payments on personal and corporate income tax are waived for Q2 2020, as are penalties for failing to pay property tax and file tax returns on time.

Monetary and macro-financial
  • The Czech National Bank (CNB) lowered the policy rate by 50 bps to 1.75 percent on March 16 and increased the frequency of repo operations from one to three times a week. It has also revisited its earlier decision adopted in May 2019 to increase the countercyclical capital buffer rate for exposures located in the Czech Republic to 2% with effect from 1 July 2020, leaving it at 1.75 percent. The CNB is considering to, if certain conditions are met, allow banks to delay loan repayments by up to 5 months without requiring (i) the immediate reclassification of loans as non-performing and (ii) banks to update the respective clients' credit rating in the credit registry.

Exchange rate / capital flow management
  • No measures.


D


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Denmark

Denmark has reported 1591 confirmed cases of COVID-19 infection, with 32 deaths as of March 25, 2020. The government has implemented a range of measures to contain the spread of the Covid-19 virus, and to support people, jobs and businesses. These include closure of all borders; prohibition of events with more than 10 people; closure of schools, universities and daycare centers; closures of entertainment, hospitality and public leisure facilities; sending home non-essential public employees and asking all private businesses to keep employees home when possible. The containment measures have been extended until April 13.


Key Policy Responses as of March 23, 2020

Fiscal
  • The authorities responded to the ongoing crisis by providing discretionary fiscal support to the tune of 2.5 percent of GDP (about DKK 60 billion). The increased spending will mainly finance additional health care needs and extraordinary budgetary measures to support workers and businesses. Another 2.5 percent of GDP in countercyclical support is expected to come through Denmark’s strong automatic stabilizers—including from weaker tax receipts and higher social benefits. Temporary liquidity measures, including postponement of tax payments and government guarantees, will further support activity in the first half of year.

Monetary and macro-financial
Exchange rate and balance of payments
  • Denmark’s krone is pegged to the Euro. The fixed exchange rate policy has served Denmark well. The DN has stated its objective of preserving the peg.


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Djibouti

Djibouti has had 11 confirmed COVID-19 case as of March 25, 2020. The government has implemented various prevention measures, including restrictions of air, land, and sea borders, interruption of passenger flights and trains to (and from) Djibouti; suspension of visa issuance; confinement of non-essential employees, and steps to encourage social distancing.

The Ministry of Health and its partners have increased their preparedness by building surveillance, testing, quarantine and health worker capacity. The WHO has delivered protective and medical equipment, including tests and respirators.


Key Policy Responses as of March 25, 2020

Fiscal
  • Increase in health spending.

Monetary and macro-financial
  • The Central Bank of Djibouti has stepped up its financial sector surveillance.

Exchange rate and balance of payments
  • No measures.


E


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Eastern Caribbean Currency Union

The Eastern Caribbean Currency Union consists of eight members (Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines) with a common central bank (the Eastern Caribbean Central Bank). As of noon March 25, the number of COVID-19 infected cases is 17. Authorities are taking medical precautions in line with international recommendation, including travel restrictions, suspension of cruise ship visits, school and university closures, social distancing, expansion of hospital capacity (e.g., procuring medical equipment and supplies, identifying quarantine and isolation facilities, and training medical staff). The COVID-19 shock, if prolonged to the hurricane season (August-November), could compound recurrent risk of natural disasters, aggravating the impact on the economy and society.


Key Policy Responses as of March 24, 2020

Fiscal
  • ECCU members have announced fiscal measures. The Grenadian authorities announced various fiscal and financial measures on March 20, effective for April-June in the first instance, to mitigate the impact of COVID on the economy. These include: (i) payroll support to the affected sectors (such as tourism) and individuals, (ii) expansion of government employment programs; (iii) credit support to small businesses; (iv) increased health care spending, and (v) reduced or deferred payment of some taxes. On March 22, the Prime Minister of St. Kitts and Nevis informed of a 27 percent increase in budgeted health expenditure specifically to deal with COVID-19. This is partly being used to acquire protective equipment masks, gloves, and ventilators.

Monetary and macro-financial
  • On March 19, the Monetary Council of the Eastern Caribbean Central Bank (ECCB) approved grant funding to the ECCB Member Governments, totaling EC$4 million (EC$500,000 each), to help in their fight against the COVID-19. On March 20, the ECCB and ECCU Bankers Association announced a support program for customers and residents during this time of difficulty and uncertainty. The program includes: (i) a loan repayment moratorium for an initial period up to 6-months, with a possible extension upon review; and (ii) waiver of late fees and charges to eligible customers during this period.

Exchange rate and balance of payments
  • No measures.


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Egypt, Arab Republic of

According to the WHO, as of March 24, 2020, Egypt has 366 confirmed cases of COVID-19 and 19 deaths. The COVID-19 epidemic is likely to impact the Egyptian economy primarily due to declining travel and tourist activity, reduced worker remittances, capital outflows, and slowdown in domestic activities as people are asked to stay home. The weaker demand in the global market will also reduce Egypt’s exports as well as earnings from the Suez Canal. The authorities have taken a host of precautionary measures to improve testing as well as to limit the community spread of the virus, including setting up testing centers, temporarily closing places of worship, temporarily halting all air travel, and encouraging civil servants to work from home in non-essential sectors. The central bank and the government are actively implementing measures to contain economic implications of the epidemic.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has announced stimulus policies in the USD 6.4 billion package (EGP 100 billion, 2 percent of GDP) to mitigate the economic impact of COVID-19. Pensions have been increased by 14 percent. Energy costs have been lowered for the entire industrial sector; real estate tax relief has been provided for industrial and tourism sectors; and subsidy pay-out for exporters has been stepped up. As part of the EGP 100 billion stimulus, EGP 50 billion has been announced for the tourism sector, which contributes close to 12% of Egypt’s GDP, 10% of employment, and almost 4% of GDP in terms of receipts, as of 2019. The moratorium on the tax law on agricultural land has been extended for 2 years. The stamp duty on transactions and tax on dividends have been reduced. Capital gains tax has been postponed until further notice.

Monetary and macro-financial
  • The central bank has reduced the policy rate by 300bps. The preferential interest rate on loans to SMEs, industry, tourism and housing for low-income and middle-class families, has been reduced from 10 percent to 8 percent. The limit for electronic payments via mobile phones has been raised to EGP 30,000/day and EGP 100,000/month for individuals, and to EGP 40,000/day and EGP 200,000/per week for corporations. A new debt relief initiative for individuals at risk of default has also been announced, that will waive marginal interest on debt under EGP 1 million if customers make a 50 percent payment. The regulations issued last year requiring banks to obtain detailed information of borrowers have been relaxed. The central bank has also launched an EGP 20 billion stock-purchase program.

Exchange rate and balance of payments
  • No measures.


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El Salvador

El Salvador has reported nine positive cases (no deaths) as of March 24, 2020. The government has implemented a range of measures to contain the spread of the virus, including travel restrictions, closure of schools, universities and the non-essential public sector, social distancing, and closure of restaurants. On March 21, 2020, the government issued a nationwide stay-at-home order and closed all non-essential businesses.


Key Policy Responses as of March 24, 2020

Fiscal
  • Key spending and tax measures include: (i) a US$ 150 salary raise for all employees of the Ministry of Health and other public institutions affected by COVID-19; (ii) a one-time US$ 300 subsidy to approximately 60 percent of all households; (iii) a 3-month deferral of utility payments; (iv) a 3-month extension for income tax payments for individuals and firms operating in the tourism sector with a taxable income lower than US$ 25,000; and (v) a 3-month exemption from the special tourism tax for companies operating in the tourism industry.

Monetary and macro-financial
  • Key measures include: (i) lowering banks’ reserve requirements by 25 percent for newly issued loans; (ii) amending provisioning for NPLs through freezing credit ratings; (iii) imposing a temporary moratorium on credit risk ratings; and (iv) temporarily relaxing lending conditions through a grace period for loan repayments.

Exchange rate and balance of payments
  • No measures.


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Equatorial Guinea

There are 9 confirmed cases of COVID-19 in Equatorial Guinea as of March 24, 2020. All cases have been imported, with no deaths. The government has been proactive in implementing preventive measures, including a complete border closure as of March 15, social distancing measures, closures of public markets and some other non-essential businesses.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has deployed an initial health spending plan (0.07 percent of GDP) focused mainly on prevention. This plan operationalized a first response system, quarantine facilities for incoming travelers, and laboratory facilities/testing. A more comprehensive health contingency plan is should be deployed soon. Finally, the government is also contemplating additional social spending measures. In light of the recent oil price declines, the government is contemplating to slow down execution of non-priority expenditures as well as to continue implementation of plans to strengthen the tax administration.

Monetary and macro-financial
  • On March 24, 2020, BEAC announced that it will suspend its main absorption operations on the monetary market for the coming week in order to better assess the impact of the COVID-19 pandemic on banking liquidity in CEMAC. However, banks with financing needs will be able to satisfy their requests at the marginal lending facility under the usual conditions. Further measures are expected to be taken following the Monetary Policy Committee meeting scheduled on March 27.

Exchange rate and balance of payments
  • No measures.


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Eritrea

The State of Eritrea reported its first positive COVID-19 case to the World Health Organization (WHO) on March 21, 2020. As of March 24, there have been no additional cases. The government has asked locals to limit non-essential movement and avoid public transportation unless for emergencies; prohibited public gatherings, sports and cultural events that assemble a crowd of more than 10 people; closed cinemas and nightclubs; mandated social distancing in commercial units and centers; discouraged nationals who live overseas from returning to Eritrea; imposed strict restrictions on internal and foreign travel unless for extremely urgent and unavoidable purposes; stipulated that visitors who originate directly from, or who have transited through, China, Italy, South Korea and Iran will be quarantined; and announced that stringent legal measures will be taken on all individuals and commercial enterprises that engage in hoarding and speculative price hikes.


Key Policy Responses as of March 24, 2020

Fiscal
  • N/A.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Estonia

The COVID-19 pandemic is affecting the Estonian economy. Barely seven weeks after the first report, COVID-19 registered 404 infections as of March 25, 2020. The government has implemented a range of measures aimed at containing and mitigating the impact of the pandemic for workers and businesses. The measures include travel restrictions, social distancing, declaration of state of emergency, distance learning for schools, ban of public gatherings and sanitary inspections.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government is considering a €2 billion (7 percent of GDP) economic support package aimed broadly at mitigating the effects of the impact of the virus, in particular for buying supplies for the health facilities and for supporting workers and businesses. The package includes support to the Unemployment Insurance Fund to cover for wage reduction (€250 million); business loans to rural companies through the rural development fund (€200 million); guarantees/collateral for bank loans to allow for rescheduling of payments (€1 billion); business loans earmarked for liquidity support to companies (€500 million); investment loans to companies (€50 million); and compensation for direct costs of cancelled cultural and sporting events (€3 million). The government is also discussing the possibility to suspend payments to the Pillar II pension fund. The government signed an order raising the maximum volume of short-term notes that can be issued by Estonia by €600 million from previously €400 million bringing the total to €1 billion.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Additionally, the Eesti Pank reduced the systemic risk buffer for the commercial banks from 1 percent to 0 percent on March 25, 2020 to free up resources for loan losses or new loans. The measure is expected to free up about €110 million for the banks.

Exchange rate and balance of payments
  • No measures.


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Eswatini

Eswatini has reported 4 COVID-19 cases (no deaths) as of March 22, 2020. The government has declared a national state of emergency and a partial lockdown, and implemented containment measures, including suspension of private and public gatherings of 50 people or more, schools closures, suspension of non-essential travel for all citizens, intensive screening and mandatory self-isolation for residents/citizens coming from high risk countries, and restricted entry to foreign nationals coming from high-risk countries. The authorities are working with the WHO to build domestic detection capacity. Economic activity has been affected by the closure of borders with South Africa and the announced lockdown in South Africa, while the exchange rate has depreciated by 17 percent this year.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has issued a supplementary budget for public healthcare in the amount of E100 million or 0.14 percent of GDP (pending parliamentary approval). Low priority recurrent spending will be redirected to the fight against the pandemic and a portion of the capital budget will be reallocated towards refurbishing hospitals and completing new hospitals. Additional expenditure policies are being considered but have not yet been finalized. Revenue measures to mitigate the impact of the virus include: (i) taxpayers projecting losses will file loss provisional returns and no payment will be required; (ii) extension of returns filing deadlines by 3 months before penalties kick-in; (iii) payment arrangements for taxpayers facing cash flow problems; and (iv) waiver of penalties and interest for older tax debts if principal is cleared by the end of September, 2020. For more information see http://www.gov.sz/.

Monetary and macro-financial
  • The Central Bank of Eswatini has: (i) reduced the discount rate by 100 basis points to 5.5 percent; (ii) reduced the reserve requirement to 5 percent (from 6 percent); and (iii) reduced the liquidity requirement to 20 percent (from 25 percent) for commercial banks and to 18 percent (from 22 percent) for the development bank. Banks have announced that those individuals and companies that need short term financial support or relief can approach them and each application will be assessed on a risk-based approach. For more information see https://www.centralbank.org.sz/.

Exchange rate and balance of payments
  • No measures.


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Ethiopia

As of March 23, there were 11 cases of COVID-19 reported in Ethiopia and no deaths. In response, the authorities have closed borders, closed schools, ordered the shuttering of nightclubs and entertainment outlets, and announced social distancing measures. In addition, all people entering Ethiopia from another country are subject to a mandatory 14-day quarantine at designated hotels at the traveler’s expense. The National Election Board of Ethiopia is reviewing the feasibility of conducting elections, scheduled for August 29. Ethiopia is highly exposed to the shock through the large contribution of air transportation to exports: the national carrier, Ethiopian Airlines, which has the largest fleet in Africa, announced the suspension of flights to 30 countries and has reported sharp losses. Flower exports to Europe have also declined significantly due to lack of demand and closure of airports on the continent. Finally, while Ethiopia benefits from lower oil prices, the prices on its main export commodities such as coffee and oil seeds have been adversely impacted by the crisis.


Key Policy Responses as of March 23, 2020

Fiscal
  • Ethiopia initially announced a Br 300 million package to bolster healthcare spending in early March. On March 23, the Prime Minister announced the aid package would be increased to Br 5 billion (US$154 million or 0.15 percent of GDP) but details on the precise modalities of the assistance are not yet available.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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European Union/Euro Area

COVID-19 is propagating rapidly across Europe with 160,233 confirmed cases and 8,622 reported deaths in the EU/EEA and the United Kingdom as of March 23. Most European countries have taken several containment measures ranging from lock downs and travel restrictions to school closures and bans on large gatherings. Measures that favor teleworking were also widely implemented.


Key Policy Responses as of March 23, 2020

Fiscal
  • Key measures (about €37 billion and 0.3 percent of EU27 GDP) include (i) establishing a Corona Response Investment Initiative in the EU budget to support public investment for hospitals, SMEs, labor markets, and stressed regions; (ii) extending the scope of the EU Solidarity Fund to include a public health crisis within its scope, with a view of mobilizing it if needed for the hardest-hit EU member states (up to €800 million is available in 2020); (iii) redirecting €1 billion from the EU Budget as a guarantee to the European Investment Fund to incentivize banks to provide liquidity to hit SMEs and midcaps; and (iv) announcing that credit holidays to existing debtors that are negatively affected will be provided. The European Commission also activated the general escape clause in the EU fiscal rules, which suspends the fiscal adjustment requirements for countries not at their medium-term objective and allow countries to run deficits in excess of 3 percent of GDP.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

Exchange rate and balance of payments
  • No measures.


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Fiji

Fiji announced its first case of COVID-19 on March 19, 2020, and counts 4 confirmed cases (with zero deaths) as of March 24, 2020. The authorities were proactive in their efforts to keep the virus out of Fiji by early imposition of travel restrictions. They reacted to the first confirmed case with a broad set of measures, including social distancing, closure of schools and non-essential businesses in the affected area, and reinforced detection measures.


Key Policy Responses as of March 24, 2020

Fiscal
  • A supplementary budget will be announced on March 26, 2020 in response to the COVID-19 pandemic. Supplemental expenditures will aim at protecting public health, supporting the economy and ensuring food security. An Agricultural Response Package to ensure food security has also been announced. It includes the scaling up of the existing Home Gardening program and a new Farm Support Package which aims at boosting the production of short-term crops through seeds and materials distribution.

Monetary and macro-financial
  • The Reserve Bank of Fiji reduced the overnight policy rate to 0.25 percent from 0.5 percent on March 18 to counter the economic impact of COVID-19. No government policies with respect to the financial sector have been announced so far.

Exchange rate and balance of payments
  • Fiji’s currency is pegged to a basket of currencies amid limited capital mobility. The Fiji dollar has depreciated by about 6 percent vis-à-vis the U.S. dollar since March 10, partly reflecting dollar appreciation against other currencies in the basket. No information is available on whether the central bank has intervened during this period. The Reserve Bank of Fiji reported foreign exchange reserves stood at US$965 million (5.8 months of retained imports) as of March 18, 2020.


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Finland

There have been 700 confirmed cases of COVID-19 in Finland, claiming 1 life as of March 24, 2020. The Finnish government announced a package of fiscal, monetary and financial measures to support workers’ incomes and firms, with around 6.4 percent of GDP (€15 billion) in supportive measures (in addition to ECB measures). Including other measures, e.g. changes to capital requirements to stimulate bank lending and tax and pension payment deferrals, the government estimates that the package could have an impulse of up to around 21 percent of GDP (€50 billion). On March 16, the government invoked the Emergency Powers Act, which was used to close borders, restrict domestic movements, and expand service obligations of essential health-, social services-, and security personnel.


Key Policy Responses as of March 23, 2020

Fiscal
  • Key discretionary tax and spending measures (about 0.7 percent of GDP) include additional spending for (i): healthcare and testing, protection and medical equipment, public safety and border controls, and research on the coronavirus epidemic, in particular to develop methods for rapid diagnostics and vaccines and a knowledge base for timely decision-making on coronavirus measures, (especially on the exit strategy) (€200 million); (ii) lower pension contributions through the remainder of 2020 (€900 million); (iii) grants to SMEs through Business Finland and the Employment Centers (€200 million); and (iv) other possible emergencies (€200 million). In addition to discretionary measures, automatic stabilizers are expected to increase the fiscal deficit significantly, including through an expansion of the coverage of existing unemployment benefits. Deferral of tax and pension payments for 3 months are expected to provide additional short-run relief of €3-4.5 billion. Finland is also contributing €5 million to international non-profit companies working on the development of a COVID-19 vaccine.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules. Key measures within Finland include: (i) Bank of Finland to support liquidity through investing in short-term Finnish corporate commercial paper (€1 billion); (ii) 1 ppt reduction in the structural buffer requirements of all credit institutions by removing the systemic risk buffer and adjusting institution-specific requirements (increases Finnish banks’ international lending capacity by an estimated €52 billion – that, plus other countries’ measures, increase lending capacity to Finnish households and firms by an estimated €30 billion); (iii) Finland’s Export Credit Agency is expanding its lending and guarantee capacity to SMEs by €10 billion (and the government will increase its coverage of the agency’s credit and guarantee losses from 50 to 80 percent); (iv) the State Pension Fund will also invest in commercial paper (€1 billion); and (v) easier re-borrowing of pension contributions allowed.

Exchange rate/capital flow management
  • No measures. Finland is a member of the euro zone.


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France

The coronavirus has been spreading rapidly across France with over 19,800 confirmed cases and claiming 860 lives as of March 23. The government has implemented a range of measures to reduce the spread of COVID-19, including school closures, the ban of all non-essential outings and long-distance travel, and the introduction of night-time curfews in some cities.


Key Policy Responses as of March 23, 2020

Fiscal
  • An amending budget law introduced a fiscal package of €45 billion (about 2 percent of GDP including liquidity support measures) and €300 billion (about 13 percent of GDP) of state guarantees for bank loans to companies. Key immediate fiscal support measures include (i) streamlining and boosting health insurance for the sick or their caregivers; (ii) increasing spending on health supplies; (iii) liquidity support through postponements of social security and tax payments for companies; (iv) support for wages of workers under the reduced-hour scheme; (v) direct financial support for affected SMEs and independent workers; and (vi) postponement of rent and utility payments for affected SMEs. See also: https://www.economie.gouv.fr/coronavirus-soutien-entreprises.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Other measures include: (i) reducing the counter-cyclical bank capital buffer to 0 percent (an increase from 0.25 percent to 0.5 percent was to become effective by April); (ii) a ban on short-selling stocks until April 16; and (iii) credit mediation to support renegotiation of SMEs’ bank loans.

Exchange rate and balance of payments
  • No measures.


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Gabon

As of March 25, 2020, the number of COVID-19 cases in Gabon stands at 7 with one decease from the virus. Authorities have taken early action attempting to suppress COVID19. They have been following WHO-recommended initial measures and enhancing them over time as initial cases were detected. The primary measures, which included bans on social gatherings and travel restrictions have been enhanced over time to closing all borders, the air space, and imposing night curfews, as initial cases are being detected. Gabon is being hit by two shocks—the global impact of COVID-19 and the sharp decline in oil prices. Government policy is responding to both these developments.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government has invited the SME and the Large Businesses Associations to discuss what would be the best measures to adopt in order to alleviate the impact of both crises. The government has also created a fund available at their Caisse de Depots et Consignation (CDC) with an initial allocation of FCFA 4 billion (approx. USD 2 million) to combat the propagation of COVID-19 in the country. Authorities’ current projection envisages the control of non-priority expenditure and redirect savings (FCFA 17 billion; 0.2 percent of GDP) to COVID-19 related spending. At last, the Minister of Finance has designated a public accountant in order to facilitate disbursements of health-related spending of that fund.

Monetary and macro-financial
  • On March 24, 2020, BEAC announced that it will suspend its main absorption operations on the monetary market for the coming week in order to better assess the impact of the COVID-19 pandemic on banking liquidity in CEMAC. However, banks with financing needs will be able to satisfy their requests at the marginal lending facility under the usual conditions. Further measures are expected to be taken following the Monetary Policy Committee meeting scheduled on March 27.

Exchange rate and balance of payments
  • No measures.


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The Gambia

The Gambia has 4 confirmed cases of COVID-19, as of March 25, 2020, including one fatality. The Gambian President has ordered the closure of the airspace and land borders for 21 days. Emergency powers have been invoked by the President to freeze prices and ration essential food (rice, meat, fish and cooking oil) and non-food (soap, sanitizers and cement) commodities to prevent price gouging and hoarding. Tourism—a key driver of foreign exchange and trade—has been halted, while financial conditions have tightened.


Key Policy Responses as of March 24, 2020

Fiscal
  • The authorities have prepared a US$9 million COVID-19 action plan for which they are seeking grant financing given the country’s debt situation. The government has also reallocated 500 million dalasi (0.6 percent of GDP) from the current budget to the Ministry of Health and other relevent public entities to complement the support already received from partners to prevent and control the spread of the COVID-19 outbreak.

Monetary and macro-financial
  • Domestic financial conditions have tightened with the average yield on the most used 364-days T-bills increasing to 11.4 percent (400 bps higher than at end-2019). To ease liquidity conditions the central bank reduced its monetary policy rate by 50 basis points at end-February 2020 to 12 percent and increased its standing deposit facility rate by the same margin to 3 percent. It is also actively monitoring the situation and is in close communication with banks and ready to respond to the situation as inflationary presures warrant. Further measures are under consideration to provide emergency liquidity support together with increased intensity and frequency of supervision to address any financial stability concerns.

Exchange rate and balance of payments
  • No measures.


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Georgia

Georgia has reported 63 active positive cases of COVID-19 (no deaths) as of March 25, 2020. The government has declared a national state of emergency and adopted containment measures, including social distancing, lock down of high-risk districts, closure of border crossings, travel ban for foreign visitors, quarantine for nationals returning to Georgia, closure of shops (other than groceries and gas stations) and schools. Economic activity, in particular tourism, has come to a standstill. Tighter financial conditions have resulted in portfolio outflows from domestic government securities. The lari has depreciated by 25 percent vis-à-vis the dollar since March 6th.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government announced a GEL 1 bn (2 percent of GDP) support package on March 13. The package includes suspension of property and income taxes for the tourism sector until November 2020, provision of interest subsidy to small and medium sized hotels, increase in credit guarantee scheme, acceleration of VAT refunds, and higher capital spending. The government has also stated it will fund any needed increase in health spending.

Monetary and macro-financial
  • The National Bank of Georgia (NBG) announced measures to support capital and liquidity in the banking sector. Banks have been asked to evaluate the quality of the loan portfolio; on-site inspections have been suspended; and a moratorium on fines was introduced where a breach emerged due to the crisis. The NBG kept its policy rate steady in its March MPC meeting as the nominal effective depreciation would impact inflation dynamics

    See Link

Exchange rate and balance of payments
  • As of March 23, NBG has sold $100 million in three interventions in the foreign exchange market, to prevent disorderly depreciation.


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Germany

Germany currently has the third highest number of confirmed cases of Covid-19 among European countries (after Italy and Spain), totaling 24,774 as of March 23. While the outbreak has claimed 94 lives, so far, the case fatality rate is among the lowest in Europe. The government has responded with a range of measures to contain the spread of virus through travel restrictions, closure of schools and non-essential businesses, and a ban on public gatherings.


Key Policy Responses as of March 23, 2020

Fiscal
  • Key spending and tax measures totaling €156 billion (4.5 percent of GDP) include: (i) spending on healthcare equipment, hospital capacity and R&D (vaccine), (ii) expanded access to short-term work (“Kurzarbeit”) subsidy to preserve jobs and workers’ incomes, expanded childcare benefits for low-income parents and easier access to basic income support for the self-employed, (iii) €50 billion in grants to small business owners and self-employed persons severely affected by the Covid-19 outbreak in addition to interest-free tax deferrals until year-end. At the same time, through the newly created economic stabilization fund (WSF) and the public development bank KfW, the government is expanding the volume and access to public loan guarantees for firms of different sizes, with an allocation of at least €822 billion (24 percent of GDP).

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    In addition to measures at the euro area level: (i) release of the countercyclical capital buffer for banks from 0.25 percent to zero; (ii) additional €100 billion to refinance expanded short-term liquidity provision to companies through the public development bank KfW, in partnership with commercial banks; and (iii) following the structure of the former Financial Stabilization Fund, €100 billion is allocated within the WSF to directly acquire equity of larger affected companies and strengthen their capital position.

Exchange rate and balance of payments
  • No measures.


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Ghana

As of March 25, 2020, Ghana Health Service reported 68 confirmed COVID-19 cases and 3 deaths. Starting March 16, the government adopted sweeping social distancing measures and travel restrictions to avert an outbreak, including (i) suspension of all public gatherings exceeding 25 people for four weeks; (ii) closure of all universities and schools until further notice; and (iii) mandatory 14-day self-quarantine for any Ghanaian resident who has been to a country with at least 200 confirmed cases of COVID-19, within the last 14 days. On March 23, Ghana closed all its borders to travelers for two weeks. As an oil exporter, Ghana is also significantly affected by the large decline in oil prices.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government committed US$100 million to support preparedness and response. Additional funds have been earmarked to address availability of test kits, pharmaceuticals, equipment, and bed capacity.

Monetary and macro-financial
  • The Monetary Policy Committee (MPC) cut the policy rate cut by 150 basis points to 14.5 percent on March 18, and announced several measures to mitigate the impact of the pandemic shock, including lowering the primary reserve requirement from 10 to 8 percent, lowering the capital conservation buffer from 3 to 1.5 percent, revising provisioning and classification rules for specific loan categories, and steps to facilitate and lower the cost of mobile payments. The committee also signaled it would continue to monitor the economic impact of COVID-19 and hold emergency meetings if necessary.

Exchange rate and balance of payments
  • No measures.


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Greece

Greece has reported 743 positive cases as of March 25, 2020. The government has adopted strict containment measures to delay the spread of coronavirus, including (i) a national lockdown that restricts all but essential movement and economic activity, (ii) school closures, (iii) domestic travel restrictions, (iv) travel bans on visitors from high-risk countries, and (v) quarantines for international visitors and Greek nationals returning from abroad.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government has announced a package of measures totaling 5 percent of (2019) GDP (€10 billion) financed from national and EU resources. Key measures include: (i) health spending increases for new hiring of 2,000 doctors and nurses, procurement of medical supplies, and cash bonuses to health sector workers; (ii) transfers to vulnerable individuals, including a € 800 cash stipend through April 30 for employees working in hard hit firms, extension of unemployment benefits by two months, and paid leave for parents who have children not going to school; (iii) liquidity support to hard hit businesses through subsidized loans, loan guarantees, interest payment subsidies, and deferred payments of tax and social security contribution.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Banks will allow deferral of principal payments on existing loans for hard-hit individuals and firms through end-September (in addition to the interest payment subsidies mentioned above).

Exchange rate and balance of payments
  • No measures.

For additional information, visit the Greek Government Website: https://government.gov.gr/


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Guatemala

As of March 24th, Guatemala has reported 21 confirmed cases and one fatality of COVID-19. On March 13th, the government declared a State of Calamity. Through April 30st, unessential activities in the private and public sectors are suspended, all national borders are closed, and an 8-day curfew (4pm until 4am) is in force.


Key Policy Responses as of March 24, 2020

Fiscal
  • For COVID-19 mitigation, the government is drawing on emergency budgetary reserves (about US$60 million) and seeking Congress approval of the World Bank Disaster Risk Management DPL (US$200 million, 0.3% of GDP). A facility for coronavirus patients (financed through a US$1 million grant from the Central American Bank of Economic Integration) will add 3,000 beds to the existing capacity (350 beds). A National Emergency and Economic Recovery Plan and a supplementary budget for a fiscal impulse of 1.2% of GDP are being discussed in Congress. Key measures announced to support the economy include streamlined tax credit refunds to exporters (freeing up to 0.2 percent of GDP), a one- quarter deferral of selective tax payments and social security contributions, a guarantee fund for SMEs, and expanded social housing.

Monetary and macro-financial
  • On March 19th, Banco de Guatemala lowered its policy rate by 50 basis points to 2.25 percent and announced that it stands ready to secure liquidity provision facilities, including by acting as lender of last resort. To support the financial sector, the Monetary Board has temporarily eased (180-day period) credit risk management regulations to enable loan restructuring, loan payments moratorium, and the use of generic provisions.

Exchange rate and balance of payments
  • No measures.


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Guinea

As of March 24, 2020, four cases of COVID-19 were confirmed in Guinea. The authorities have adopted several measures to reduce the risk of contagion. Notably, large public gatherings have been banned, the international airport has been closed to non-essential flights, and public areas (markets, religious facilities) are required to have hand sanitizing equipment. All schools have been closed until further notice. Guinean embassies and consulates have suspended visa issuance to travelers from countries with more than 30 confirmed cases.


Key Policy Responses as of March 24, 2020

Fiscal
  • A National Emergency Preparedness and Response Plan for a COVID-19 outbreak was prepared, with the support of international development partners. Key measures focus on strengthening surveillance at ports of entry; reinforcing capacity for COVID-19 detection; increasing the number of quarantine centers; expanding treatment facilities and acquiring needed medical equipment; and conducting a communication campaign.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Guinea Bissau

As of March 25, 2020, there are two confirmed cases of COVID-19 in Guinea Bissau. All borders were closed and all flights to Bissau interrupted as of March 18. All schools and outdoor markets are closed until further notice. Large gatherings are prohibited. Public transportation vehicles can no more circulate in Bissau since March 25. The prohibition will be extended to the entire country on March 28. Guinea-Bissau is entering the pandemic in the midst of a political crisis, as the result of the December 2019 presidential election still being subject to an appeal with the Supreme Court of Justice.


Key Policy Responses as of March 25, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • On March 21, 2020, the BCEAO (the regional central bank) announced the following monetary and macro-financial measures with the aim to mitigating the negative economic impact of the COVID-19 crisis by: (i) providing FCFA 340 billion additional liquidity to bring the total liquidity made available to banks by weekly and monthly auctions to 4750 billion FCFA; (ii) extending the collateral framework to access the BCEAO’s refinancing to include CFAF 1,050 billion of bank debt of prequalified 1,700 private companies that could thus benefit from better financing conditions; and (iii) setting-up a framework with the banking system to support firms with repayment difficulties.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No measures.


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Guyana

Guyana reported five confirmed COVID-19 cases and one death as of March/24/2020. The government has announced mitigation measures (including closing schools and borders, imposing mandatory quarantine for those infected or exposed to the disease, encouraging social distancing, providing tests to suspected infection cases, providing additional supplies to medical professions, and raising public awareness).


Key Policy Responses as of March 24, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • The Bank of Guyana has urged commercial banks to consider reducing interest rates on loans and allow deferral of repayments to cushion the expected financial effects from COVID-19 on both individuals and businesses.

Exchange rate and balance of payments
  • No measures.


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Haiti

Haiti announced the presence of COVID-19 in the country on March 20th. Tourism had already declined sharply in 2018-2019 due to the political instability and social unrest. The main economic impact from COVID-19 will come through remittances, which represent about 30 percent of GDP and are expected to drop with the income shock in the United States and other source markets.


Key Policy Responses as of March 22, 2020

Fiscal
  • The authorities launched a public health preparedness plan for containment and treatment; they plan to boost some social programs and are also considering supporting wage payments temporarily in some sectors.

Monetary and macro-financial
  • The central bank moved immediately to ease conditions in the financial system, including reducing the refinance and reference rates, reducing reserve requirements on domestic currency deposits, easing loan repayment obligations for three months, and suspending fees on interbank transactions.

Exchange rate and balance of payments
  • No measures.


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Honduras

Honduras has reported 30 positive cases (no deaths) as of March 24, 2020. The government has declared a national state of emergency and adopted containment measures, including a nation-wide curfew and closing of national frontiers. The authorities have taken fiscal actions to respond to the healthcare and humanitarian crisis, and monetary and macro-financial measures to mitigate the impact on economic activity.


Key Policy Responses as of March 25, 2020

Fiscal
  • The executive has announced L3,800 mn (about 0.6 percent of GDP) in public expenses to respond to the Covid-19 crisis. This includes the purchases of medical supplies and enabling of temporary medical facilities, hiring of additional healthcare personnel, and financing of a public program to deliver food supplies covering basic needs of poor families (800,000 families, about one third of the population). The executive plans to redirect 2 percent of all non-essential public expenditures in the 2020 budget to accommodate these expenses. The government also announced a 1-month freeze in prices of goods in the basic consumption basket, as well as 1-month free access to emergency telecommunications services related to the COVID-19 crisis. Separately, Congress approved a special economic stimulus law envisaging $420 mn (about 1.6 percent of GDP) in additional spending to build new infrastructure (hospitals and medical centers) in the national health system over the medium term.

Monetary and macro-financial
  • The central bank cut the policy rate by 75 bps to 4.5 percent—following cuts of 50 bps in December and January. The BCH also announced the suspension of issuance of one-day BCH bills, resulting in liquidity increase of L10,600 mn (1.6 percent of GDP)—this adds to the projected increase in liquidity of about L7,500 mn (1.2 percent of GDP) in 2020 resulting from the previously announced elimination of obligatory investments in the central bank.

    The government issued a decree mandating all supervised financial institutions to provide temporary debt service relief to companies and individuals whose incomes have been affected by the crisis. Debt service of affected sectors will be suspended until end-June, without penalties or impact on credit classification. The government also announced a 3-month moratorium on service of bank loans financed by the second tier development bank Banhprovi (covering about 5 percent of total bank credit to the private sector), as well as additional financing for Banhprovi’s housing program for the middle class (L200 mn, about $8 mn). It has also expedited approval of loans under a subsidized credit program for the agricultural sector.

Exchange rate and balance of payments
  • No measures.


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Hungary

The number of confirmed COVID-19 cases in Hungary was 226 on March 25, with 10 deaths. The economy has been hit hard by the outbreak as it is tightly intertwined globally through supply chains and tourism. The government declared a state of emergency on March 11 and implemented various containment measures, including travel and activity restrictions, and mandatory distance learning for schools and universities.


Key Policy Responses as of March 25, 2020

Fiscal
  • While the 2020 budget is being revised, several revenue measures were already introduced to alleviate the fiscal burden on businesses: (i) employers' social contributions will be lifted in the most affected sectors; (ii) the health care contributions will be lowered through June 30; (iii) around 80,000 SMEs (mainly in the services sector) will be exempt from the small business tax (the payment of the tax by other companies in affected sectors will be deferred until the end of the state of emergency); (iv) the tourism development contributions will be temporarily cancelled; (v) media service providers will be given a tax relief for incurred losses of advertising revenue; and, (vi) procedures for collecting tax arrears will be suspended during the state of emergency. On the spending side, about HUF 25 billion (0.06 percent of GDP) was reallocated for the healthcare sector.

Monetary and macro-financial
  • The central bank (MNB) increased access to liquidity through: (i) an increase in the regular forint-liquidity swap stock at regular auctions; (ii) the introduction of the daily provision of one-week forint-liquidity swaps; (iii) the expansion of eligible collateral; (iv) the introduction of a long-term unlimited collateralized lending facility; and, (v) suspension of penalties for unmet reserve requirements. Measures were also taken to provide financial relief to households and corporates borrowers, including: (i) the provision of a grace period of repayment of loans to the Growth Funding Facility (subsidized lending to SMEs supported by the MNB); (ii) the extension of short-term loans to businesses until June 30; (iii) a repayment moratorium on all existing loans, corporate and retail, until the end of this year, with a reprofiling of debt payment thereafter to avoid an increase in monthly payments; and, (iv) a cap on the average annual percentage rate (APR) on new unsecured consumer credit at the central bank base rate (currently, 0.9 percent) plus 5 percent. Regarding macro-prudential measures, the Foreign Exchange Coverage Ratio (FECR), which imposes a limit on the difference between forex-denominated assets and liabilities of credit institutions as a percent of total assets, was reduced from 15 to 10 percent.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly.


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Iceland

As a country dependent on tourism, Iceland has been highly exposed to health, economic, and financial contagion from the global spread of the COVID-19 virus. As of March 24, Iceland had 648 confirmed COVID-19 cases, 8200 in quarantine, and 2 deaths. To contain the spread of the disease, the authorities activated a national pandemic plan involving testing and quarantine protocols.


Key Policy Responses as of March 25, 2020

Fiscal
  • A package of fiscal measures of ISK 230 billion krona (7.8 percent of GDP) has been submitted to parliament to ease the strain on households and firms and, looking forward, to help the economy recover. Key measures to support households and firms include tax cuts, tax deferrals, increased unemployment benefits, one-off child allowances, support to companies whose employees have been quarantined, and state-guaranteed bridge loans to companies. Key measures to restart the economy (1.1 percent of GDP) include public investment, tax incentives for real estate improvement, temporary tax relief for the tourism sector, and marketing efforts to encourage domestic tourism. See also: https://www.government.is/news/article/2020/03/21/Icelandic-Government-announces-1.6bn-USD-response-package-to-the-COVID-19-crisis/

Monetary and macro-financial
  • The Central Bank of Iceland (CBI) has provided monetary support and has taken measures to preserve financial stability. Since the outbreak, the Monetary Policy Committee (MPC) has cut policy rates by 100 basis points to 1.75 percent and reduced deposit institutions’ average reserve requirements point to 1 from 2 percent to ease their liquidity positions by about 1 percent of GDP. To further enhance banks’ liquidity, the public Housing Financing Fund will transfer its deposits from the CBI to commercial banks (about ISK30 billion, or 1 percent of GDP). The CBI Financial Stability Committee reduced the countercyclical capital buffer from 2 percent to 0 percent, providing scope for banks to increase lending by ISK 350 billion (12 percent of GDP). See also: https://www.cb.is/publications/news/news/2020/03/18/Statements-of-Monetary-Policy-Committee-and-Financial-Stability-Committee/

Exchange rate and balance of payments
  • The CBI has allowed the exchange rate to adjust flexibly, while preventing disorderly market conditions. Between January 1 and March 23, the CBI intervened in the foreign market on 5 days selling €57 million (0.3 percent of GDP).


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India

India has 434 confirmed COVID-19 cases as of March 23, with 9 deaths attributed to the disease. Prime Minister Modi announced on March 24 that the entire country will go under lockdown for the next 21 days. Prior to this announcement, numerous containment measures had already been imposed, varying in intensity across the country, including travel restrictions (complete restriction of incoming international commercial passenger aircraft and some restrictions on domestic travel including cancellation of domestic passenger air traffic); closing educational establishments, gyms, museums, and theatres; bans on mass gatherings; and encouraging firms to promote remote work.


Key Policy Responses as of March 24, 2020

Fiscal
  • Prime Minister Modi announced that an additional 150 billion rupees (about 0.1 percent of GDP) will be devoted to health infrastructure, including for COVID-19 testing facilities, personal protective equipment, isolation beds, ICU beds and ventilators. Some stimulus measures have been announced at the state level, the largest a 200 billion rupees package in Kerala (2.5 percent of state GDP; 0.1 percent of India-wide GDP), which includes some direct transfers to poor households. The central government has also encouraged state governments to make direct transfers to unorganized construction workers from existing Labor Welfare Board funds (https://pib.gov.in/PressReleseDetail.aspx?PRID=1607911). At the national level, several measures to ease the tax compliance burden across a range of sectors have been announced, including postponing some tax-filing and other compliance deadlines. The government has constituted the COVID-19 Economic Response Task Force, which may recommend additional fiscal and support measures.

Monetary and macro-financial
  • The Reserve Bank of India (RBI) has indicated that a rate action will be taken in the next MPC meeting in early April and has introduced long-term repo operations (LTROs, 0.5 percent of GDP; 1-3 year), open market operations (over 0.1 percent of GDP) and variable term repos (0.5 percent of GDP) to ease any domestic liquidity pressures (https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx). In addition, the RBI introduced regulatory measures to promote credit flows to the retail sector and micro, small, and medium enterprises (MSMEs) and provided regulatory forbearance on asset classification of loans to MSMEs and real estate developers. CRR maintenance for all additional retail loans has been exempted and the priority sector classification for bank loans to NBFCs has been extended for on-lending for FY 2020-21. The RBI asked financial institutions to assess the impact on their asset quality, liquidity and other parameters due to spread of the COVID-19 and take immediate contingency measures, including BCPs, to manage the risks following the impact assessment.

Exchange rate and balance of payments
  • A foreign exchange swap ($2 billion; 6 month) has been introduced to provide liquidity to the foreign exchange market through multiple price-based auction.


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Indonesia

Indonesia has reported 686 confirmed COVID-19 cases and 55 deaths as of March 24, 2020. The government has adopted containment measures, including travel bans on visitors from high-risk countries, screening at ports of entry, and some school closures and other restrictions on public events. In the last month through March 23, the yield on rupiah-denominated 10 year government bonds has increased by 178 bps to 8.31 percent, the rupiah has depreciated by some 20 percent vis-à-vis the U.S. dollar, and equity prices dropped by 32 percent.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government has announced two fiscal stimulus packages amounting to 33.2 trillion rupiah (about 0.2 percent of GDP). This first package comprises support to the tourism sector (tax cuts and discounts on airplane tickets and jet-fuel) and to low-income households (social assistance and subsidy for home buyers). The package also aims to accelerate the roll-out of the Pre-Work Card, which provides periodic cash stipends for job seekers. The second package includes income tax exemptions to workers in the industrial sectors (with an income ceiling) and supports businesses through delayed payments for income tax and acceleration in VAT refund from April to September. The government has also announced steps to prioritize the handling of the COVID-19, including budgetary reallocation toward the health sector and acceleration of purchases of goods and services for COVID-19 prevention and treatment.

Monetary and macro-financial
  • Bank Indonesia reduced the policy rate by 25 bps to 4.75 percent on February 20, 2020, and by another 25 bps to 4.5 percent on March 19. The Bank also announced other measures to ease liquidity conditions, including: (i) lowering reserve requirement ratios for banks; (ii) increasing the maximum duration for repo and reverse repo operations (up to 12 months); (iii) introducing daily repo auctions; (iv) increasing the frequency of FX swap auctions for 1, 3, 6 and 12 month tenors from three times per week to daily auctions; and (v) increasing the size of the main weekly refinancing operations as needed. To ease stock market volatility, the regulator OJK has introduced a new share buyback policy (allowing listed companies to repurchase their shares without a prior shareholders’ meeting) and introduced limits on stock price declines. OJK has also relaxed loan classification and loan restructuring procedures for banks to encourage loan restructuring and extended the deadline―by 2 months―for publicly listed companies to release their annual financial reports and hold annual shareholders meetings.

Exchange rate and balance of payments
  • Bank Indonesia has intervened in the spot and domestic non-deliverable foreign exchange markets, and in the domestic government bond market to maintain orderly market conditions. The Bank has also reaffirmed that global investors can use global and domestic custodian banks to conduct investment transactions in Indonesia.


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Iran, Islamic Republic of

Iran has been hit hard by the COVID-19 outbreak with over 23049 confirmed cases and 1812 deaths as of March 23, 2020. The government has adopted a range of measures to limit the spread of the virus, including stopping flights from China, closing schools, malls, markets and key religious sites, banning cultural and religious gatherings, releasing a high number of prisoners to fight contagion in prisons, and warning Iranians against traveling. On March 25, President Rouhani announced a partial lockdown, closing businesses and government offices for two weeks and banning travel between different cities.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key measures include (i.) the disbursement of cash payments (USD 14-40) to 1.5 million poor households from March to June 2020; (ii.) extra funding for the National Committee on COVID-19, Tehran and other provinces (0.06 percent of GDP); and (iii.) refurbishing of schools in order to limit the spread of the virus. The government has also announced low interest rate loans and funds to cover employers’ insurance for affected businesses, lending facilities for 4 million laid-off employees in firms disrupted by the virus and a three-month extension of the deadlines for tax payments. Sukuk bonds (0.5 percent of GDP) will provide part of the financing.

Monetary and macro-financial
  • The Central Bank of Iran has (i.) announced the allocation of funds (0.06 percent of GDP) to import medicine; (ii.) agreed with commercial banks that they postpone by three months the repayment of loans due in February 2020; (iii.) offered temporary penalty waivers for customers with non-performing loans; and (iv.) expanded contactless payments and increased the limits for bank transactions in order to reduce the circulation of banknotes and the exchange of debit cards.

Exchange rate and balance of payments
  • The Central Bank of Iran announced it injected USD 1.5 billion in the foreign exchange market to stabilize the rial.


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Iraq

Iraq has been hit by two shocks—the spread of COVID-19 and the sharp decline in oil prices. The number of COVID-19 cases stands at 346 as of March 25 with 29 fatalities. The authorities have implemented a range of measures to limit the spread of the virus encompassing closing borders, travel restrictions (including on international flights and internal public transportation), closing schools and universities, and a nationwide lockdown and curfew since March 22.


Key Policy Responses as of March 25, 2020

Fiscal
  • To support the Ministry of Health's efforts to fight the COVID-19 pandemic, the Central Bank of Iraq has established a fund to collect donations from financial institutions with initial donations of $20 million from the CBI itself and $5 million from the Trade Bank of Iraq.

Monetary and macro-financial
  • The Central Bank has announced a moratorium on interest and principal payments by small and medium-sized enterprises through its directed lending initiative (the “one trillion ID” initiative), and encouraged banks to extend maturities of all loans as they deem appropriate. The Central Bank also encouraged the use of electronic payments to contain the transmission of the virus, and instructed vendors to eliminate commissions on such payments for the next six months.

Exchange rate and balance of payments
  • No measures.


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Ireland

Ireland has reported 1329 confirmed cases of Covid-19 claiming 7 lives as of March 24. Virus spreads rapidly across the country and has affected all regions. The government has implemented a wide range of health and containment measures, including social distancing measures, closures of all non-essential businesses, school closures, travel restrictions and increased testing.


Key Policy Responses as of March 25, 2020

Fiscal
  • The Irish authorities have announced a comprehensive fiscal package of €7.2 billion (about 2 percent of GDP) including: (i) income support measures, namely (a) the COVID-19 Wage Subsidy scheme refunding employers up to 70 percent of an employee's wages – up to a level of €410 to allow employers to pay their employees during the current pandemic; (b) the COVID-19 Enhanced Illness Benefit (“sick pay”) of €350 per week for medically-certified self-quarantined individuals (for a maximum of two weeks) to minimise any disincentive that workers and the self-employed might have against self-isolation; (c) the COVID-19 Pandemic Unemployment Payment – a payment available to all employees and the self-employed who have lost employment due to a downturn in economic activity caused by the COVID-19 pandemic at a flat rate of €350 per week; ii) liquidity support for affected businesses with an initial package of €200 million; iii) health sector support package of €1bn to scale up the sector’s actions and capacity to deal with the virus.

    Additionally, there is a further package, subject to final approval, of €1bn in 2020 for the health sector to further scale up its response actions and maintain service levels at community level particularly for vulnerable people. In addition, further measures underway include expanding capacity in public hospitals, developing primary and community-based responses and procurement of additional essential equipment.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Additional measures announced by Central Bank of Ireland (CBI) include: (i) the release of the countercyclical capital buffer, which will be reduced from 1% to 0% no later than April 2; ii) agreement on the payment moratoria proposed by the largest banks for mortgages and individual loans (which will result in any arrears being exempt from the classification and loan loss provisioning as NPLs). SMEs will have the possibility to defer loan payments up to 3 months. The CBI expects banks to use the positive effects of these measures solely in support of the economy and not for dividend distributions.

    The Bank of Italy have announced a series of measures to help banks and non-bank intermediaries under its supervision, in line with the initiatives undertaken by the ECB and the EBA. These include the possibility to temporary operate below selected capital and liquidity requirements; extension of some reporting obligations; and rescheduling of on-site inspections.

Exchange rate and balance of payments
  • No measures.


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Israel

Israel has been significantly affected by the global spread of COVID-19, with 2170 cases confirmed and 5 deaths as of March 25. The government has implemented a range of measures to contain and mitigate the spread of the virus, and to support people, jobs, and businesses. Measures in response to the COVID-19 outbreak have included increased testing, travel restrictions, social distancing measures—including restricting Israelis to 100-meter radius of their home for recreation, and closures of businesses—except essential services—and indoor premises.


Key Policy Responses as of March 25, 2020

Fiscal
  • The authorities announced a package of NIS 15 billion (about 1.1 of GDP), which includes NIS 2 billion for health and other direct COVID19-related expenses and NIS 8 billion for public loan guarantees to SMEs. They also announced a series of expenditure and revenue measures including: (i) relaxation of requirements to obtain unemployment benefits and grants for laid-off workers; (ii) subsidies for the self-employed and SMEs; and (iii) deferred payments for income taxes, VAT, property taxes, social security contributions, and electricity and water bills.

Monetary and macro-financial
  • Key monetary policy measures include: (i) the announcement of government bond purchases up to NIS 50 billion; and (ii) repo operations to provide shekel liquidity to the banks. The Bank of Israel has taken measures to ease financial conditions for households and companies by: (i) increasing the loan-to-value cap on residence-backed loans (from 50 to 70 percent); (ii) raising the cap (from 20 to 22 percent) on the banks’ loan portfolio allocated to construction companies; and (iii) allowing commercial banks to increase customers’ overdraft credit facilities and suspend restrictions on accounts of customers with checks returned due to insufficient funds. See also: https://www.boi.org.il/en/Pages/CoronaUpdates.aspx

Exchange rate and balance of payments
  • The Bank of Israel is providing additional USD liquidity through foreign exchange swaps of up to USD 15 billion.


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Italy

COVID-19 has been spreading rapidly across the country. As of March 23, nearly 64,000 people have contracted the virus, and over 6,000 people have died. The government has moved resolutely with containment measures. In early March, a four-week nation-wide lockdown was announced. Travel is restricted and public gathering are banned. All schools and universities are shut. Non-essential productive activities are closed across the country until early April, with exceptions for supermarket and grocery stores, pharmacies, banks, public transport and essential public services.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government adopted a €25 billion (1.4 percent of GDP) emergency package. It includes (i) funds to strengthen the Italian health care system and civil protection (€3.2 billion); (ii) measures to preserve jobs and support income of laid-off workers and self-employed (€10.3 billion); (iii) other measures to support businesses, including tax deferrals and postponement of utility bill payments in most affected municipalities (€6.4 billion); as well as (iv) measures to support credit supply (€5.1 billion) aimed to unlock about €350 billion (20 percent of GDP) of liquidity for businesses and households (see below). The authorities indicated that additional steps could be taken if needed.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Key measures adopted in the government’s emergency package include: a moratorium on loan repayments for some households and SMEs, including on mortgages and overdrafts; state guarantees on loans to SMEs; incentives for financial and non-financial companies in the form of Deferred Tax Activities; state guarantee of €0.5 billion to the state development bank—Cassa Depositi e Prestiti—to support lending and liquidity to banks to enable them to finance medium- and large-sized companies.

    The Bank of Italy have announced a series of measures to help banks and non-bank intermediaries under its supervision, in line with the initiatives undertaken by the ECB and the EBA. These include the possibility to temporary operate below selected capital and liquidity requirements; extension of some reporting obligations; and rescheduling of on-site inspections.

Exchange rate and balance of payments
  • No measures.


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Jamaica

The total number of confirmed COVID-19 infections has reached 25 cases, with 1 recorded death as of March 25. The government has taken early and proactive measures to contain the spread of infection across the island, including cancellation of all large public and private events, school shutdowns, quarantine of entire communities, and total closure of the island’s boarders to incoming visitors.


Key Policy Responses as of March 25, 2020

Fiscal
  • The Minister of Finance announced tax cuts of around 0.6 percent of GDP, along with targeted measures for up to 0.5 percent of GDP to counteract the effects of COVID19. This is largely expected to be financed by ongoing asset divestment. Additional measures have been announced to support the most affected sectors by the virus and contain labor shedding, including SCT and custom duty waivers on medical supplies and sanitizers and a COVID-19 Allocation of Resources for Employees (CARE) program, which envisages (i) temporary cash transfers to businesses in targeted sectors based on the number of workers employed; (ii) temporary cash transfer to individuals where loss of employment can be verified since March 10; (iii) grants targeted at the most vulnerable segments of society. The Minister also noted that the Fiscal Responsibility law contains an escape clause that would allow for some temporary flexibility in meeting the fiscal targets, should the economic situation deteriorate further.

Monetary and macro-financial
  • The overnight policy rate remains unchanged at 0.5 percent, but Bank of Jamaica has taken additional actions to ensure uninterrupted system wide liquidity, such as the recent removal of limits on the amounts that deposit taking institutions can borrow overnight without being charged a penalty rate and a broadening of the range of acceptable repo collateral. The authorities are also encouraging the banking sector to reschedule loans and mortgages, in addition to the mortgage rate cuts already announced by the National Housing Trust.

Exchange rate and balance of payments
  • No measures.


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Japan

As of March 24, 2020, Japan has reported 1,140 confirmed COVID-19 cases and 42 deaths. Japan was one of the first countries hit by COVID-19 and now it is one of the least-affected among developed countries. In response to the outbreak, the authorities have taken several measures targeted towards health and containment efforts. Measures are in place to strengthen quarantine procedures and the healthcare system. While there have been no mass quarantines of large cities or regions, school closures have been implemented together with the cancellation of public events, travel restrictions, work from home, and social distancing. On March 24, Prime Minister Abe and the International Olympic Committee announced a postponement of the Tokyo Olympics to no later than summer 2021, which will have a relatively small impact on Japanese growth for 2020 and 2021.


Key Policy Responses as of March 24, 2020

Fiscal
  • The Government of Japan adopted two emergency response packages (on February 13 and March 10), for a total amount of ¥446 billion (0.1 percent of GDP). The packages included: (i) measures to contain the spread of the virus and enhance preparedness of the healthcare system (around ¥62 billion, or 0.01 percent of GDP); (ii) aid to households (about ¥223 billion, or 0.04 percent of GDP) such as enhanced paid-leave and compensation to working parents affected by the school closure; as well as (iii) measures to mitigate the economic impact (about ¥142 billion, or 0.03 percent of GDP) including subsidies to firms who maintain employment during scale down of operations. The deadline for tax return filing and payment of personal income tax, gift tax, and consumption tax (for the self-employed) was extended from mid-March to mid-April. Tax payments for people and businesses negatively impacted by the COVID-19 outbreak are deferred. In addition, the ¥26 trillion (about 4.8 percent of GDP) December 2019 stimulus package is being used to offset the adverse impact of COVID-19 on the economy as well as counter the economic slowdown. On March 19, the Government also launched “Intensive Hearing on the COVID-19’s Impact on the Economy,” attended by Prime Minister Abe and other key policymakers. To support the international response, the government has pledged ¥15 billion (about US$140 million) as contributions to WHO and other international organizations. Japan has made a contribution of SDR14 million (US$19 million) to the IMF’s Catastrophe Containment and Relief Trust.

Monetary and macro-financial
  • On March 13, the Bank of Japan (BoJ) expanded the overnight and term repos facility to enhance liquidity provision. On March 16, the BoJ called a monetary policy meeting and announced a comprehensive set of measures to maintain the smooth functioning of financial markets (notably of U.S. dollar funding markets), and incentivize the provision of credit. These include targeted liquidity provision through Japanese government bond purchases, special funds-supplying operation to provide loans to financial institution to facilitate financing of corporates, an increase in the annual pace of BoJ’s purchases of Exchange Traded Funds (ETFs) and Japan-Real Estate Investment Trusts (J-REITs), and a temporary increase of targeted purchases of commercial paper and corporate bonds. The BoJ in coordination with the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve and the Swiss National Bank enhanced the provision of U.S. dollar liquidity on March 15, by lowering the pricing on the standing U.S. dollar liquidity swap arrangements by 25 basis points. As of March 24, 2020, the BoJ had provided U.S. dollar funding through the swap line of ¥10.4 trillion (US$94.5 billion) for 84 days and ¥5.2 trillion (US$47.3 billion) for 7 days.

    The government boosted special financing and guarantees primarily for micro, small and medium-sized business operators affected by COVID-19 to ¥1.6 trillion (US$15.6 billion, or about 0.3 percent of GDP) through the Japan Finance Corporation and other institutions.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly.


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Jordan

Jordan is being hit by the spread of COVID-19. There have been 127 confirmed cases in Jordan, as of March 24th. The authorities have implemented a range of measures to try and limit the spread of the virus. Measures include the suspension of all international flights, the closure of all schools, restaurants and archeological sites, the interruption of all public events and gatherings, and quarantines. The defense law was enacted to enforce curfews, close businesses, and place restrictions on the movement of people within the country to counter the pandemic. The authorities also launched a public communication and awareness campaign to inform the public on examination and treatment facilities.


Key Policy Responses as of March 23, 2020

Fiscal
  • On March 18th, the Ministry of Finance announced a host of measures in response to the pandemic. Measures included (i.) the postponement, until the end of the year of the collection of sales tax on all domestic sectors, and imports related to health, and the supply of medicines; (ii.) the allocation of 50 percent of the maternity insurance revenues (JD 16 million) to material assistance for the elderly and the sick; (iii.) the introduction of price ceilings on essential products; (iv.) the postponement of 70 percent of the value of customs duties for selected companies and the reduction of social security contributions from private sector establishments.

Monetary and macro-financial
  • The Central Bank of Jordan reduced most policy rates by 50 basis points on March 3rd, and further by 100 basis points on March 16th. In addition, the Central Bank announced a package of measures aimed at containing the impact of the Coronavirus on the economy. The measures included: (i.) allowing banks to postpone the credit facilities installments granted to clients of sectors impacted by the virus; (ii.) pumping additional liquidity to the banks of JD 550 million by reducing the compulsory reserve ratio on deposits with banks from 7 percent to 5 percent.

Exchange rate and balance of payments
  • No measures.


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Kazakhstan

The total number of COVID-19 cases in Kazakhstan reached 68 as of March 24 (no deaths have been reported), mostly in the two largest cities, Nur-Sultan and Almaty. The cases have been related largely to external travel, with limited signs to date of community transmission. To prevent rapid further transmission, authorities announced a 30-day state of emergency from March 16, with the possibility of extension; Nur-Sultan and Almaty are under quarantine (no entry/exit). In addition to social distancing measures (travel restrictions, remote working with free internet access, closure of schools and other public places), authorities also announced a major anti-crisis package of KZT 4.4 trillion ($10 billion or 6 percent of GDP) on March 23, including regulated prices for essential goods and targeted assistance.


Key Policy Responses as of March 24, 2020

Fiscal
  • The anti-crisis package includes cash payments to the unemployed ($95 per month per person), a lower VAT rate for food, as well as additional spending to strengthen the health sector and support employment and business. Subsidized lending will be provided under the state program (“Economy of Simple Things”, KZT 1 trillion), along with actions to help small and medium-sized enterprises (SMEs) finance their working capital (KZT 600 billion). An additional KZT 1 trillion will be allocated to support employment under an “Employment Roadmap” program. SMEs and individual entrepreneurs are also eligible for new tax incentives.

Monetary and macro-financial
  • On March 10, the National Bank (NBK) raised its policy rate from 9.25 percent to 12 percent and widened the interest rate corridor from 100 to 150 bps, after pressures on the tenge (KZT) intensified with the drop of oil prices. Banks have been instructed by the NBK and the financial supervisory agency to defer loan repayments and refrain from charging penalties and additional payments for overdue interest for borrowers affected by the emergency. There is also a regulatory loosening for lending to SMEs, with risk weights for SME exposure in tenge lowered from 75% to 50% and for FX loans from 200% to 100%. On March 23, authorities also ordered suspension of loan repayments for retail sector borrowers during the state of emergency.

Exchange rate and balance of payments
  • The NBK continues to intervene in the foreign exchange market to mitigate excess tenge volatility, although the central bank has stressed flexibility of the tenge. On March 23, the government called on state-owned enterprises to sell part of their FX reserves to support the tenge.


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Kenya

As of March 24, 2020, Kenya has reported 25 cases of COVID-19 (no deaths). The government has adopted a number of containment measures, including social distancing and closure of most non-essential social spaces to gatherings; encouragement of teleworking where possible; a suspension of international flights (with the exception of cargo flights) and imposition of a 14-day quarantine for those recently returning from abroad; establishment of isolation facilities; and limitations on public transportation passenger capacity.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has earmarked funds for additional health expenditure, including enhanced surveillance, laboratory services, isolation units, equipment, supplies, and communication. The government has also earmarked funds for expediting payments of existing obligations to maintain cash flow for businesses during the crisis. Given lower revenues due to decreased economic activity and the need to accommodate emergency spending, the government is currently reassessing the budget deficit target for FY 2019/20.

Monetary and macro-financial
  • On March 24, the central bank (1) lowered its policy rate by 100 bps to 7.25 percent; (2) lowered banks’ cash reserve ratio by 100 bps to 4.25 percent; (3) increased the maximum tenor of repurchase agreements from 28 to 91 days; and (4) announced flexibility to banks regarding loan classification and provisioning for loans that were performing on March 2, 2020, but were restructured due to the pandemic. The central bank has also encouraged banks to extend flexibility to borrowers’ loan terms based on pandemic-related circumstances and encouraged the waiving or reducing of charges on mobile money transactions to disincentivize the use of cash.

Exchange rate and balance of payments
  • No measures.


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Kiribati

Kiribati does not have any confirmed cases as of March 24, 2020. An entry ban on all travelers from countries with ongoing local transmission of COVID-19, requiring them to spend at least fourteen days in a country free of COVID-19 prior to their arrival in Kiribati, became effective January 31. Originally, the restrictions applied to China, Japan, Malaysia, Singapore, South Korea, Thailand, the United States, and Vietnam. Currently, the restrictions apply to an increasing number of countries where sustained local transmission has been recorded. A press release to prevent speculations and panic was released on March 17 and government task forces have been formed to address commodities and cargo buffers; communication and awareness; isolation centers and containment efforts; and border control.


Key Policy Responses as of March 24, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Korea

Korea has reported 9,332 confirmed COVID-19 cases and 139 deaths as of March 27, 2020. The authorities have implemented comprehensive testing and tracking, which has enabled early isolation and treatment while minimizing widespread mobility restrictions. After registering more than 500 new cases per day in late February and early March, the number has slowed to an average of fewer than 100 per day since March 15.


Key Policy Responses as of March 24, 2020

Fiscal
  • Direct measures amount to 0.8 percent of GDP (approximately KRW 16 trillion, including a supplementary budget for KRW 11.7 trillion). Health care measures: prevention, testing, and treatment costs, and loans and support for medical institutions. Measures for households: transfers to quarantined households, employment retention support, consumption coupons for low-income households, and emergency family care support. Measures for firms: loans and guarantees for business operation, and support of wages and rent for small merchants. Measures for local communities: local gift certificates and local government grants for costs of responding. Revenue measures: consumption tax cut for auto purchases; tax cuts for landlords who reduce rent for commercial tenants; VAT reduction for the self-employed; and tax payment deferral covering a broad range of taxes for small businesses and the self-employed in medical, tourism, performance, hospitality, and other affected sectors.

Monetary and macro-financial
  • The Bank of Korea (BOK) has taken several measures to ensure continued accommodative monetary conditions and facilitate financial system liquidity. These include i) lowering the Base Rate by 50 basis points, from 1.25 percent to 0.75 percent, effective March 17, 2020; ii) making unlimited amounts available through open market operations (OMOs); iii) expanding the list of eligible OMO participants to include select non-bank financial institutions; iv) expanding eligible OMO collateral to include bank bonds and certain bonds from public enterprises and agencies; and v) purchasing Korean Treasury Bonds (KRW 1.5 trillion). To augment available funding for SMEs, the BOK increased the ceiling of the Bank Intermediated Lending Support Facility by a total of KRW 5 trillion (about 0.26% of GDP) and lowered the interest rate to 0.25 percent (from 0.5-0.75 percent).

    On March 24, President Moon announced a financial stabilization plan of KRW 100 trillion (5.3 percent of GDP). The main elements are: i) expanded lending of both state-owned and commercial banks to SMEs, small merchants, mid-sized firms, and large companies (the latter on a case-by-case basis) including emergency lending, partial and full guarantees, and collateralization of loan obligations; ii) a bond market stabilization fund to purchase corporate bonds, commercial paper, and financial bonds; iii) financing by public financial institutions for corporate bond issuance through collateralized bond obligations and direct bond purchases; iv) short-term money market financing through stock finance loans, BOK repopurchases, and refinancing support by public financial institutions; and v) an equity market stabilization fund financed by financial holding companies, leading financial companies, and other relevant institutions.

Exchange rate and balance of payments
  • The BOK opened a bilateral swap line with the U.S. Federal Reserve for US$60 billion. Other measures taken to facilitate funding in foreign exchange include: i) raising the cap on foreign exchange forward positions to 50 percent of capital for domestic banks (previously 40 percent) and 250 percent for foreign-owned banks (was 200 percent); ii) temporarily suspending the 0.1 percent tax on short-term non-deposit foreign exchange liabilities of financial institutions; and iii) temporarily reducing the minimum foreign exchange liquidity coverage ratio for banks to 70 percent (was 80 percent).


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Kosovo

Number of confirmed COVID-19 cases has reached 71 with one death as of March 25. Containment measures taken by the government in order to delay the spread of the coronavirus include temporary suspension of educational process on all levels, closures of all non-essential businesses, social distancing, travel and movement restrictions.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key spending and tax measures include: (i) allocation of €6 million to the health ministry; (ii) deferrals for corporate income and personal income taxes, and VAT; (iii) advancing payments for social assistance schemes by additional one month's amount (from one month to two months) to support families in need; (iv) removal of VAT on imports of wheat and flour; (v) deferral of public utilities payments until end of April.

Monetary and macro-financial
  • The Central Bank of Kosovo (CBK) together with the Kosovo Banking Association decided to suspend the payment of loan instalments for businesses and individuals starting from March 16 until April 30. This suspension could be extended depending on the situation. The CBK will apply regulatory forbearance on loan provisions and capital requirements on reprogrammed loans.

Exchange rate and balance of payments
  • No measures so far on balance of payments controls or restrictions. No exchange rate measures are possible as Kosovo is unilaterally euroized.


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Kuwait

Kuwait has been hit by two related shocks - the COVID-19 outbreak and a sharp drop in oil prices. As of March 24, the number of confirmed COVID-19 cases stood at 191. The government took resolute actions to contain the spread of the virus. These included imposing partial curfew and travel restrictions, suspending inbound commercial flights, closing schools and universities, banning public celebrations and gatherings, and suspending nonessential work in governmental entities. On the economic front, the policy measures focused on mitigating the negative impact of the shocks on activity. Ample financial buffers and strong financial sector allow Kuwait to face these shocks from a position of strength.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has submitted to parliament a draft law that would allocate KD 500 million ($1.6 billion or 1.4 percent of GDP) additional funds to support governmental entities’ efforts in fighting the spread of COVID-19. The details on how these funds will be disbursed have not been made public yet.

Monetary and macro-financial
  • Following the U.S. Fed decision to cut interest rates to zero, the Central Bank of Kuwait (CBK) reduced interest rates on all monetary policy instruments by 1 percentage point and committed to provide liquidity as needed. The CBK is working with commercial banks to ensure uninterrupted access to financial services, including online banking, payment, settlement and electronic clearing systems, and access to disinfected banknotes. The CBK also set up a KD 10 million ($31.9 million) fund, financed by Kuwaiti banks, to support government’s efforts in combating the virus and instructed banks to support impacted businesses and SMEs. The CBK increased the limit for contactless payments to KD 25 from KD 10, suspended the fees on point of sales devices and ATM withdrawals for three months. Kuwait Banking Association announced that banks will postpone loan payments and cancel interest and any other fees for Kuwaiti clients, including the SMEs, for six months.

Exchange rate and balance of payments
  • No measures.


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Kyrgyz Republic

There have been 42 confirmed cases of COVID-19 so far in the country. All sectors are being impacted with extreme severity as measures are being taken to stop the spread of the virus. The authorities have taken drastic measures to prevent the outbreak, including the closure of borders with China where 36 percent of imports of goods originate, and border restrictions with Kazakhstan and Uzbekistan. As a result, imports and tax revenues have declined substantially. At the same time, the weakening of oil prices has resulted in a fall in remittances.


Key Policy Responses as of March 25, 2020

Fiscal
  • The authorities will safeguard health spending at around budgeted levels and create space for increasing health and other spending once the full impact of mitigation measures is assessed. Additional health expenditure to contain the spread of COVID-19 have been estimated at $9.4 million (0.1 percent of GDP) so far and more will most likely be identified as the crisis unfolds. The closure of the border has resulted so far in declines in imports from China by 27 percent and in tax revenue collected at the border by about 20 percent compared to the same period last year. A temporary widening of the budget deficit will be accommodated, provided it can be fully financed with donor financing.

Monetary and macro-financial
  • The NBKR raised the policy interest rate by 75 basis points to 5 percent in February, amid global uncertainty and the increase in inflation.

    The NBKR will postpone enactment of several financial regulations until further notice: 1) liquidity ratio is lowered to a minimum of 30% (from the current 45%); 2) liquidity ratio requirements (7-day and overnight/instant) will be removed; 3) risk-weights of FX corporate and retail loans will be reduced from 150% to 100%; 4) banks and NBFIs should create a loan loss reserve equal to 100% for the amount of overdue accrued interest payments on loans that have been given the status of non-accrual of interest income when overdue arrears are 270 days or more (from the now 90 days); 5) in the event of arrears arising from COVID-19, banks or NBFIs have the right not to worsen the classification category due to financial condition of the borrower.

Exchange rate and balance of payments
  • The National Bank of the Kyrgyz Republic (NBKR, the central bank) has already sold $202 million of foreign exchange reserves so far (40 percent more than total FX interventions for the whole year of 2019) and the KGS has depreciated by 20 percent vis-a-vis the US$ since the beginning of the year after a long period of stability since mid-2016. The external position is weakening as remittances and tourism receipts are falling (i.e. remittances by 15 percent compared to the same period last year).


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Lao P.D.R.

Lao P.D.R. has two confirmed cases of COVID-19 as of March 24, 2020. Travel restrictions have been put in place, including closures of all border checkpoints for all travelers. In addition, containment measures such as closure of schools and all educational institutions, as well as entertainment venues and large gatherings; social distancing; and quarantines are being enforced. Lao Airlines, the national airlines, has furloughed a large share of its workforce and has suspended almost all international flights or has reduced the frequency of flights to several destinations. The Taskforce Committee for COVID-19 Epidemic Prevention, Control and Response is monitoring latest developments and coordinates the authorities’ response. A separate Taskforce Committee has been appointed to address the economic impacts.


Key Policy Responses as of March 24, 2020

Fiscal
  • Ten billion kip (less than one percent of GDP) has been allocated for prevention and control. A proposed 13-measure economic stimulus package has been endorsed by the cabinet. Measures include, establishing a separate taskforce to address the economic impact of the Coronavirus. A new electricity tariff, to ensure supply of electricity, in effect from May 1, 2020 through December 31, 2025 has been approved. Extra efforts to ensure revenue collections through automated platforms and inspections targeted on stockpiling of essential goods are being considered. Tax relief and extensions of interest payments are being discussed for tourism and agriculture companies. The authorities have also signaled intentions to cut unnecessary spending in proportion to the possible revenue shortfall.

Monetary and macro-financial
  • The central bank asked banks to restructure loans and issue targeted credits to farmers and producers affected by natural disasters and the epidemic. In addition, various forbearance measures have also been announced.

Exchange rate and balance of payments
  • The central bank has announced a reduction in the reserve requirements (from 10 percent to 8 percent on foreign exchange, and from 5 percent to 4 percent on local currency).


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Republic of Latvia

The number of COVID-19 confirmed cases in Latvia was 221 as of March 24, without any loss of life so far. The number of tests performed has reached almost 7,000 since the first confirmed case on March 2. The government has imposed strict containment measures after declaring a state of emergency, including the shutdown of most international passenger services from March 17 onward, closure of school and banning of large gatherings.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government announced a support package of about €1 billion (3 percent of GDP) to support businesses and employees, including through tax holidays and sick pay leave. While details are still being worked out, the measures aim to relieve sectors suffering losses as a result of the coronavirus crisis by covering 75 percent of employees’ wages from the state budget with the maximum monthly payment per employee set at €700. In addition, the covered wages will not be subject to personal income tax and social contributions. Taxpayers affected by the crisis will be able to apply for an extension of tax payment deadlines for up to three years. Companies involved in the production and storage of alcohol used to produce disinfectants can apply for an excise discount of up to 90 percent. The Cabinet also approved a 20 percent bonus payment for “front line” medical workers, covering about 4,500 workers.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Other national measures include: (i) a 50 percent cut in interest rates on loans for SMEs in the tourism sector and a 15 percent cut for large enterprises; (ii) an increase of the reserve capital of the Finance Development Institution ALTUM, so that companies affected by the crisis could use support instruments such as credit guarantees and loans.

Exchange rate / capital flow management
  • No measures.


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Lebanon

Lebanon’s underlying economic situation is challenging, with high public debt, current account deficit, and funding needs. The spread of COVID-19 is contributing to the economic recession. The number of COVID-19 cases stands at 368 and 6 deaths as of March 26, 2020. The authorities have implemented a range of measures to try and limit the spread of the virus encompassing a general mobilization with complete closure of all educational establishments, private sector and public institutions until April 12, 2020. Lebanon also closed the airport—after suspending flights from 11 countries—as well as seaports and land borders.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government established a national solidarity fund that would accept in-kind and monetary donations. The ministry of finance announced the extension of all deadlines related to payment of taxes and fees. The ministry of social affairs, in collaboration with the ministries of industry, agriculture, defense, interior, labor, finance, economy and information, agreed to devise a plan—to be executed in coordination with municipalities, mayors, social affairs centers and the army—to distribute a solidarity basket of food and sanitizers for families hit economically and financially as a result of COVID-19. Work will proceed on providing monetary assistance as well.

Monetary and macro-financial
  • The Banque Du Liban (BDL) issued circular 547, allowing banks and financial institutions to extend exceptional five-year zero percent interest rate loans in Lebanese Pounds and in dollars to customers that already have credit facilities but are unable to meet their obligations, operating expenses, or pay the salaries to their employees during March, April and May 2020 as a result of the interruption of activity due to the COVID-19. BDL will in turn provide banks and financial institutions five-year zero percent interest rate credit lines in dollars equivalent to the value of exceptional loans granted.

Exchange rate and balance of payments
  • No measures.


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Lesotho

Lesotho has reported no confirmed cases as of March 23, 2020. The government has declared a national state of emergency, created an inter-ministerial committee to coordinate the response to COVID-19, and adopted containment measures, including social distancing, travel bans for public servants, quarantine for nationals returning from high-risk countries, screening at ports of entry, and school closures until at least mid-April. The Ministry of Health has developed a Preparedness and Response Plan. The local currency is pegged to South Africa’s Rand, which has depreciated by 17 percent vis-à-vis the US dollar.


Key Policy Responses as of March 23, 2020

Fiscal
  • So far additional measures have been accommodated within the Ministry of Health’s existing budget.

Monetary and macro-financial
  • On March 23, 2020, following an extraordinary meeting of the Monetary Policy Committee, the Central Bank of Lesotho (CBL) announced (i) an increase of the NIR target floor from US$630 million to US$660 million, and (ii) a reduction of the CBL policy rate by 100 basis points from 6.25 to 5.25 percent.

Exchange rate and balance of payments
  • No measures.


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Liberia

As of March 23, 2020, Liberia has three confirmed cases of COVID-19 virus, with the first one detected on March 16, 2020. There have so far been no fatalities. On March 21, 2020, the Liberian authorities issued a declaration designed to enforce social distancing, including: closure of all schools, night clubs, cinemas, beaches, spas, mosques and churches; banning of all street selling and gatherings of more than 10 people; limits on admittance to banks and restaurants to five customers kept six feet apart; social distancing for health facilities and pharmacies (which are to remain open); and mandatory washing with soap and clean water at all public and private establishments. In addition, a hotline has been established for use by the population to report those exhibiting COVID-19 symptoms.


Key Policy Responses as of March 23, 2020

Fiscal
  • Aside from a preparedness plan, no other special fiscal measures have yet been adopted.

    The authorities are hoping to finalize a COVID-19 preparedness plan in conjunction with the donor community. The draft is still evolving. The World Bank has to date approved US$1.5 million of financing (which is yet to be utilized).

    Areas of concentration under the plan include support to health care workers, purchase and rehabilitation of health care equipment, procurement of drugs and other medical supplies, deployment of surge staff to contact tracing activities, border areas, rapid response teams, training of responders, planning, communications and information sharing, staffing and equipping of laboratories, and logistical and supply support.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Libya

Libya has yet to register any COVID-19 positive cases. The Tripoli-based National Center for Disease Control (NCDC) has announced that it has started to implement measures to stop the virus from entering the country and contain its spread within Libya, if and when it should arrive. According to NCDC, as of March 23, Libya had 59 suspected cases under testing, and 72 individuals remain under quarantine, including those arriving in Libya from abroad. The country’s borders have been closed, large public gatherings banned, and travel restrictions instituted. In some regions, dusk-to-dawn curfews have also been ordered. In addition to COVID-19, Libya’s economy will continue to be affected by the continued civil war and the drop in oil prices and production.


Key Policy Responses as of March 23, 2020

Fiscal
  • The Government of National Accord (GNA) announced a package of LD 500 million (about 1 percent of GDP) in emergency COVID-19 related spending. The exact nature and use of this spending is yet to be specified, but it is believed to be aimed at supporting the medical system in expanding testing and responding to a possible surge in infections, once the coronavirus arrives in Libya. Certain medical equipment and protective gear are already in short supply as a result of the civil war which reduces imports and impedes the free flow of goods within Libya’s borders.

Monetary and macro-financial
  • No measures announced.

Exchange rate and balance of payments
  • No measures announced.


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Republic of Lithuania

Lithuania has reported 143 cases of COVID-19 and 1 death as of March 23, 2020. The government has introduced a range of containment measures to slow the spread of coronavirus, including a nationwide quarantine, closed borders, increased testing, the closure of schools and cancellation of public events, as well as the shutdown of non-essential shops, museums, cinemas, and similar establishments.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government has announced an overall fiscal package of 2.5 billion euros (5 percent of GDP). Within this amount, spending measures by the General Government amounts to 1.1 billion euros (2.3 percent of GDP) which includes (i) additional funds for the healthcare system and emergency management (500 million euros), (ii) additional funds for caring for the sick and disabled, including for parents of school children who now need to stay home, and support for the self-employed (550 million euros), and (iii) co-financing of climate change investment projects (about 20 percent of 250 million euros). In addition, the government expanded guarantee schemes, including guarantees for agricultural as well as SME loans by around 1.3 billion euros (2.6 percent of GDP). Finally, the government increased the borrowing limit by 5 billion euros (10 percent of GDP).

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    In addition to policies from the ECB, the Bank of Lithuania has lowered its counter-cyclical capital buffer from 1 to 0 percent (effective April 1) and has encouraged to be flexible and negotiate, on a case-by-case basis, loan terms with borrowers if necessary (within the existing regulatory framework).

Exchange rate / capital flow management
  • No measures.


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Luxembourg

The spread of COVID-19 has accelerated, with 1,333 confirmed cases and 8 deaths as of March 25. The government has implemented a range measures to slow the spread of coronavirus, including temporary closures of schools, entertainment and hospitality premises, and protect vulnerable individuals, such as prohibiting visits to elderly care facilities. On March 18, the government declared a state of emergency and assumed additional powers to quickly take decisions to support workers, jobs, and businesses.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government announced a fiscal package of €1.75bn (2.8 percent of GDP) and €8bn (12.5 percent of GDP) of liquidity support for affected businesses (in the form of postponement of tax and social-security contribution payments as well as credit guarantees). The fiscal package includes the following measures: (i) covering 80 percent of employees’ leave for family reasons (€400 million, 0.6 percent of GDP); (ii) paying partial-unemployment benefits (€1bn, 1.6 percent of GDP) and advances to cover operating costs for eligible companies and liberal professions experiencing financial difficulties (about €350 million, 0.5 percent of GDP); and (iii) reimbursing VAT credit balances below €10,000 (€50 million, 0.1 percent of GDP).

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    No measures were taken by the Luxembourg authorities.

Exchange rate / capital flow management
  • No measures.


M


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Madagascar

The number of confirmed COVID-19 cases stands at 19 (no deaths) as of March 25, 2020. As of March 23, the government has declared a national state of emergency and adopted a range of measures to limit the spread of the virus including travel restrictions (on international flights and internal public transportation), a 15-day quarantine period for people in contact with the infected ones, a curfew in the capital between 8PM and 5AM, closure of schools and public offices (except for critical public services), and increased testing. Facing a severe impact from the global pandemic, the authorities’ immediate priority is to ensure the health of the population and preserve macroeconomic stability.


Key Policy Responses as of March 25, 2020

Fiscal
  • Measures are being taken to increase health spending, help the most vulnerable, support the private sector and preserve the stability of the financial sector. Key measures include: (i) increased spending on epidemic prevention and control; (ii) cash-transfers and in-kind necessities to the poorest and those unemployed; and (iii) tax relief, suspension of government fees and waived social contributions. Due to very limited resources, the authorities are actively seeking additional budget support from development partners, beyond what was already disbursed or committed. On March 12, 2020, the World Bank provided a grant of $3.7 million to strengthen prevention against the COVID-19 pandemic, purchase materials and equipment, and train health workers. The government is working on a revised budget law that will consider additional fiscal and support measures to be presented to parliament.

Monetary and macro-financial
  • The central bank provided monetary policy support and acted to safeguard financial stability, by providing MGA180 billion (about 0.3 percent of GDP) in additional liquidity to the banking system in mid-March 2020 to allow banks to defer delayed payments on existing loans and increase lending to businesses.

Exchange rate and balance of payments
  • The authorities are maintaining the flexible exchange rate regime. Based on the latest available data, the central bank made some limited interventions in recent days, and the exchange rate depreciated by less than 1 percent since last month.


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Malawi

As of March 24, there are no confirmed cases of COVID-19. As a precautionary move, the government has closed all schools and universities. Currently, there are no hard entry restrictions for inbound international travelers to Malawi, but a two-week mandatory self-quarantine for people arriving from areas highly affected by coronavirus disease has been announced.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government’s response plan includes US$20 million (0.25 percent of GDP) in spending on health care and targeted social assistance programs. The details of the plan are still being refined.

Monetary and macro-financial
  • No changes in monetary policy or macroprudential framework have been announced. Financial sector buffers, including banks’ capital and liquidity buffers, are expected to counter risks to the banking system.

Exchange rate and balance of payments
  • No measures.


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Malaysia

Malaysia is being hit by two shocks—the spread of COVID-19 and the sharp decline in oil prices. COVID-19 cases were 1,518, with 15 deaths, as of March 24, 2020. A Movement Control Order (MCO) was put in place for March 18-31 and subsequently extended to April 14, 2020: borders are closed (including with Singapore); schools, universities and non-essential shops and firms are closed; public servants are teleworking; and all public gatherings are banned. Compliance with the MCO is reportedly at 95 percent.


Key Policy Responses as of March 25, 2020

Fiscal
  • A fiscal stimulus package of RM 6 billion (0.4 percent of GDP) was approved on February 27, 2020. The measures include: (i) increased spending on medical equipment and personnel; (ii) temporary tax relief; (iii) a temporary reduction of the Employer Provident Fund (EPF) minimum statutory contribution rate from employees from 11 to 7 percent; (iv) targeted cash transfers; and (v) infrastructure investment and maintenance spending. Additional measures—electricity discounts and temporary pay leave—amounting to RM 0.62 billion (less than 0.1 percent of GDP) were announced on March 16, 2020. Some of the investment spending already planned for 2020 is being frontloaded.

    A second stimulus package will be released on March 27, 2020. This package will reportedly include additional health spending and transfers to local governments to fight COVID-19. Furthermore, employees will be allowed special withdrawals from their EPF account for a 12-month period.

Monetary and macro-financial
  • Several measures have been taken:

    (i) on March 3, 2020, Bank Negara Malaysia (BNM) lowered the Overnight Policy Rate (OPR) by 25 basis points to 2.50 percent, citing market disruptions, greater risk aversion and financial market volatility, and tighter financial conditions due to COVID-19;

    (ii) BNM lowered the Statutory Reserve Requirement (SRR) Ratio by 100 basis points to 2 percent effective 20 March 2020 and allowed each Principal Dealer to recognize MGS and MGII of up to RM1 billion as part of the SRR compliance until March 2021. BNM expects these combined measures to release approximately RM30 billion worth of liquidity into the banking system. BNM also allocated RM3.3 billion (0.2 percent of GDP) to three financing facilities (available from March 6, 2020) in support of SMEs. Participating financial institutions will obtain a public guarantee;

    (iii) on March 23, 2020, the Securities Commission Malaysia (SC) and Bursa Malaysia suspended short-selling until April 30 to mitigate risks arising from heightened volatility and global uncertainties. The SC also waived annual licensing fees for capital market licensed entities.

    (iv) on March 25, 2020, BNM announced measures temporarily easing regulatory and supervisory compliance on banks to enable them to support loan deferment and restructuring (see link)

Exchange rate and balance of payments
  • No announced measures.


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Maldives

Maldives is expected to be hit hard by the outbreak. While the number of confirmed COVID-19 cases has thus far been limited to 13 and no deaths as of March 23, 2020, Maldives’ economy is very dependent on tourism. Tourism receipts represent about 60 percent of GDP. The government declared a Public Health Emergency from March 12 to April 10, 2020. There are several adopted containment measures, including travel bans on visitors originating from, transiting to, or with a travel history of certain high-risk countries; quarantine for all passengers traveling to Maldives by air except for tourists checking-in to resorts; screening at ports of entry; restrictions on travel between resorts and inhabited islands; ban on all cruise ships from entering and docking; requirement on all guest houses and city hotels operating in the Maldives to suspend all tourist check-ins during March 17 to 31; and school closures.


Key Policy Responses as of March 23, 2020

Fiscal
  • To minimize the economic impact of the COVID–19 virus, the authorities announced on March 20 an Economic Recovery Plan of 2.5 Billion rufiyaa (2.8 percent of GDP). Under the plan, the Government of Maldives will (i) reduce recurrent expenditure by 1 billion rufiyaa (1.1 percent of GDP); (ii) increase the amount of funds allocated for the health sector; (iii) subsidize 40 percent of electricity bills and 30 percent of water bills for the months of April and May; and (iv) ensure through banks, availability of working capital to businesses. At the same time, the government intends to continue public sector investment program (PSIP) projects as planned.

Monetary and macro-financial
  • The Maldives Monetary Authority (MMA) has been in close contact with the banks to discuss the impact on the domestic financial system and has identified the measures that can be taken through the financial institutions to reduce economic disruptions and loss of jobs and output. The announced measures include: (i) reduction of the minimum required reserves up to 5 percent as and when required; (ii) making available a short-term credit facility to financial institutions as and when required; (iii) introducing regulatory measures to enable a moratorium of 6 months on loan repayments for those impacted by the current situation (customers have to submit their requests to the banks in order to avail themselves of this moratorium).

Exchange rate and balance of payments
  • The MMA will increase its foreign exchange interventions and use other available facilities to maintain the exchange rate peg against the US dollar. At the same time, the authorities have announced their intention to obtain a foreign currency swap facility amounting to US$150 million under the currency swap agreement signed between the MMA and the Reserve Bank of India.


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Mali

The COVID-19 pandemic has hit at a time when the country is facing a challenging security situation in the northern and central regions. The first two cases were confirmed on March 24, 2020, but the government had responded in mid-March to the global emergence of the pandemic with preventive containment measures. These include the suspension of commercial flights from affected countries (except cargo flights), the closure of land borders, the suspension of all public gatherings, the prohibition of social, sports, cultural and political gatherings of more than 50 people, and the closure of schools (for 3 weeks), night clubs and bars. In addition, the government has set up a crisis response unit, a hotline for signaling any suspicious case, and some quarantine facilities.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has prepared a contingency plan to prevent the spread of COVID-19 and strengthen its medical care capacity, in collaboration with the World Health Organization, costed at about CFAF 6.3 billion (0.06 percent of GDP). The government is also working with the World Bank to enhance its medical care capacity, notably in terms of medical equipment (respirators, quarantine facilities, etc.). At the regional level, the council of Finance Ministers of the WAEMU have committed to undertake necessary steps to mitigate the adverse economic effects of the virus, although no specific measure has been announced yet.

Monetary and macro-financial
  • On March 21, 2020, the BCEAO (the regional central bank) announced the following region-wide monetary and macro-financial measures with the aim to mitigating the negative economic impact of the COVID-19 crisis by: (i) providing FCFA 340 billion additional liquidity to bring the total liquidity made available to banks by weekly and monthly auctions to FCFA 4,750 billion; (ii) extending the collateral framework to access the BCEAO’s refinancing to include CFAF 1,050 billion of bank debt of prequalified 1,700 private companies that could thus benefit from better financing conditions. and (iii) setting-up a framework with the banking system to support firms with repayment difficulties.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No measures.


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Malta

COVID-19 is rapidly spreading in Malta, with 120 cases confirmed but no deaths as of March 24. The government responded swiftly to mobilize the healthcare system and implement containment measures, including travel restrictions, social distancing, closures of schools, childcare centers, bars, restaurants, sport centers, non-essential shops and services, as well as the cancellation of all mass gatherings.


Key Policy Responses as of March 25, 2020

Fiscal
  • On March 18, the government announced a €1.8 billion (12 percent of GDP) package. It covers €210 million (1.5 percent of GDP) of spending measures, including (i) €35 million to healthcare budget; (ii) allowances to support quarantined households and individuals unable to work from home (such as families with children, persons with disabilities); (iii) wage subsidies for businesses and self-employed persons that have suspended or reduced operations; (iv) special unemployment benefits; and (v) increases in rent subsidies for unemployed individuals. In addition, the government will provide deferrals of tax payments for income tax, VAT, social security and maternity fund contributions. On March 24, the government raised wage subsidies in the sectors hardest hit by COVID-19. The objective is to guarantee minimum wage and up to €1200 per month for workers above minimum wage and for self-employed. This additional measure will be retroactive to March 9 and are expected to cost €61 million per month.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    The government will provide loan guarantees up to €900 million (6 percent of GDP).

Exchange rate and balance of payments
  • No measures.


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Republic of Marshall Islands

As of March 24, no COVID-19 case had been confirmed in the Republic of Marshall Islands (RMI). The government has responded with swift precautionary measures early on. Travel restrictions from affected countries have been imposed since January 24. Entry of all international travelers by commercial flight has been suspended since March 8. To ensure food and other supplies, container vessels and fuel tankers have been exempted from entry restrictions, but with strict safety requirements including prohibition of human contacts and a minimum of 14 days between departure from ten restricted countries and arrival in RMI. Though small, the hotel and tourism sectors are experiencing significant losses.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government has formulated a Coronavirus Disease Preparedness and Response Plan and is preparing preventive measures amounting to about US$7 million (3.1 percent of GDP), including construction of quarantine units, purchases of medical equipment, installment of washing stations, and funding for overtime of health workers. The authorities are currently working with multilateral and bilateral development partners in search for financial support.

Monetary and macro-financial
  • The U.S. dollar is the country’s legal tender.

Exchange rate and balance of payments
  • Not applicable, given the adoption of U.S. dollar as legal tender.


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Mauritania

Mauritania has reported 2 positive cases of COVID-19 (no deaths) as of March 23, 2020 but there are fears of a deterioration in the coming days. The government has taken stringent containment measures to limit the spread of the virus, including suspension of all commercial flights into and from the country; closure of all land borders except for the transportation of goods; closure of schools and universities, as well as of all restaurants and cafés; and a curfew from 6:00 p.m. to 6:00 a.m. throughout the country.


Key Policy Responses as of March 25, 2020

Fiscal
  • As a first step the Ministry of Health has prepared a $10 million (0.13 percent of GDP) short-term response plan to contain the spread of COVID-19. The plan includes the procurement of medical supplies and equipment as well as the recruitment of additional medical staff. The government is expected to announce soon a large set of measures to further address the pandemic and support the population and the economy, including financial assistance to negatively impacted people and businesses.

Monetary and macro-financial
  • The central bank has taken a set of measures to support the financing of the economy, including: a reduction of the policy rate from 6.5 percent to 5 percent; a reduction of the marginal lending rate from 9 percent to 6.5 percent; a decrease of the reserve requirement ratio from 7 percent to 5 percent.

Exchange rate and balance of payments
  • No measures.


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Mauritius

Mauritius has reported 42 positive cases (2 deaths) as of March 25, 2020. The authorities have implemented a range of containment measures including bans on public gatherings, followed by a curfew order in effect until April 2, closing borders, discontinuing public transportation, closing schools, universities, shopping malls and attraction sites, suspending employee attendance at government and private workplaces (except for essential staff), and increasing testing. On March 25, the authorities further tightened the lockdown by closing all supermarkets, bakeries and shops and announced that the next day the government will begin direct food distribution to needy households.


Key Policy Responses as of March 25, 2020

Fiscal
  • The authorities have announced plans to increase general public health spending by Rs 208 million (0.04 percent of GDP), with half already disbursed. There are a range of other fiscal support measures including an additional Rs 4 billion (0.8 percent GDP) in spending/financing. The State Investment Corporation will raise Rs 2.7 billion (0.5 percent of GDP) to make equity investments in troubled firms. There will be financing available for SMEs. The Development Bank of Mauritius will give Rs 200 million (0.04 percent of GDP) in credit for firms short on cash. Affected firms will receive extra tax deductions. All labor contracts set to expire this year are extended through December 3, 2020. The government will also introduce a Wage Support Scheme to limit the socio-economic impact of COVID-19 by providing financial support to employees who would become unemployed on a temporary basis.

Monetary and macro-financial
  • The Bank of Mauritius (BOM) reduced the Key Repo Rate from 3.35 percent to 2.85 percent on March 10. On March 13, the BOM also adopted a set of measures focused on economic operators which are being directly impacted by COVID-19, including: i) reduction of cash reserve ratio - lower cash reserve ratio from 9 to 8 percent; ii) special relief amount of Rs 5 billion (1 percent or GDP) - special credit line for affected firms to be administered via the commercial banks to meet affected operators’ cash flow and working capital requirements; iii) moratorium on capital repayment for loans - commercial banks will provide a moratorium of six months on capital repayment for existing loans of affected economic operators; iv) easing of banking guidelines - the BOM also eased supervisory guidelines on handling credit impairments and v) savings bonds - Rs 5 billion (1 percent of GDP) of 2.5 percent two-year BOM bonds which will be made available to retail investors.

    On March 23, BOM announced additional support measures: i) support to households - six-month moratorium on household loans at commercial banks, while BOM will bear interest payments for households with the lowest income; ii) Special Foreign Currency (USD) Line of Credit ($300 million) - targeting operators having foreign currency earnings, including SMEs; iii) Swap arrangement to support import-oriented businesses (initial amount $100 million); and iv) Shared ATM Services - waving ATM fees during national confinement period.

Exchange rate and balance of payments
  • The central bank has maintained the flexible exchange rate regime and intervened modestly in the foreign exchange market to reduce volatility and provide FX liquidity to the economy.


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Mexico

Mexico has reported 251 confirmed cases and 2 deaths as of March 22, 2020. To delay the spread of the coronavirus, the government is implementing a range of measures, including travel restrictions, social distancing, declarations of state of emergency in some municipalities and states, closure of schools and public recreational facilities such as cinemas, theaters and gyms in parts of the country. Mexico was also hit by the global selloff in financial markets and the declining oil price—during the last month, local government bond markets saw nonresident outflows of around US$ 4.6 billion (0.4 percent of 2019 GDP), the 10-year dollar credit spread widened from 141 bps to 404 bps for the sovereign and from 414 bps to 1117 bps for Pemex, and the peso depreciated by 24 percent relative to the US$ (as of March 24, 2020).


Key Policy Responses as of March 23, 2020

Fiscal
  • The government announced that it would: 1) ensure that the Ministry of Health has sufficient resources and does not face red-tape, and sufficient supply of medical equipment and materials; 2) advance pension payments to the elderly; 3) accelerate the tender processes for public spending to ensure full budget execution; and 4) set-up a Health Emergency Fund to request additional resources from Congress, that could reach up to 180 billion pesos (0.7 percent of 2019 GDP).

Monetary and macro-financial
Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly, while supporting US$ liquidity.


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Federated States of Micronesia

As of March 18, 2020, there are no confirmed COVID-19 cases in the Federated States of Micronesia (FSM), but the country’s health system has limited capacity for handling an outbreak (see U.S. Department of State travel advisory for the FSM). The national and state governments have introduced travel restrictions; banning or requiring 14-day self-quarantine prior to entry into the FSM; and restricting residents from traveling abroad. The state of Chuuk closed schools.


Key Policy Responses as of March 24, 2020

Fiscal
  • To address the emergency caused by COVID-19, the national government plans to use available funds in the Disaster Assistance and Emergency Fund and the Disaster Relief Fund.

Monetary and macro-financial
  • No monetary policy response. With the U.S. dollar its legal tender, the FSM does not have a central bank.

Exchange rate and balance of payments
  • No exchange rate policy response, given that U.S. dollar is the legal tender of the FSM.


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Moldova

Moldova has recorded 149 COVID-19 infection cases, two individuals that have recovered, and one person that died as of March 25, 2020. Confirmed cases have risen progressively, prompting a declaration of a state of national emergency, restrictions on border crossings, and limits on economic and social activity. Among other provisions, the state of emergency allows Moldovan authorities to impose additional border controls, limit movement, prohibit large gatherings, manage food supplies, and coordinate media messaging about the pandemic.


Key Policy Responses as of March 25, 2020

Fiscal
  • While a comprehensive fiscal package is yet to be formulated, several targeted fiscal measures to support businesses have been announced: delaying tax payment deadlines to mid-2020, suspending tax audits and other controls, and increasing state budget allocations to the budget emergency fund and to a mortgage guarantee program.

Monetary and macro-financial
  • The National Bank of Moldova decreased the base rate applied to the main short-term monetary policy operations by 2.25 percentage points to 3.25 percent, decreased the required reserve ratio in local currency by 2.5 percentage points to the level of 38.5 percent, while the required reserves ratio in freely convertible currencies increased by 1.0 percentage point to the level of 21.0 percent. These measures were taken with a view to support the economy, ease liquidity conditions, and enhance financial system resilience. Financial sector policy has thus far focused on providing banks with flexibility to manage near-term payment obligations of individuals facing financial difficulties without recourse to adjustment of prudential provisions, including in cases of loan rescheduling.

Exchange rate and balance of payments
  • The National Bank of Moldova announced that it stands ready to intervene in the foreign exchange market to counter disorderly market pressures and excessive exchange rate volatility.


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Mongolia

Mongolia reported 10 confirmed cases (no fatalities) as of March 24, 2020. The authorities declared the state of high alert on February 13 and quickly implemented a broad range of measures including a travel ban from high-risk countries, temporary suspension of coal exports to China, social distancing, public events cancellations and school and university closures.


Key Policy Responses as of March 24, 2020

Fiscal
  • MNT12 billion (0.03 percent of GDP) of additional health spending has been approved and allocated to epidemic prevention and control, acquisition of medical supply and medical staff overtime salaries. This measure is financed by a Government Reserve Fund withdrawal. Additional fiscal measures have been announced and are pending parliamentary approval in early April, including: (i) tax exemptions on several imported food items; (ii) tax exemptions on rent income of taxpayers who have reduced rents for retail businesses, including supermarkets, shopping centers and service centers; (iii) tax penalty exemptions or deferred payments during the state of high alert, and; (iv) soft loans from the development bank to cashmere producers.

Monetary and macro-financial
  • On March 11, the Bank of Mongolia (BOM) (i) reduced the policy rate by 100 bps to 10 percent; (ii) reduced the MNT reserve requirement of banks by 200 basis points to 8.5 percent; and (iii) narrowed the policy rate corridor to ±1 percent. The lower reserve requirement released MNT 324 billion (0.8 percent of GDP) of additional liquidity in the banking system. On March 18, the BOM and the Financial Regulatory Commission implemented temporary financial forbearance measures on prudential requirements, loan classifications, and restructuring standards.

Exchange rate and balance of payments
  • No measures.


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Montenegro

Montenegro has 53 cases of COVID-19 infections (and one death), as of March 25, 2020. The government has implemented a range of containment measures including travel restrictions, border closures, as well as the closures of schools, restaurants, and public transportation.

The latest measures can be found at the link.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government has announced several measures, including: the removal of the excise on medical alcohol sold in pharmacies; the delay of tax payments and contributions to earnings; the creation of a new Investment Development Fund (IRF) credit line to improve the liquidity of entrepreneurs; the deferral of lease payments for state-owned real estate; and advance payments to contractors for capital projects. The government will also offer one-off financial assistance to low-income pensioners and social welfare beneficiaries in the amount of EUR 50 each (EUR 1 million has been allocated for this).

Monetary and macro-financial
  • The central bank announced a moratorium on loan repayment for a period of up to 90 days. It includes the interim suspension of all payments of obligations based on the loan (principal, interest, default interest, fees, etc.). Banks are also allowed to restructure loans and reclassify them as new loans, including by additionally extending the repayment period by up to two years, if the borrower’s financial position was impacted by the pandemic and restructuring would improve the credit capacity of the borrower. These measures also apply to leasing and microfinance institutions.

    More details can be found here.

Exchange rate and balance of payments
  • No measures.


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Morocco

Morocco has reported 170 confirmed cases of COVID-19 and 5 deaths as of March 24, 2020. The government created an emergency committee chaired by the Minister of Finance in charge of monitoring the situation. The authorities declared a state of health emergency, adopted containment measures, including quarantine, suspended all international passenger flights, forbid all public gatherings, and closed mosques, schools, universities, restaurants, cafes, and hammams. The authorities also decided to regulate prices and control the distribution channels of facemasks and hydro alcoholic gels.


Key Policy Responses as of March 24, 2020

Fiscal
  • The authorities have created a special fund dedicated to the management of the pandemic, of about US$1 billion financed by the government and by voluntary contributions from public and private entities which will be tax deductible. This fund will cover the costs of upgrading medical facilities and support businesses and households impacted by the pandemic. Employees who become unemployed and are registered with the pension fund will receive 2,000 dirhams a month and can put off debt payments until June 30. In addition, all businesses can defer social contribution payments until June 30, and companies with annual turnover lower than 20 million dirhams can defer tax payments.

Monetary and macro-financial
  • The central bank reduced the policy rate by 25 bps to 2.0 percent on March 19. To support companies, loan payments are suspended for small and medium-sized businesses and self-employed people until June 30, and a new banking credit line is created to finance businesses’ operational expenses, which is guaranteed by the Central Guarantee Fund. To reduce volatility, the Capital Market Authority decided to revise downwards the maximum variation thresholds applicable to financial instruments listed in Casablanca Stock Exchange.

Exchange rate and balance of payments
  • As part of a gradual and orderly transition to a more flexible exchange rate regime, the authorities broadened the dirham’s fluctuation band to +/- 5 percent (from +/- 2.5 percent) on March 6, 2020.


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Mozambique

As of March 24th, 2020 Mozambique had reported one positive case of COVID-19. The government has stated that “prevention remains the best strategy”. These actions include (i) the shutdown of schools form pre-school up to university, (ii) the ban of all gatherings, of more than 50 persons, (iii) the ban and cancellation of all entry visas, (iv) a 14 day quarantine for all travelers entering Mozambique and (iv) the creation of a technical and scientific committee to advise the government.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has increased the budget allocation for health, from about MT 2 billion (or about 0.2 percent of GDP) to about MT 3.3 billion (0.3 percent of GDP). In addition, the Minister of Finance also asked for US$ 700 million from partners to face the impact of the pandemic.

Monetary and macro-financial
  • To ease liquidity conditions, the central bank reduced reserve requirements by 150 basis points for both foreign currency and domestic currency deposits (to 11.5 percent and 34.5 percent respectively) on March 16. On March 22, it announced measures to support financial markets and encourage prudent loan restructuring by: (i) introducing a foreign currency credit line for institutions participating in the Interbank Foreign Exchange Market, in the amount of US$ 500 million, for a period of nine months; and (ii) waiving the constitution of additional provisions by credit institutions and financial companies in cases of renegotiations of the terms and conditions of the loans, before their maturity, for clients affected by the pandemic, until December 31.

Exchange rate and balance of payments
  • In line with the flexible exchange rate regime, the metical has been allowed to adjust and has depreciated since early March 2020.


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Myanmar

Myanmar has 3 confirmed COVID-19 cases (0 deaths) as of March 25, 2020. The economy has been deeply affected by the outbreak, with sharp declines in tourist arrivals, supply chain disruptions for the garment sector, and losses for SMEs, which have resulted in large layoffs and factory closures. In response, the government has announced measures to limit the spread of the virus including travel restrictions (including quarantine requirements), closure of several land borders, and banning mass public gatherings. A National Central Committee on Prevention, Control and Treatment of 2019 Novel Coronavirus has also been established to coordinate the authorities’ response.


Key Policy Responses as of March 25, 2020

Fiscal
  • Measures include: (i) the allotment of MMK 300 million (US$0.2 million) to the Ministry of Health and Sports for additional health related expenditures; (ii) income and commercial tax payments due in the second and third quarters of the fiscal year have been made extendable to end of the fiscal year, and an exemption for the 2 percent advance income tax on exports to the end of the fiscal year has been announced; and (iii) a COVID 19 Fund worth MMK 100 billion (US$70 million, 0.1 percent of GDP) has been established at the Myanmar Economic Bank to provide soft loans to affected business (particularly the priority garment and tourism sectors and SMEs) at a 1 percent per annum interest rate for a one-year period, with terms to be reassessed as needed.

Monetary and macro-financial
  • The Central Bank of Myanmar cut the policy interest rate by 0.5 percentage points on March 12, and announced a further 1 percentage point cut to be effective April 1. Deposit auctions have been halted to maintain adequate liquidity in the interbank market.

Exchange rate and balance of payments
  • The kyat has been allowed to adjust flexibly, with limited rules-based intervention to manage excessive exchange rate volatility.


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Namibia

Namibia has reported 6 positive cases (no deaths) as of March 24, 2020. The government has declared a national state of emergency and adopted containment measures, including social distancing, travel bans on visitors from high-risk countries, and screening at ports of entry.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government called off the Independence Celebrations and reallocated the corresponding financial outlay to the fight against COVID-19.

Monetary and macro-financial
  • The central bank reduced the policy rate by 100 bps to 5.25 percent on March 20.

Exchange rate and balance of payments
  • No measures.


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Nauru

As of March 25, 2020, Nauru has no confirmed cases of COVID-19. The government has imposed a number of containment measures including a near-total ban on entry by air into Nauru effective March 16th. Cargo flights are operating at normal frequency at this time, but subject to strict handling on arrival, including on contact with crew. Screening and quarantine measures have also been in effect since March 16th and apply to all passengers on arrival, including a mandatory 14-day stay in approved transition accommodation and further measures for symptomatic cases. Social distancing measures have been encouraged including limiting or cancelling public gatherings and recommending working arrangements from home where possible.


Key Policy Responses as of March 25, 2020

Fiscal
  • Fiscal measures have not been deployed yet. Initial estimates from the health and immigration department suggest an estimated AUD $5 million for health expenditures and isolation costs per 500 individuals (approximately 4 percent of the population). Support to the national airlines and other SOEs is likely to be significant and will escalate the longer the duration of the COVID-19 crisis. The authorities will reduce buffer funds and draw down general reserves to support the needed fiscal measures, including necessary medical expenditures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Nepal

Nepal has 2 confirmed COVID-19 cases as of March 23. Containment measures imposed include a nationwide lockdown and a ban on international travel (both currently until March 31), as well as the closure of cinema halls, stadiums, health clubs, museums, bars and other recreational places through end-April.


Key Policy Responses as of March 24, 2020

Fiscal
  • No announcement.

Monetary and macro-financial
  • The Nepal Rastra Bank announced its intention to provide interest subsidies through its refinancing facility and to allow banks to reschedule loan payments of businesses affected by COVID-19.

Exchange rate and balance of payments
  • No announcement.


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The Netherlands

The first cases of COVID-19 infections were reported in the Netherlands in late February. As of March 25, there are 5,560 confirmed cases, and 276 deaths. The authorities have taken measures to limit the spread of the virus, including ordering closure of schools and many catering businesses, and advising to avoid social contact and work from home to the extent possible.


Key Policy Responses as of March 25, 2020

Fiscal
  • A package of fiscal measures was announced to contain the economic impact of the outbreak. The package includes spending measures of about 10-20 billion euros (1-2 percent of GDP) in the next three months, and covering (i) compensation of up to 90 percent of labor costs for companies expecting a reduction in revenues of 20 percent or more; (ii) compensation for affected sectors (hospitality, travel, and others); (iii) support for entrepreneurs and the self-employed; (iv) scaling up of the short-time working scheme (unemployment benefit compensation available to companies needing to reduce their staff by at least 20 percent). In addition, companies can defer tax payments without penalties, and calculate provisional taxes on the basis of expected reduced activity levels. Also, public guarantee schemes, especially for SME loans, are expanded to help the most vulnerable companies to manage their liquidity problems. The total cost of these programs will depend on demand.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    In addition, the Dutch central bank has reduced systemic buffer requirements for the three largest banks to support bank lending. The central bank is also taking measures to provide temporary regulatory relief to less significant banking institutions. Furthermore, the planned introduction of a floor for mortgage loan risk weighting is postponed. In turn, the largest Dutch banks have agreed to grant SMEs a six-month postponement of their loan repayments.

Exchange rate and balance of payments
  • No measures.


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New Zealand

As of March 25, New Zealand had 205 confirmed and probable cases of COVID-19, 22 confirmed recoveries and no deaths. The authorities have declared a state of emergency and implemented strong containment measures including the closure of all non-essential businesses, cancellation of all events and gatherings, closure of schools, and cancellation of discretionary domestic air travel. The population is instructed to self-isolate, except those providing essential services. These measures are in place for at least four weeks. This follows earlier closing of the borders to all but New Zealand citizens, who must self-isolate for 14 days upon entry.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has announced a fiscal package amounting to a total of NZ$16.3 billion (5.4 percent of GDP), of which more than half will be disbursed by end-June. Key measures include: healthcare-related spending to reinforce capacity (NZ$0.5 billion or 0.2 percent of GDP); a permanent increase in social spending to protect vulnerable people (total NZ$2.4 billion or 0.8 percent of GDP over the next four years); a lump sum 12-week wage subsidy to support employers severely affected by the impact of COVID-19 (NZ$9.3 billion or 3.1 percent of GDP); a permanent change in business taxes to help cashflow (NZ$2.8 billion or 0.9 percent of GDP over next four years); and, support for the aviation sector (NZ$0.6 billion or 0.2 percent of GDP). The government has also approved a NZ$0.9 billion debt funding agreement (convertible to equity) with Air New Zealand to ensure continued freight operations, domestic flights and limited international flights. The government is expediting urgent work on new income support measures for all workers above and beyond the wage subsidy scheme.

Monetary and macro-financial
  • The Reserve Bank of New Zealand (RBNZ) cut the official cash rate (OCR) by 75 basis points to 0.25 percent on March 17 and announced that this level will remain for at least 12 months. The RBNZ also announced a Large Scale Asset Program (LSAP) to purchase government bonds in the secondary market up to NZ$30 billion across a range of maturities over the next 12 months. The RBNZ has been providing liquidity in the FX swap market and re-established a temporary U.S. dollar swap line (US$30 billion) with the U.S. Federal Reserve. A new Term Auction Facility, which allows banks access to collateralized loans of up to 12 months, has also been established. The RBNZ has reduced banks‘ core funding ratio requirement to 50 percent from 75 percent to help banks make credit available. The start date for a regulatory change requiring higher capital for banks has been postponed for 12 months, to July 2021 (to support up to about NZ$47 billion of more lending), with other regulatory initiatives in the pipeline also put on hold for at least six months. The NZ government, the RBNZ and retail banks have also announced a number of financial measures to support SMEs and homeowners. These include a six-month loan moratorium to mortgage holders and SMEs affected by COVID-19 and a NZ$6.25 billion business finance guarantee scheme for SME loans, in which the government covers 80 percent of the credit risk. The government has also announced a six month freeze on residential rent increases and increased protections for tenants for termination of tenancies.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust flexibly and has depreciated by about 16 percent year-to-date.


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Nicaragua

Nicaragua has reported, as of March 24, 2 positive cases (no deaths). The government through the Minister of Health (MINSA) is conducting a Health Campaign with house-to-house visits to deliver hygiene and preventive informationIn that context, there is strict monitoring in accordance with international protocols at airports and at all entry points and recommends a 14-day quarantine for nationals returning from countries with large outbreaks.


Key Policy Responses as of March 24, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • In March, the Central Bank of Nicaragua (CBN) reduced its repo reference rate, and the 1-day and 7-day repo window rate by 75 bps. The rate for foreign currency deposit window was also cut by 60 bps. On March 24, the CBN updated its Business Continuity Plan COVID-19 (activated on March 11) to guarantee the continuity of financial, treasury, accounting and administrative operations.

Exchange rate and balance of payments
  • No measures.


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Niger

Niger has 7 confirmed COVID-19 cases and 1 death announced as of March 25, 2020. The first case was detected on March 19, 2020. The containment measures include: health controls at border crossings; public awareness campaigns; banning gatherings of 50 people or more; closure of bars and entertainment centers; closure of schools; closure of land and air borders (except for commercial goods, health and security travel); banning religious congregations and traditional gatherings such as birth celebrations; and imposing social distancing and hygiene rules in the local markets. The emphasis is on prevention and containment. Efforts to strengthen the limited capacities of Niger’s health care system are also underway.


Key Policy Responses as of March 24, 2020

Fiscal
  • A COVID-19 response plan has been formulated, focusing on containment and prevention, with an initial cost of US$2.4 million (0.02 percent of GDP).

Monetary and macro-financial
  • OOn March 21, 2020, the BCEAO (the regional central bank) announced the following monetary and macro-financial measures with the aim of mitigating the negative economic impact of the Covid-19 crisis by: (i) providing CFAF 340 billion additional liquidity to bring the total liquidity made available to banks by weekly and monthly auctions to CFAF 4,750 billion; (ii) extending the collateral framework to access the BCEAO’s refinancing to include CFAF 1,050 billion of bank loans to prequalified 1,700 private companies that could thus benefit from better financing conditions, and (iii) setting-up a framework with the banking system to support firms with repayment difficulties.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No measures.


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Nigeria

Nigeria has been hit by the spread of COVID-19 and the associated sharp decline in oil prices. The authorities have reported 44 cases of COVID-19 and 1 death as of March 24, 2020. A range of measures have been implemented to contain the spread of the virus, including closure of international airports, public and private schools, universities, stores and markets, and suspension of public gatherings. Work at home is also encouraged in several states and government institutions.


Key Policy Responses as of March 24, 2020

Fiscal
  • Contingency funds of N984 million ($2.7 million) have been released to Nigeria’s Center for Disease Control, and an additional N6.5 billion ($18 million) is planned. The government is reviewing its 2020 budget and, given the expected large fall in oil revenues, announced plans to cut/delay non-essential capital spending by N1.5 trillion (close to 1 percent of GDP). A fiscal stimulus package to provide relief for taxpayers and incentivize employers to retain and recruit staff during the downturn is being designed. Import duty waivers for pharmaceutical firms will be introduced. Regulated fuel prices have been reduced, and an automatic fuel price formula introduced to ensure fuel subsidies are eliminated.

Monetary and macro-financial
  • The Central Bank of Nigeria (CBN) maintained its current monetary policy rate in March but introduced additional measures, including: (i) reducing interest rates on all applicable CBN interventions from 9 to 5 percent and introducing a one year moratorium on CBN intervention facilities; (ii) creating a N50 billion ($139 million) targeted credit facility; and (iii) liquidity injection of 3.6 trillion (2.4 percent of GDP) into the banking system, including N100 billion to support the health sector, N2 trillion to the manufacturing sector, and N1.5 trillion to the real sector to impacted industries. Regulatory forbearance was also introduced to restructure loans in impacted sectors.

Exchange rate and balance of payments
  • The official exchange rate has been adjusted by 15 percent, with an ongoing unification of the various exchange rates under the investors and exporters (I&E) window, Bureau de Change, and retail and wholesale windows. The authorities committed to let the I&E rate move in line with market forces. A few pharmaceutical companies have been identified to ensure they can receive FX and naira funding.


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North Macedonia

North Macedonia has reported 177 confirmed cases and 3 deaths as of March 25, 2020. The government has declared a state of emergency, closed borders and imposed important social-distancing restrictions to slow down contagion.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government has implemented a fiscal package (0.2 percent of GDP) to help address firms’ liquidity problems and protect jobs, targeted to affected sectors such as transport, hotel and restaurants for three months starting in April. The measures include a subsidy on social security contributions for firms that maintain employment, postponement of corporate income tax payments by suspending obligations to prepay based on past year’s income, and direct financial assistance to firms from the Development Bank, offering loans at zero interest rate. An additional package of fiscal measures is under discussion. The government has also implemented price controls on basic food products, medicines, and disinfection products, and abolished the import duty on medical supplies.

Monetary and macro-financial
  • The National Bank of the Republic of North Macedonia (NBRNM) cut is policy rate by 25 basis points to 1.75 percent at an extraordinary meeting on March 16. The fees for withdrawing and returning cash to the National Bank’s central vault have been abolished to minimize any risk of transmitting the virus infection by coins and bills. On financial sector measures, the NBRNM has revised its credit risk regulation, to encourage banks to restructure loans temporarily, and has relaxed the loan classification standards for NPLs. It has also reduced the base for the reserve requirement by the amount of new loans to firms in affected sectors and has extended the deadline for banks to submit their first Internal Liquidity Assessment Report in order to allow them to focus on providing credit while maintaining the quality of the loan portfolio.

Exchange rate and balance of payments
  • The National Bank of the Republic of North Macedonia intervenes regularly, given the de-facto exchange rate peg.


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Norway

COVID-19 has been spreading rapidly across Norway with over 2,500 confirmed cases, claiming more than 10 lives as of March 24, 2020. The government has implemented a range of measures to mitigate the spread of coronavirus and to stabilize the economy. The former includes travel restrictions, social distancing measures, and closures of schools, universities and businesses. The latter are elaborated below.


Key Policy Responses as of March 24, 2020

Fiscal
  • Key tax and spending measures (about NOK 66.6 billion or 2.2 percent of 2019 mainland GDP excluding the government bond fund and any losses from government guarantees) include (i) larger wage subsidies for temporary lay-offs and more generous unemployment benefits; (ii) strengthening of the healthcare sector and transfers to municipalities; (iii) deferral of tax payments; (iv) change in CIT regulations so that lossmaking companies can re-allocate their losses towards previous years’ taxed profits; (v) the establishment of a government guarantee scheme for bank loans; (vi) lowering of reduced VAT rate from 12 to 8 percent; (vii) suspension of aviation charges; (viii) the reinstatement of a government fund that buys bonds issued by Norwegian companies to increase liquidity and access to capital in the Norwegian bond market; and (ix) subsidies for domestic air routes. To support the international response, Norway is taking the initiative to create a new multi-donor fund at the United Nations to assist developing countries with weak health systems in addressing the coronavirus crisis.

Monetary and macro-financial
  • Key monetary measures include: (i) reduction of the policy rate by 1.25 percentage points to 0.25 percent; (ii) provision of additional liquidity to banks in form of loans of differing maturities; (iii) the establishment of a swap facility of USD 30 billion between Norges Bank and the US Federal Reserve (mutual currency arrangement); and (iv) the possibility for banks to borrow in USD dollars against collateral.

    Key macro-financial policies include: (i) easing of countercyclical capital buffer by 1.5 percentage points; and (ii) the possibility that banks can temporarily breach the liquidity coverage ratio (LCR).

Exchange rate and balance of payments
  • Norges Bank announced that it was continuously considering whether there is a need to intervene in the market by purchasing Norwegian krone.


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Oman

Oman is being hit by two shocks—the spread of COVID-19 and the sharp decline in oil prices. Government policy is responding to both these developments. The number of COVID-19 cases stands at 99 as of March 25. The authorities have implemented a range of measures to try and limit the spread of the virus encompassing travel restrictions (including on international flights and internal public transportation and taxis), suspending prayers at mosques, closing all schools, universities, shopping malls and commercial establishments (except for groceries, pharmacies, food delivery, and gas stations), and limiting employee attendance at government workplaces.


Key Policy Responses as of March 23, 2020

Fiscal
  • Because the decline in oil prices will result in a loss of government revenue, the authorities have announced that they will reduce spending in the 2020 budget by five percent (2.5 percent of GDP). The government announced several measures to support the economy on March 19. These include the suspension of municipal taxes and some government fees (until end-August) and rent payments for companies in industrial zones (for the next three months), reduction of port and air freight charges, as well as postponement of loan servicing for borrowers of Oman Development Bank and SME support fund for six months.

Monetary and macro-financial
  • On March 18, the Central Bank of Oman (CBO) announced a set of policy measures effective immediately to support the financial sector and estimated its impact in terms of additional liquidity at OR 8 billion (US$ 20.8 billion). The measures included: reduction in the interest rate on repo operations by 75 basis points to 0.5 percent, and extension of the period of repo operations to three months; reductions in the interest rates for other money market instruments; reduction in the capital conservation buffer by 50 percent; increase in the lending ratio by 5 percent; accepting with immediate effect requests by affected borrowers for deferment of loan installment payments for the next six months without adverse impact on risk classification of such loans; deferring the risk classification of loans related to government projects for six months.

Exchange rate and balance of payments
  • No measures.


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Pakistan

COVID-19 has been spreading rapidly in the past two weeks in Pakistan, with 972 confirmed cases claiming 7 deaths, as of March 24, 2020. In response, both the federal and provincial governments have implemented a range of measures to delay and contain the spread of the virus. These included quarantining more than three thousand travelers from Iran, closing borders with all neighboring countries, international travel restrictions, social distancing measures, and lockdowns of differing scales across the provinces of the country. Pakistan army troops were deployed across the country starting form Monday, March 23, to help provincial governments in their measures to contain the spread of the virus.


Key Policy Responses as of March 24, 2020

Fiscal
  • A relief package worth PKR 1.2 trillion has been announced by the authorities on March 24, 2020. Key measures include: (i.) an elimination of the import duties on imports of emergency health equipment; (ii.) relief to daily wage workers (PKR 200 billion), (iii.) cash transfers to low-income families (PKR 150 billion), (iv.) accelerated tax refunds to the export industry (PKR 100 billion), and (v.) financial support to SMEs (PKR 100 billion). The economic package also earmarks resources for an accelerated procurement of wheat in the coming weeks (PKR 280 billion), financial support to utility stores (PKR 50 billion), relief in fuel prices (PKR 70 billion), support for health and food supplies (PKR 15 billion), electricity bill payments relief (PKR 110 billion), an emergency energy provision (PKR 100 billion), and a transfer to the National Disaster Management Authority (NDMA) for the purchase of necessary equipment to deal with the pandemic (PKR 25 billion).

Monetary and macro-financial
  • The State Bank of Pakistan (SBP) has responded to the crisis by cutting the policy rate twice by a cumulative 225 basis points to 11.0 percent in the span of less than two weeks. On March 17, 2020, SBP announced two new refinancing facilities: first, the ‘Temporary Economic Refinancing Facility’ (TERF) worth PKR 100 billion in bank refinancing to stimulate investment in new manufacturing plants and machinery at 7 percent fixed for 10 years; second, the “Refinance Facility for Combating COVID–19” (RFCC) worth PKR 5 billion to support hospitals and medical centers the purchase of equipment to detect, contain, and treat COVID-19. On March 24, 2020, SBP cut the policy rate by 150 basis points, and announced that it will follow with regulatory measures in coordination with banks.

Exchange rate and balance of payments
  • No measures.


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Palau

While there have been no confirmed cases of COVID-19 in Palau as of March 24, 2020, the authorities have adopted early prevention and containment measures. These include travel bans on visitors from some hard-hit countries, health screening at Palau International Airport and Malakal Seaport, school closures, and restrictions on public events.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government is taking actions to support the health sector and the economy. The parliament is appropriating an additional $916,808 (0.3 percent of GDP) to the Hospital Trust Fund to help with prevention and preparation for COVID-19. The parliament is also authorizing additional funding (up of to $6 million or 2.1 percent of GDP) to help maintain government services in the face of declining tourism revenue.

Monetary and macro-financial
  • The National Development Bank of Palau announced plans to provide financial relief to affected business and households, including interest only payments, term extension, loan consolidation, and temporary payment deferral. Some private banks have introduced loan deferral and forbearance programs for three months.

Exchange rate and balance of payments
  • No measures.


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Papua New Guinea

The Papua New Guinea government confirmed its first imported case of COVID-19 on March 20. The affected individual was evacuated to Australia on March 23 for further tests and confirmation of his status. As of March 25, there are no cases of local transmission of COVID-19. The government had started imposing containment measures since early February, including a ban on travelers from Asian countries, reduced international flights, mandatory health declaration forms for incoming travelers and enhanced screening at designated ports of entries. Following the confirmation of the first imported case the government has declared a 14-day state of emergency effective March 24 as a precautionary measure which also included the grounding of all domestic flights.


Key Policy Responses as of March 21, 2020

Fiscal
  • The government has so far allocated K45.33 million (0.05 percent of GDP) from the 2020 national budget to prepare and respond to any outbreak and is working on additional fiscal and support measures. Government revenue is expected to suffer as a result of a fall in demand as well as the decline in the price of LNG and oil. Consequently, the government has announced that it is seeking K860 million (1 percent of GDP) from key development and international financial institutions in support for its health and economic actions to deal with the COVID-19 pandemic.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Paraguay

The first case of COVID-19 was confirmed in Paraguay on March 7th, 2020. As of March 24th, 2020, there are 27 confirmed cases and 2 deaths. Confirmed cases include four imported cases. The rest are community and local transmissions. The government has taken a series of measures to prevent the spread of the virus, including border closure and suspension of school, all activities that involve groups of people, as well as public and private events. the country implemented a total quarantine starting March 20th, 2020.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has lowered VAT on medical supplies to 5 percent and eliminated import tariffs on them. On March 23rd, 2020, the government submitted to congress a package of emergency spending measures of around $945 million (2.5 percent of GDP). The package includes additional health-related spending of $500 million, $400 million measures to support the vulnerable population, and $45 million emergence funding for small enterprises. The government has asked Congress to authorize additional borrowing of up to U.S. $1.6 billion (4 percent of GDP) from IFIs and through bond issuances.

Monetary and macro-financial
  • Since early March, the central bank has lowered the policy rate by 75 basis points, to 3.25 percent. The government has also allowed banks to restructure loans to private sector companies that are in repayment difficulties, and postponed collection of taxes and user fees for 2 months.

Exchange rate and balance of payments
  • The central bank is continuing with its policy of letting the exchange rate absorb shocks, and have its value determined by market forces. FX interventions are only carried out to prevent disorderly market conditions.


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Peru

The first case of COVID-19 was confirmed in Peru on March 6th and by March 23rd there were 395 confirmed cases and 5 deaths. The government has declared a state of national emergency and implemented a number of measures to limit the spread of the virus, including closing of national borders, restrictions to interprovincial movement, a mandatory two-week national isolation period, and daily curfews from 8 pm to 5 am. In addition to the distortions associated with the domestic outbreak, the decline in copper (and other commodity) prices is reducing the country’s external and fiscal revenues.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government has approved 783 million soles (0.1 percent of GDP) to attend the health emergency. In addition, the government has approved approximately 1.2 billion soles (0.14 percent of GDP) in direct transfers to support poor households during the two-week national isolation period. The government has announced that similar direct transfers would be made available to a group of independent workers and has also announced a postponement of households’ payments of electricity and water. The government has approved a three-month extension for the income tax declaration for SMEs and is granting flexibility to enterprises and households in the repayment of tax liabilities. These tax measures are estimated to provide a temporary relief in the order of 0.5 percent of GDP. The government has also approved the creation of a 300 million soles (or 0.04 percent of GDP) fund to help qualified SMEs to secure working capital and/or refinance debts.

Monetary and macro-financial
  • The central bank has cut the policy rate by 100 basis points, bringing it to 1¼ percent, and is monitoring inflation developments and its determinants in order to increase the monetary stimulus if necessary. In addition, the central bank has provided liquidity to the financial system through repo operations and has pledged to undertake all the necessary measures to support the payments system and the flow of credit. The superintendence of banks has issued a notification allowing financial institutions to modify the terms of their loans to households and enterprises affected by the Covid-19 outbreak without changing the classification of the loans. These operations have to satisfy well defined conditions, including a maximum modification period of six months.

Exchange rate and balance of payments
  • The central bank has been intervening since late February to mitigate disorderly conditions in the foreign exchange market. By March 23rd, the central bank had sold approximately USD 2 billion (or 0.9 percent of GDP) in foreign exchange swaps. International reserves remain significant, at around 29 percent of GDP.


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Philippines

The Philippines has reported 462 cases of confirmed COVID-19 with a death toll of 33 as of March 24, 2020. The government has put the Luzon island, including Metro Manila, under an “enhanced community quarantine” until April 12, together with other containment and mitigation measures, such as suspension of flights from high-risk economies, restrictions on mass gathering, and school closures. Financial market volatility has risen since end-February, with stock prices falling by 31 percent and the EMBI sovereign risk premium rising by almost 200 bps as of March 23. However, the peso/US$ exchange rate has remained remarkably stable, depreciating only by 0.6 percent.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has announced a PHP 27.1 billion fiscal package (about 0.15 percent of 2019 GDP), which comprises the following measures: additional purchase of COVID 19 testing kits and health equipment; social protection for vulnerable workers; and support to the tourism and agriculture sectors. Financial assistance will also be provided to affected SMEs and vulnerable households through specialized microfinancing loans and loan restructuring. The government also plans to accelerate budget execution and reallocate more resources toward COVID 19-related health spending.

Monetary and macro-financial
  • The Bangko Sentral ng Pilipinas (BSP) has reduced its policy rate twice in 2020 by a cumulative 75 bps (25 bps on February 6 and another 50 bps on March 19) to 3.25 percent. The BSP has also announced a 200 bps reduction of the reserve requirement ratio for banks effective on March 30. It plans to purchase PHP 300 billion worth government securities (about 1.6 percent of 2019 GDP) to support the government’s programs to counter the impacts of COVID-19. The BSP has also announced a series of regulatory relief measures for the banking sector, including: (1) a temporary relaxation of requirements on compliance reporting, penalties on required reserves, and single borrower limits; (2) easier access to the BSP’s rediscounting facility; and (3) a temporary relaxation of provisioning requirements (subject to the BSP approval). These relief measures are intended to encourage banks, in turn, to provide financial relief to their borrowers (e.g., temporary grace period for loan payments). Banks are also expected to suspend all fees and charges imposed on online banking platforms during the period of regulatory relief.

Exchange rate and balance of payments
  • No measures.


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Poland, Republic of

Poland has reported 774 confirmed COVID-19 cases (with 10 deaths) as of March 24, 2020. The government introduced containment measures including closures of schools, universities, restaurants, bars, cafés, and non-essential businesses more broadly; bans on large gatherings; border controls; and travel restrictions.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has announced (subject to parliamentary approval) new budgetary spending estimated at PLN 66 billion (2.9 percent of 2019 GDP). Key measures include: (i) additional funds for hospital equipment and supplies; (ii) wage subsidies for employees of affected businesses and self-employed persons; (iii) increased guarantees from the national development bank (BGK) for enterprises; (iv) additional loans for micro-firms; (v) postponement of payment of social contributions and possible deferral, payment in installments, or cancellation of taxes; (vi) deduction of this year’s losses for 2021 tax settlement; (vii) an allowance for parents for school closures; and (viii) the establishment of a public infrastructure investment fund. Proposed credit guarantees and micro loans for entrepreneurs are estimated at PLN 75 billion (3.3 percent of 2019 GDP).

Monetary and macro-financial
  • The National Bank of Poland (NBP) reduced its policy interest rate by 50 bps to 1 percent on March 17. The NBP has re-introduced repo (fine-tuning) operations to provide liquidity to banks, reduced the required reserve ratio from 3.5 to 0.5 percent, and raised the interest rate on required reserves to the level equal to the policy interest rate. It also announced the purchase of Polish Treasury securities in the secondary market and the introduction of a program to provide funding for bank lending to non-financial private enterprises.

    In addition, the 3 percent systemic risk buffer for bank capital requirements has been repealed. The Polish Financial Supervisory Authority (PFSA) announced measures related to provisions and reclassification of loans to existing SMEs/micro enterprises to allow smoothing of credit losses over a longer period. Some flexibility has been granted in how banks meet capital and liquidity requirements. A flexible approach has been adopted to valuation under Solvency II for the insurance sector. Additionally, the Polish Banking Association has recommended voluntary deferral of loan payments for affected borrowers for up to three months

Exchange rate and balance of payments
  • No information on foreign exchange intervention has been disclosed.


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Portugal

As of March 25, Portugal had nearly 3,000 confirmed cases of COVID-19, which have resulted in 43 deaths. A state of emergency has been declared and containment measures include school closures, social distancing, and travel restrictions (including with Spain). The government has also responded with a range of measures to support the economy and jobs which are detailed below.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key fiscal measures contained in the March 18 fiscal package include: i) €3.0 billion (1.4% GDP) of state-guaranteed credit lines for medium, small and micro enterprises in affected sectors, operated through the banking system; ii) €5.2 billion (2.5% GDP) of (within-year) tax deferrals for companies and employees; iii) €1.0 billion (0.5% GDP) of relief from social security contributions. Additional financial support is also provided for: those temporarily furloughed by their employers; the self-employed affected by the virus; people forced to stay home to care for children, and; those sick or in quarantine. Finally, there have been additional resources transferred to the health system, and regulation on staff overtime, hiring procedures and procurement rules have been eased.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Banco de Portugal, in line with guidance from the European Banking Authority, has announced the postponement of the 2020 stress test exercise for less significant banking institutions. On March 25, the Banco de Portugal relaxed some aspects of the macroprudential recommendations currently in effect, benefitting consumer credits with maturities of 2 years or less used by households to cope with temporary liquidity problems.

Exchange rate and balance of payments
  • No measures.


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Qatar

Qatar is being impacted by two shocks—the spread of COVID-19 and the sharp decline in hydrocarbon prices. The authorities are putting in place policies to address these. The number of COVID-19 cases currently stands at 526 and no deaths have been reported. Measures implemented to contain the spread of the virus include: travel restrictions (suspension of all international flights for 14 days starting March 18, a 14 day quarantine for all returning Qatari citizens, and suspension of public transportation); suspension of public and private schools (replaced with distance learning); closure of cinemas, theaters, gyms, wedding venues, shopping malls (excluding groceries stores and pharmacies), and part of the Industrial Area, where there is a high concentration of COVID-19 cases; banning all public gatherings and dining in cafes and restaurants; and cancellation of routine medical and dental appointments (except Well-baby, Vaccination Clinics, and Urgent Radiology and Ultrasound) to prioritize resources and protect patients. These measures have been complemented by required teleworking for vulnerable groups (older than 55, pregnant women, and those with chronic illness), public health awareness campaigns, and more testing for COVID-19.


Key Policy Responses as of March 25, 2020

Fiscal
  • Qatar’s QAR 75 billion ($20.6 billion or about 13 percent of GDP) package to reduce the effects of COVID-19 was announced on March 16. The program aims at shoring up small businesses and hard-hit sectors (hospitality, tourism, retail, commercial complexes, and logistics), including through six-month exemptions on utilities payments (water, electricity). Food and medical goods are exempt from customs duties for six months (provided that this is reflected in the selling price), and the price and profits for sanitizers and antiseptics have been set. Logistics areas and small and medium industries are exempt from rent payments for six months.

Monetary
  • The Qatar Central Bank (QCB) has lowered its policy rates twice in March in line with the US Federal Reserve (to maintain the currency peg). The deposit rate has been reduced by 100bps to 1 percent; the lending rate has been reduced by 175 bps to 2.5 percent; and repo rate has been reduced by 100 bps to 1.5 percent. The QCB will also provide additional liquidity to banks operating in the country.

Macro-Financial
  • QCB has put in place mechanisms to encourage banks to postpone loan installments and obligations of the private sector with a grace period of six months. The Qatar Development Bank will postpone installments of all borrowers for six months. Government funds have been directed to increase investments in the stock market by QAR 10 billion ($2.75 billion).

Exchange rate and balance of payments
  • No measures.

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Romania

COVID-19 has been spreading across Romania with 906 confirmed cases and 14 deceased, as of March 25. The government has implemented a range of measures to delay the spread of coronavirus and to support people, jobs, and businesses. This includes declaring national emergency, increased testing, social distancing measures, including the closure of schools and entertainment as well as travel restrictions.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key tax and spending measures announced so far about 2 percent of 2019 GDP include (i) additional funds for the healthcare system, (ii) covering partially the wages of parents staying home for the period the schools are closed, and (ii) measures to support businesses including covering in part the wages of workers in danger of being laid off for an initial period of one month. In addition, the government is providing initial RON10 billions of guarantees—equivalent to 1 percent of GDP—for loan guarantees and subsidized interest for working capital and investment of SMEs. Other measures include faster reimbursement of VAT, suspending foreclosures on overdue debtors, suspending tax authorities’ control, postponement of property tax by three months, and others.

Monetary and macro-financial
  • Key measures include: (i) reducing the monetary policy rate by 0.50 percentage points to 2.0 percent; (ii) narrowing the corridor defined by interest rates on standing facilities around the monetary policy rate to ±0.5 percentage points from ±1.0 percentage points; (iii) providing liquidity to credit institutions via repo transactions (repurchase transactions in government securities); (iv) purchasing government securities on the secondary market.

Exchange rate / capital flow management
  • No measures.


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Russian Federation

As of March 23, 438 cases are confirmed with no deaths from COVID-19. The authorities started preemptive containment at end-December: progressively closing the border with China and some European countries and more recently mandating self-quarantine for people arriving from other countries and people at risk, and closing schools, theaters, sports facilities and encouraging remote work. A pandemic has not been officially announced. The COVID-19 shock is compounded with a collapse in oil prices and associated instability in financial markets. The Government has adopted an action plan to support households and businesses and stands ready to take further measures.


Key Policy Responses as of March 23, 2020

Fiscal
  • Key measures include: (i) increased compensation for medical staff as well as for health and safety inspectors; (ii) individuals under quarantine to receive sick leave benefits and federal budget to guarantee unemployment benefits paid by regional governments; (iii) zero import duties introduced for socially important goods; (iv) subsidized and guaranteed loans for SMEs, retailers, and distributors; (v) 3-month grace periods for SME payments of social contributions and rent to the government; (vi) government guarantees for restructured loans; (vii) tax deadlines extended for tourism and aviation industries, as well as for SMEs and other affected industries; (vii) tourism companies not to pay contributions to the tourist sector reserve funds; and (vii) suspension of onsite checks by tax authorities. The authorities have released partial cost estimates for the measures, so far amounting to RUB 0.3 trillion (0.3 percent of GDP).

Monetary and macro-financial
  • Policy rates remain unchanged so far. On March 19, the Central Bank of Russia (CBR) started selling FX reserves from the National Welfare Fund, reflecting the fall in oil prices below the reference price under the fiscal rule and the ongoing purchase of Sberbank by the government. It also increased the limit on its FX swap operations. It introduced temporary regulatory easing for banks intended to help the transport and tourism sectors, and more favorable treatment for FX loans issued to pharmaceutical and medical supplies companies. Banks have been allowed not to worsen the credit classification of SMEs, thus avoiding additional loan loss reserves, and to value securities at their price from March 1. FX operations can also be valued at the exchange rate of March 1, except for those on open forex positions. The CBR has introduced a new RUB 500bn facility for SME lending and reduced the interest rate on the existing RUB 175bn facility. Measures for households include reduced risk weights on mortgages and allowing restructuring of bank loans for those with confirmed coronavirus infections, so long as banks’ regulatory requirements are not impacted.

Exchange rate and balance of payments
  • No measures beyond FX sales mentioned above reflecting the fiscal rule and Sberbank purchase.


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Rwanda

As of March 26, 2020, Rwanda has reported 50 cases of COVID-19 infection (no deaths). The government has implemented a range of containment measures in response to the pandemic including border closure, suspension of domestic travel, cancellation of public gatherings, institution of teleworking, and closure of schools, places of worship and non-essential businesses.


Key Policy Responses as of March 25, 2020

Fiscal
  • The pandemic is expected to cause a revenue shortfall of 1.9 percent of GDP. The government’s emergency response plan, including health-related spending, is estimated at about 1.5 percent of GDP. The government is working on a fiscal stimulus package that may include scaled-up health spending to support affected individuals and targeted fiscal support for the hospitality industry and other hard-hit sectors, as well as SMEs.

Monetary and macro-financial
  • On March 18, the central bank announced liquidity support measures: (i) an extended lending facility worth RWF 50 billion available to liquidity-constrained banks for the next six months. Under this facility, banks can borrow at the policy rate and benefit from longer maturity periods; (ii) Treasury bond purchases through the rediscount window for the next six months; and (iii) lowering of the reserve requirement ratio by 100 basis points, from 5 to 4 percent, effective from April 1. Loan repayment conditions were also eased for impacted borrowers, and charges on electronic money transactions waived for the next three months. The central bank is also working closely with the Minister of Economy and Planning to provide support to microfinance institutions.

Exchange rate / capital flow management
  • No measures. The central bank remains committed to maintaining exchange rate flexibility and limiting foreign exchange market interventions to avoiding excessive exchange rate volatility.


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Samoa

No confirmed cases of COVID-19 have been reported in Samoa although some suspected cases exist, and they are under investigation as of March 25. The government is taking full precautions and preventive measures to control the transmission of COVID-19, including preparation of the health system to treat and care for patients. Social distancing measures are also in effect. The government has instructed the public to avoid mass gatherings (of five or more people), and unnecessary travel. Samoa implemented travel restrictions to protect citizens of the country on January 24, among the first countries in the world to do so and has gradually tightened the rules.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government has put together the first phase of the fiscal and economic response package, which is to be approved by parliament. The package is centered around the mission of “Support the private sector so they can feed the nation,” and includes: (i) expenditure to cover the immediate medical response; (ii) assistance to the private sector; and (iii) assistance to individuals and households. The government has been stepping up its efforts to increase the level of preparedness and prevention. Temporary quarantine facilities have been established in key areas. There is a dire need for testing kits, medical consumables, as well as other clinical equipment and medication, to prepare for the confirmation/arrival and treatment of COVID-19. The support for the private sector includes: a temporary exemption on import duties on most commonly bought food items for households; duty concessions to be applied to an expanded list of agricultural and fishing materials; a grace period of three months to be applied for all loan payments; and a six-month moratorium on pension contributions for the hospitality sector. Support for citizens includes: establishment of the Emergency Price Control Board to keep wholesale and retail prices in check and bring them down, if necessary; provision of financial assistance to members of the National Provident Fund in the form of a refund of their loan payments for March 2020; and a temporary reduction of utility bills (both electricity and water) for six months through September 2020.

Monetary and macro-financial
  • The Central Bank of Samoa (CBS) continues to maintain an accommodative monetary policy. The CBS will encourage commercial banks to reduce interest rates, and/or associated bank fees and charges. The CBS will also make sure to maintain ample liquidity in the banking system to support businesses and stands ready to activate its lending facilities for the financial institutions. The proposed fiscal and economic response package includes provision of a three-month grace period to be applied for all loan payments. To compensate part of the losses in interest income, local commercial banks will receive payments from the government.

Exchange rate and balance of payments
  • No mesaures.


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San Marino

San Marino has been severely hit by the outbreak with over 187 confirmed COVID-19 cases and 20 deaths as of March 23, implying one of the highest rates of infection and deaths per capita in the world. The government imposed strict containment measures, including the lockdown of the entire country, suspension of all construction and retail activities except for essential services related to the provision of food and health, and reduction of the number of active employees by 50 percent on the premise in the manufacturing sector.


Key Policy Responses as of March 25, 2020

Fiscal
  • The key measures approved by the government include: i) deferral of payments towards government tax and non-tax obligations, utility bills, and other dues to provide liquidity to the private sector; ii) temporary freeze of all non-essential government spending and reduction in public sector wage bill to redirect spending to the health sector; and iii) extension of supplemental wage scheme to support workers displaced by COVID-19 containment measures.

Monetary and macro-financial
  • Encouraged by the authorities, commercial banks are granting temporary suspension to the payments of existing mortgage instalments and providing loans with reduced rates to individuals and firms who are impacted by the COVID-19 outbreak.

Exchange rate and balance of payments
  • No measures.


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São Tomé

To-date there are no confirmed cases of COVID-19 in São Tomé and Príncipe. On March 17, the authorities declared a state of emergency. Specific measures announced on March 20 and took effect on March 21 include mandatory quarantine for 15 days for individuals entering the country, closed all schools, prohibited all public gatherings, and suspended all international passenger flights.


Key Policy Responses as of March 24, 2020

Fiscal
  • Expected fiscal measures are estimated at STD 230 million (2.5 percent of GDP). Key measures under considerations include: (i) Increased spending on epidemic prevention and readiness; (ii) Expansion of social assistance; (iii) Protecting small businesses; and (iv) Implementation of automatic stabilizers.

Monetary and macro-financial
  • The Board of the Central Bank of Sao Tome (BCSTP) is considering reducing the minimum cash reserve requirement for banks and easing pressure on the banks. They are also working on options to increase liquidity to banks so that they will be able to grant credit to the economy.

Exchange rate and balance of payments
  • No measures.


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Saudi Arabia

Saudi Arabia is being hit by two shocks—the spread of COVID-19 and the sharp decline in oil prices. Government policy is responding to both these developments. The number of COVID-19 cases stands at 767 (as of March 24). The authorities have implemented a range of measures to try and limit the spread of the virus encompassing a nighttime curfew for 21 days; travel restrictions (including on international flights and internal public transportation and taxis); suspending prayers at mosques; closing all schools, universities, and shopping malls; suspending employee attendance at government and private workplaces (except for critical staff); and increasing testing.


Key Policy Responses as of March 22, 2020

Fiscal
  • A SAR 70 billion ($18.7 billion or 2.7 percent of GDP) private sector support package was announced on March 20. The package includes the suspension of government tax payments, fees, and other dues to provide liquidity to the private sector and an increase in available financing through the National Development Fund. The government has also stated it will fund any needed increase in health spending and has made an additional budget allocation available to the Ministry of Health. Because the decline in oil prices will result in a loss of government revenue, the authorities have also announced that they will reduce spending in non-priority areas of the 2020 budget by SAR 50 billion (1.9 percent of GDP) to accommodate some of these new initiatives within the budget envelope.

Monetary and macro-financial
  • The Saudi Arabian Monetary Authority (SAMA) has reduced its policy rates twice in March, lowering its reverse repo and repo rates by a combined 1.25 pp to 0.5 and 1 percent respectively. On March 14, SAMA announced a SAR 50 billion ($13.3 billion, 1.9 percent of GDP) package to support the private sector, particularly SMEs, by providing funding to banks to allow them to defer payments on existing loans and increase lending to businesses. The central bank will also cover fees for private sector stores and entities for point-of-sale and e-commerce transactions for 3 months. The Governor has announced that the central bank stands ready to supply liquidity if needed.

Exchange rate and balance of payments
  • No measures.


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Senegal

Senegal has reported 86 positive cases (no deaths) as of March 24, 2020. The government has declared a national state of emergency and adopted strict containment measures, including suspension of international air travel, closure of borders, limits on inter-regional travel, bans on public gatherings, school closures, and a curfew. Containment measures and the sudden stop of travel and tourism are already having a significant economic impact, exacerbated by declining export demand and lower remittances.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government plans to set up an emergency fund of up to FCFA 1000 billion (7 percent of GDP), financed by a mix of donor contributions, voluntary donations from the private sector, and the budget. The Fund will be used to support vulnerable households and firms. FCFA 50 billion will be allocated for urgent food aid. The government intends to adopt tax measures, providing some general tax relief and targeted support to the most affected sectors (hotels, restaurants, transport and culture). A strategic plan to fight against COVID-19 is being implemented to i) enhance testing and treatment capacity, ii) strengthen preventive measures, and iii) intensify communication. Its implementation is expected to cost about FCFA 70bn (0.5 percent of GDP).

Monetary and macro-financial
  • On March 21, 2020, the BCEAO (the regional central bank) announced the following monetary and macro-financial measures to mitigate the negative economic impact of Covid-19 by: (i) providing FCFA 340 billion additional liquidity to bring the total liquidity made available to banks by weekly and monthly auctions to FCFA 4750 billion; (ii) extending the collateral framework to access the BCEAO’s refinancing to include FCFA 1,050 billion of bank debt of 1,700 prequalified private companies that could thus benefit from better financing conditions; and (iii) setting-up a framework with the banking system to support firms with repayment difficulties.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No mesaures.


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Serbia

Serbia has reported 384 positive cases and 4 deaths as of March 25, 2020. The government has declared a national state of emergency and adopted several containment measures. These include closing borders, prohibiting movement of citizens between 5pm and 5am (total ban for senior citizens), suspension of public transport and all activities in parks and public areas intended for recreation and sports, closing education centers and shopping malls (except grocery stores and pharmacies).


Key Policy Responses as of March 25, 2020

Fiscal
  • Fiscal measures adopted so far amount to RSD 56bn (1 percent of 2019 GDP). Key measures include: (i) 10 percent wage increase for public healthcare sector (RSD 13bn) and increased healthcare spending (about RSD 12bn); (ii) one-off payment to all pensioners (RSD 7bn); and (iii) new public investment infrastructure projects (RSD 24bn). Other measures include a 3-month moratorium on enforcement and interests on tax debt under rescheduling agreements and 10 percentage points reduction of the interest rate on tax debt. The government also announced additional measures to support private sector activity and employment, which could amount to RSD 300-530bn, but no details have been provided as of today.

Monetary and macro-financial
Exchange rate and balance of payments
  • The NBS has continued its practice of intervening in the foreign exchange market to smooth excessive short-term volatility.


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Seychelles

Seychelles has reported 7 positive cases (no deaths) as of March 24, 2020. The government has adopted containment measures, including social distancing, travel bans on visitors from high-risk regions, screening at ports of entry, and school closures. Given that about 30 percent of the GDP directly or indirectly relates to tourism sector, the disruption to global tourism can have have an adverse impact on the economy.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has announced a measure to subsidize wages for companies facing distress caused by COVID-19. This fiscal support measure was recently presented to the National Assembly. The government is working out the financing of this stimulus measure.

Monetary and macro-financial
  • The Central Bank of Seychelles (CBS) reduced the policy rate by 100 bps to 4 percent on March 23. On the same day, it announced that a credit facility of approximately $36 million will be set up to assist commercial banks with emergency relief measures to assist businesses and individuals struggling with the financial impact of the pandemic. The CBS also announced that commercial banks, the Development Bank of Seychelles (DBS) and the Seychelles Credit Union have agreed to consider a moratorium of six months on the repayment of principal and interest on loans to assist businesses in impacted sectors. The six-month moratorium may also apply to individuals. Through its communication, the CBS reassured that it will continue to monitor potential market stress and any emerging risks to the financial sector and the economy, and that it stands ready to take appropriate actions to ensure that the local banking system remains financially and operationally resilient to support the economy.

Exchange rate and balance of payments
  • No mesaures.


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Sierra Leone

There are no confirmed cases of COVID 19 in Sierra Leone as of March 24, 2020. The government has implemented a range of prevention and containment measures. On March 24, the President declared a national state of emergency that is set to last for 12 months. Other prevention and containment measures announced include: mandatory quarantine for anyone arriving from country with 50 or more cases and monitoring of those arriving from countries with less than 50 cases; enhanced border controls (military to be deployed to airport and border post for enforcement of quarantine measures); discourage gatherings of more than 100 people; ban international travel for all public employees; and suspend for three months all incoming and outgoing regular passenger flights suspended. All education institutions are also scheduled to close on March 31.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government is developing a package of measures. No measures have been announced or adopted yet.

Monetary and macro-financial
  • The central bank held an emergency Monetary Policy Committee meeting on March 18. They decided to: (i) reduce the monetary policy rate (mostly signaling) by 150 bps from 16.5 percent to 15 percent, effective March 19; (ii) create a special credit facility (Le 500 billion) to support production, procurement and distribution of essential goods (modalities discussed with bankers’ association on March 20 but not yet announced); and (iii) extend the reserve requirement maintenance period from 14 to 28 days to ease tight liquidity.

Exchange rate and balance of payments
  • Following the March 18 MPC meeting, the central bank also announced its intention to provide FX resources to ensure the importation of essential goods (list of qualifying goods yet to be published). The exchange rate has been allowed to adjust.


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Singapore

Singapore has reported 558 confirmed cases (of which 155 have fully recovered) and 2 related deaths as of March 25, 2020. The government has progressively stepped up containment measures including travel restrictions, temperature screening, social distancing, ban on large gatherings, and closure of entertainment venues. Strict hospital and home quarantine regimes, as well as extensive tracing, are in place with strict enforcement.


Key Policy Responses as of March 26, 2020

Fiscal
  • On February 18, the 2020 Budget announced a package of measures amounting to S$6.4 billion to deal with the economic slowdown and the uncertainties of the COVID-19 outbreak. Funds to contain the outbreak, provided mainly to the Ministry of Health, amount to S$800 million. The Care and Support Package provides support to households (S$1.6 billion), including through a cash payout and an additional goods and services tax (GST) voucher. The Stabilization and Support Package provides support to businesses (S$4.0 billion), including wage subsidies as well as additional support for industries directly affected and self-employed persons.

    On March 26, a supplementary budget was announced with additional measures worth over S$48 billion. The package includes, among other items, an expansion of wage subsidies, a tripling of cash payouts to households, enhancement of financing schemes and setting aside loan capital of S$20 billion, and additional support to the most affected sectors.

Monetary and macro-financial
  • On February 14, the Monetary Authority of Singapore (MAS) welcomed the announcements from banks and insurers in Singapore to support their customers facing financial difficulties brought about by the impact of COVID outbreak, while adhering to prudent risk assessments. The support announced by banks include moratoriums on repayments for affected corporate and individual customers, extension of payment terms for trade finance facilities, and additional financing for working capital.

    On March 19, 2020, the MAS announced the establishment of a US$60 billion swap facility with the US Federal Reserve. The MAS intends to draw on this swap facility to provide USD liquidity to financial institutions in Singapore.

    On March 23, the MAS announced that the six-monthly monetary policy statement will be issued on March 30. This is slightly earlier than the usual timing of mid-April.

    On March 26, the MAS announced that the first auction under the US$60 billion MAS USD Facility with the Federal Reserve will be conducted on March 27, 2020, where US$10 billion in 7-day funds will be offered. MAS will conduct another two auctions on March 30, where US$12 billion in 7-day funds and US$8 billion in 84-day funds will be offered. After this, regular weekly auctions will be conducted every Monday.

Exchange rate / capital flow management.
  • No announcement.


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Slovak Republic

There have been 216 confirmed cases (no deaths) in the Slovak Republic as of March 25, 2020. The government has implemented a range of measures to delay the spread of coronavirus, including social distancing, and closing borders, schools, and entertainment and hospitality premises. The new coalition government, which was sworn in on March 21, has pledged additional measures to both contain the spread of the disease and limit the economic fallout, which are expected to be approved shortly.


Key Policy Responses as of March 25, 2020

Fiscal
  • Key measures currently under consideration include (i) deferral of various tax payments (including PIT, CIT and VAT) and temporary relief from social security and health insurance contributions; (ii) enhanced support for affected workers and businesses through easing conditions of social insurance programs and state subsidies for retention of jobs; (iii) negotiations with banks to postpone repayment of loans for citizens and businesses; and (iv) measures to ease administrative burden on businesses and relax labor code requirements. There are currently no estimates of the size of these fiscal measures.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    The National bank of Slovakia has implemented the following measures as part of a coordinated approach with the ECB and the European Banking Authority (EBA): i) banks may partially meet Pillar 2 requirements using capital instruments that do not qualify as common equity tier 1 (CET1) capital; ii) banks may, in duly justified cases, temporarily operate below the level of capital defined by the capital conservation buffer; iii) banks will also, where justified, be temporarily exempted from full compliance with the LCR.

Exchange rate / capital flow management.
  • No measures.


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Republic of Slovenia

The COVID-19 pandemic has significantly affected Slovenia, a small country with a population of 2.1 million. There are over 400 confirmed cases and at least three deaths (WHO, as of March 25), with numbers still rising. The authorities have implemented a range of measures to delay the spread of coronavirus and cushion the adverse impact on people and businesses. These include border checks, increased testing, limiting large gatherings, and shutting down schools, public transport, restaurants and non-essential stores, and providing economic stimulus.


Key Policy Responses as of March 24, 2020

Fiscal
Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    Key Slovenia measures include: (i) affected firms and individuals are allowed to obtain deferrals of bank loan repayments for up to 12 months; (ii) Bank of Slovenia extended all ECB measures to all banks and savings banks in Slovenia.

Exchange rate / capital flow management.
  • No measures.


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Solomon Islands

Solomon Islands has no confirmed COVID-19 cases and deaths as of March 24, 2020. The government has banned entry of non-citizens and imposed mandatory strict quarantine measures for all incoming passengers. In addition, the government has restricted movement of its citizens to the capital city. Solomon Islands relies heavily on logging exports to China and the weak fiscal position increases vulnerability to shocks.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has not approved any fiscal measures. However, it has requested all line ministries to review and re-prioritize their respective ministry budgets in anticipation of budget pressures due to the pandemic. The government has also announced scaling down non-essential government services following an assessment by Permanent Secretaries. The government is moving ahead to set up local capability for testing within the next few weeks as well as arranging quarantine facilities.

Monetary and macro-financial
  • The central bank has confirmed its commitment to continuing to maintain an expansionary monetary policy stance for the next six months.

Exchange rate and balance of payments
  • No measures.


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Somalia

As of March 25, Somalia has recorded one COVID-19 case in a passenger arriving at the international airport of Mogadishu. In coordination with WHO and the UN, the health authorities have taken swift measures to contain the spread of the outbreak and to strengthen health systems, including screening of arriving passengers; restricting large meetings and gatherings; closing schools and universities; suspending international flights; and intensifying communication through various channels including radio, TV and social media.

Travel suspensions and restrictions on public gathering, together with social-distancing restrictions are impacting economic activity.


Key Policy Responses as of March 25, 2020

Somalia has no policy space to independently address the impact of the COVID-19 crisis. However, the authorities are seeking donors support to respond to the crisis, and, now that it has normalized its relations with key international financial institutions, it has access to the full range of facilities provided by these institutions.

Fiscal
  • No measures.

Monetary and macro-financial
  • TNo measures.

Exchange rate and balance of payments
  • No measures.


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South Africa

South Africa has reported 402 positive cases (no deaths) as of March 23, 2020. The government has declared a national state of disaster and adopted containment measures, including social distancing, travel bans on visitors from high-risk countries and quarantine for nationals returning from those countries, screening at ports of entry, and school closures. A nationwide lockdown will take place from midnight March 26 until April 16, with only critical workers and transport services and essential food and medicine production and retail operating. The banking sector will remain open. Net capital outflows (bonds and equities) in the last month have amounted to $6.2 billion (2 percent of GDP); the sovereign’s dollar credit spread has more than doubled to 401 bps; and the rand has depreciated by 19.5 percent vis-à-vis the US dollar.


Key Policy Responses as of March 23, 2020

Fiscal
  • The government will assist companies facing distress through the Unemployment Insurance Fund and special programs from the Industrial Development Corporation. Within the realm of the budget, workers with an income below a certain threshold will receive a small monthly payment during the next four months. Funds will be available to assist SMEs under stress, mainly in the tourism and hospitality sectors. Allocations will also be made to a solidarity fund to help combat the spread of the virus, which will be created with assistance of private contributions. On the tax front, the revenue administration will accelerate reimbursements and tax credits and allow SMEs to defer certain tax liabilities. The authorities have released partial cost estimates for the measures, so far amounting to ZAR 12 billion (0.2 percent of GDP). The government is working on additional support measures to be presented to parliament.

Monetary and macro-financial
  • The central bank reduced the policy rate by 100 bps to 5.25 percent on March 19. On March 20, it announced measures to ease liquidity conditions by: (i) increasing the number of repo auctions to two to provide intraday liquidity support to clearing banks at the policy rate; (ii) reducing the upper and lower limits of the standing facility to lend at repo-rate and borrow at repo-rate less 200 bps; and (iii) raising the size of the main weekly refinancing operations as needed. On March 23, the government announced the launch of a unified approach to enable banks to provide debt relief to borrowers.

Exchange rate and balance of payments
  • The central bank announced it will continue its longstanding practice of not intervening in the foreign exchange market.


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South Sudan, Republic of

The Republic of South Sudan has not reported any positive COVID-19 cases as of March 24, 2020. The government announced various precautionary measures, including (i) international flight suspension (with few exceptions for planes bringing in health-related cargo, such as medicine and medical equipment, and essential/critical food items; (ii) land border restrictions; (iii) passenger bus prohibitions; (iv) evening curfews; (v) social distancing; and (vi) a mandatory 14-day quarantine period for any traveler arriving from a virus-affected country. The government also encouraged businesses to allow their employees to telework and warned the business community against increasing prices and hoarding essential goods and commodities. Concurrently, South Sudan is affected by the sharp decline in the international price of oil—the mainstay of the economy.


Key Policy Responses as of March 24, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No mesaures.


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Spain

Spain has been heavily affected by the COVID-19 outbreak, with over 33,000 confirmed COVID-19 cases and 2,207 deaths as of March 23, 2020. The government declared a state of emergency on March 15, implying restrictions on movement to essential purposes only, suspension of commercial, cultural, recreational, hotel and restaurant activities except essential services, and reduced operation of public transport.


Key Policy Responses as of March 23, 2020

Fiscal
  • Key measures (about 0.7 percent of GDP, €8.9 billion; depending on the usage and duration of the measures the amount could be higher) include budget support from the contingency fund to the Ministry of Health (€1 billion); advance transfer to the regions for the regional health services (€2.8 billion); additional funding for research related to the development of drugs and vaccines for COVID-19 (€110 million); entitlement of unemployment benefit for workers temporarily laid off under the Temporary Employment Adjustment Schemes (ERTE) due to COVID-19, with no requirement for prior minimum contribution or reduction of accumulated entitlement; increased sick pay for COVID-19 infected workers or those quarantined, from 60 to 75 percent of the regulatory base, paid by the Social Security budget; an allowance for self-employed workers affected by economic activity suspension; additional budgetary funds of €300 million and further budget flexibility for the provision of assistance to dependents; transfer of €25 million to autonomous communities funding meals for children affected by the school closure; and extension of the social benefit for energy provision. Further measures include exemptions of social contributions by impacted companies that maintain employment under the ERTE; tax payment deferrals for small and medium enterprises and self-employed for six months (€14 billion); 50 percent exemption from employer’s social security contributions, from February to June 2020, for workers with permanent discontinuous contracts in the tourism sector and related activities; budget flexibility to enable transfers between budget lines; centralization of medical supplies; and an emergency management process for the procurement of all goods and services needed by the public sector to implement any measure to address COVID-19.

Monetary and macro-financial
  • The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).

    The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and COVID-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.

    In addition, the government of Spain has extended up to €100 billion government loan guarantees for firms and self-employed; up to €2 billion public guarantees for exporters through the Spanish Export Insurance Credit Company; and guarantees for loan maturity extensions to farmers using the special 2017 drought credit lines. These public guarantees could leverage up to €83 billion of liquidity support to companies through the private sector. Other measures include additional funding for the Instituto de Crédito Oficial (ICO) credit lines (€10 billion); introduction of a special credit line for the tourism sector through the ICO (€400 million); one-month moratorium on mortgage payments for the most vulnerable; deferred repayment of loans granted to businesses by the Ministry of Industry, Trade, and Tourism; ban of short-selling Spanish shares in the stock market at least until April 17; and authorization for special government screening of FDI in strategic sectors.

Exchange rate and balance of payments
  • No measures.


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Sri Lanka

Sri Lanka has reported 102 confirmed cases of COVID-19 as of March 24, with around 250 people under hospital observation and 3500 people in 45 quarantine centers. Since March 16, the authorities have closed schools and public offices with limited exceptions for banking and retail activity, while non-essential workers have been required to work from home. The authorities suspended all arriving international flights and ships, while imposing a strict nation-wide curfew during March 20-27, which is expected to be extended, among other social distancing measures.

As of March 18, there have been net capital outflows of around US$200 million (0.25 percent of GDP) since mid February, mostly from the domestic treasury securities market. The Sri Lankan currency has also depreciated by around 3 percent against the US dollar since that time. Sri Lanka’s EMBIG spread has more than doubled in March.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government has allocated up to 0.1 percent of GDP for quarantine and other containment measures, as well as US$5 million (0.01 percent of GDP) to the SAARC COVID-19 Emergency Fund. The 2020 Q1 payment deadline for income tax, VAT and certain other taxes has been extended until end-April. Other measures announced include tax exemptions for imported masks and disinfectant, price ceilings on essential food items such as eggs, lentils and fish, as well as concessional loans and food allowances for low income consumers (beneficiaries of the Samurdhi program). The President has also established a special fund for containment, mitigation and social welfare spending, inviting local and foreign tax-free donations.

Monetary and macro-financial
  • The Central Bank of Sri Lanka (CBSL) reduced monetary policy rates by 25 basis points on March 16 and lowered the required reserve ratio on domestic currency deposits of commercial banks by one percentage point to ease liquidity conditions. The President has also announced a wide-ranging debt repayment moratorium, which includes a six month moratorium on bank loans for the tourism, garment, plantation and IT sectors, related logistics providers, and small & medium size industries, with reduced rate working capital loans for these sectors. There will also be a six month moratorium on leasing loans for three-wheelers, and a three-month moratorium on small-value personal banking and leasing loans. The interest rate on credit cards will be capped, for transactions up to a certain amount, with a reduction in the minimum monthly repayment. In addition, the President has announced that state-owned financial institutions will invest in treasury bonds and bills to stabilize the money market interest rate at 7 percent.

Exchange rate and balance of payments
  • The Sri Lankan authorities introduced exchange restrictions on March 19 to reduce foreign exchange market pressures, preventing Sri Lankan commercial banks from facilitating the following activities for three months: (i) importing motor vehicles under letters of credit (with some exceptions); and (ii) importing other non-essential goods under letters of credit, documents against acceptance, and advance payment. Commercial banks will also be prohibited for three months from purchasing Sri Lankan international sovereign bonds from the market, to alleviate pressure on the currency.


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Sudan

There are three confirmed COVID-19 cases and 13 suspicious cases in Sudan as of March 25, 2020. The government has imposed containment measures, including shut-down borders and closing the airport for passenger travels and imposing daily curfew from 8:00 p.m. to 6:00 a.m. Other social distancing measures include closure of schools and banning of mass gathering. People returned from traveling abroad are requested to have a one-month quarantine.


Key Policy Responses as of March 25, 2020

Fiscal
  • The government faces significant financing shortages to cope with large economic imbalances on top of the COVID-19 outbreak. They have prepared a Multi-hazard Emergency Health Preparedness Plan guided by the WHO, which identifies priority areas and estimates the needed budget to carry out these activities. According to the plan, the financial needs to cope with COVID-19 is about $82 million. So far, domestic private sector pledged to contribute $ 2 million to help the government.

Monetary and macro-financial
  • No specific measures are taken to deal with COVID-19.

Exchange rate and balance of payments
  • No specific measures are taken to deal with COVID-19.


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Suriname

Suriname has reported 8 cases of COVID-19 as of March 25, 2020. In response, Suriname has implemented measures, including closing the borders on March 14 for 30 days, stopping all travel to/from the interior of the country as of March 25, closing of schools (as of March 14), businesses and markets (have had rolling closures by sector and locality). Public entertainment has been halted as of March 20. Casinos remain open and the government is recommending social distancing. Most government offices have limited hours or have closed completely. Suriname has received aid from Cuba in the form of medicine and 50 health professionals who are in the country to assist. Pan-American Health Organization (PAHO) and Brazil have also provided resources.


Key Policy Responses as of March 25, 2020

Fiscal
  • SRD 5 million has been promised to a provisional COVID-19-related budget for health services. There are also funds being made available for Surinamese stranded abroad who cannot repatriate because of the ban on incoming flights.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Sweden

COVID-19 has been spreading rapidly across Sweden like in many other countries with over 2,000 confirmed cases claiming 25 lives as of March 23, 2020. The government has implemented a range of measures to mitigate the spread of coronavirus and to stabilize the economy. The former includes travel restrictions and social distancing measures. In addition, many secondary schools and universities have switched to distance learning.


Key Policy Responses as of March 23, 2020

Fiscal
  • The announced fiscal package amounts to SEK 174 billion or 3.5 percent of 2019 GDP to SEK 462 billion or 9.2 percent of 2019 GDP depending on uptake (the debt and deficit impact may deviate from these amounts). Measures include (i) additional expenditures on wage subsidies for short-term leave, increase in transfers to relevant agencies to deal with the coronavirus outbreak and its repercussions, temporary payment of sick leave by the government, capital injections to SMEs, extra funding to the cultural sector and sports associations (SEK 16.9 billion); (ii) the possibility to defer a maximum of three month worth of payments of companies’ social contribution fees, VAT and payroll taxes for a period of up to 12 months (SEK 27 billion if uptake similar to GFC, and SEK 315 billion if used by all firms to its maximum); and (iii) credit guarantees for Swedish airlines (SEK 5 billion) and expansion of the Swedish Export Credit Agency’s credit guarantee framework (SEK 50 billion) and the Swedish Export Credit Corporation (SEK 75 billion). To support the international response, the government has decided to contribute SEK 40 million to the WHO’s Contingency Fund for Emergencies.

Monetary and macro-financial
  • Key monetary measures include: (i) reduction of the lending rate for overnight loans by 55 basis points to 0.2 percent (while leaving the repo rate unchanged at 0 percent); (ii) lending of up to SEK 500 billion to companies via banks; (iii) introduction of a new lending facility whereby banks can borrow unlimited amounts (given adequate collateral) with 3-month maturity; (iv) increase of purchases of securities of up to SEK 300 billion this year (where securities may include government and municipal bonds, covered bonds and securities issued by non-financial corporations); (v) the establishment of a swap facility of USD 60 billion between the Riksbank and the US Federal Reserve (mutual currency arrangement); and (vi) the possibility for banks to borrow in US dollars against collateral of up to USD 60 billion.

    Key macro-financial policies include (i) easing of countercyclical capital buffer by 2.5 percentage points; (ii) the possibility for banks to temporarily breach the liquidity coverage ratio (LCR) for individual currencies and for total currencies; and (iii) the recognition that loss of income due to COVID-19 is a cause for exemption from the amortization requirement (banks and borrowers may agree to reduce or suspend amortization payments temporarily given loss of income linked to COVID-19). Furthermore, the Swedish Financial Supervisory Authority has urged banks and credit institutes under its supervision to refrain from paying out dividends to its shareholders under the current circumstances.

Exchange rate and balance of payments
  • No measures.


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Switzerland

With more than 8,800 confirmed cases and 86 deaths as of March 24, Switzerland is one of the countries hardest hit by the Covid-19 outbreak. On March 16, the Federal Council declared a national state of emergency, closing all shops, restaurants, bars and entertainment facilities and schools (with exceptions for food stores and pharmacies) until April 19, prohibiting public gatherings of 5 people or more, and recommending that all citizens stay home. Some heavily affected cantons, such as Ticino, have imposed tighter restrictions on activities. The government also reintroduced controls at all its borders, with entry restrictions in place for citizens of Schengen and non-Schengen countries.


Key Policy Responses as of March 24, 2020

Fiscal (federal level)
  • The Federal Council (FC) has announced two aid packages with a total amount of CHF42 billion (around 6 percent of 2019 GDP). The first aid package of CHF10 billion, announced on March 13, includes up to CHF8 billion for partial unemployment compensation, CHF1 billion for financial aid to particularly affected firms, CHF580 million for loan guarantees for SMEs, and the rest for loss compensation for cancelled events. On March 20, the FC announced a second aid package of CHF 32 billion. The new package, which has yet to be approved by parliament, includes the following key measures: (i) a guarantee program up to CHF20 billion to support bridging loans to SMEs, with 100 percent guarantee for loans up to CHF500,000 and 85 percent guarantee for the amount exceeding that; (ii) temporary, interest-free deferral of social-security contribution payments for affected companies; (iii) extended payment periods for taxes and payables to federal suppliers without having to incur interest on arrears; (iv) extension of short-time work allowance and simplification of the application process; and (v) compensation for loss of earnings for self-employed people and for some employees affected by official measures to combat the coronavirus (e.g. parents who need to take care of children following the closing of schools).

Monetary and macro-financial
  • To address liquidity bottlenecks, the FC on March 18 ordered a debt enforcement standstill from March 19 to April 4. The Swiss National Bank activated the U.S. dollar liquidity swap line with the Federal Reserve, lowered the interest rate, offered a new 84-day maturity, and increased the frequency of the 7-day maturity operations from weekly to daily. As of March 24, USD liquidity injected via auctions totaled USD3.6 billion. In addition, the SNB announced on March 19 that starting April 1, the threshold factor for exempting sight deposits from negative interest rates would be raised from 25 to 30. On March 25, the SNB introduced a new COVID-19 refinancing facility. The facility operates in conjunction with the federal government’s guarantees for corporate loans. It allows banks to obtain liquidity from the SNB, which is secured by the federally guaranteed loans. The SNB also requested deactivation of the countercyclical capital buffer. On the supervisory front, the Swiss Financial Market Supervisory Authority introduced a temporary exclusion of central bank reserves from the calculation of banks’ leverage ratio, releasing capital buffers to support liquidity provision.

Exchange rate / capital flow management
  • The SNB has increased its interventions in the FX market to limit appreciation of the Swiss franc. The total size of interventions, proxied by the change in sight deposits held at the SNB, was around CHF20 billion (or 2.9 percent of the 2019 GDP), since early February.


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Tajikistan

Tajikistan has reported 3057 quarantine cases but no confirmed positive COVID-19 case as of March 23, 2020. The authorities have instituted a high-level task force and taken a range of measures to contain the spread of the virus, including border closures, travel restrictions, and suspending prayers at mosques. The task force is preparing for potential outbreak by arranging testing labs, medical equipment, supplies and personnel across the country. The COVID-19 pandemic and sharp decline in oil prices have weakened the macroeconomic outlook.


Key Policy Responses as of March 23, 2020

Fiscal
  • The authorities are seeing a decline in revenues and higher spending. They have requested support from IFIs, and are preparing consolidation measures that can be implemented over the medium term.

Monetary and macro-financial
  • Prices of staple goods have increased keeping headline inflation around 8 percent, at the upper end of the NBT’s target range in February. The National Bank of Tajikistan (NBT) hiked the policy rate by 50 basis points to 12.75 percent in February to contain inflationary pressures.

Exchange rate and balance of payments
  • The NBT allowed a one-off 5 percent depreciation of somoni to adjust the official exchange rate with cash market rate.


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Tanzania

Tanzania has reported 12 positive cases (no deaths) of COVID-19 as of March 24, 2020. All cases are related to travelers and no local transmission has so far been detected. The government has adopted limited containment measures. These include the banning all public gatherings (except for worship). Schools, colleges, and other training institutions have been closed for 30 days and boarding students were required to return home. Health screening is active at all points of entry and travelers entering from high-risk countries are quarantined for 14 days upon arrival at their own costs. Government and private enterprises continue to operate as normal. The authorities are assessing the economic impact of COVID-19 and potential policy responses.


Key Policy Responses as of March 22, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No mesaures.


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Thailand

As of March 25, 2020, there were 934 confirmed cases of COVID-19 (with 107 new cases over the last day) and 4 deaths. Prime Minister Prayut Chan-o-cha announced a state of emergency, effective March 26 and to last for a month, under which foreigners are banned from entering the country except for shippers, diplomats, drivers, pilots and others permitted by the Prime Minister. The government had previously taken other measures, including the postponement of the Songkran holidays and shutdown of schools and entertainment venues in the Bangkok Metropolitan Region. Movement from Bangkok to the provinces is now being restricted. COVID-19 has impacted Thailand’s important tourism and manufacture-exporting sectors particularly hard. The Bank of Thailand is currently projecting a 5.3 percent contraction in economic activity in 2020.


Key Policy Responses as of March 25, 2020

Fiscal
  • In response to COVID-19, Cabinet has approved fiscal stimulus measures amounting to at least 3 percent of GDP or THB 518 billion consisting of: i) health-related spending, including preventive and remedial measures; ii) cash handouts and soft loans for 3 million workers outside the social security system; and iii) support for businesses through soft loans from FIs and Social Security Office, lower withholding tax and higher tax expense deduction for SMEs, lower water and electricity bills, and lower employees’ and employers’ social security contributions. The Ministry of Finance said that it plans to announce more measures between April and July.

Monetary and macro-financial
  • The policy rate was reduced by 50 bps from 1.25 to 0.75 percent during the first quarter of 2020. In addition, a number of measures have been approved by Cabinet to help debtors affected byCOVID-19: (i) additional loans for circulation capital as well as reductions in interest and/or fees to make sure that debtors can keep their businesses operational; (ii) low interest loans (at 2 percent interest for a period of 2 years, not over 20 million Baht per customer); (iii) relaxation of repayment conditions and debt restructuring by suspending the principal and reducing the interest rate for the debts to SFIs; and (iv) relaxation of the maximum limit of personal loans for emergency cases.

    To lower the volatility of the government bond yield and ensure the normal functioning of the government bond market, the Bank of Thailand (BOT) purchased government bonds in excess of 100 billion baht during 13-20 March 2020, and will do more if necessary. The BOT reduced and cancelled BOT bond issuance. The Ministry of Finance, the Securities and Exchange Commission, and the BOT (i) set up a special facility to provide liquidity for mutual funds through commercial banks (BOT’s preliminary estimate of eligible bond mutual funds is approximately THB 1 trillion); and (ii) set up a THB 70-100 billion Corporate Bond Stabilization Fund to invest in high-quality, newly issued bonds by corporates to assist in debt rollover.

Exchange rate and balance of payments
  • The BOT has provided some liquidity in the FX market thereby avoiding disorderly market conditions while also allowing the exchange rate to adjust as a shock absorber.


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Timor-Leste

The Democratic Republic of Timor-Leste has one confirmed case of COVID-19 as of March 23, 2020. Travel restrictions, including the prohibition of entry into national territory, to all foreign citizens who in the last four weeks have departed or transited through countries with registered cases of infection by COVID-19, have been implemented. As of March 25, the Council of Ministers approved a request for the declaration of a state of emergency to be sent to the President. In addition, strict measures such as enforcing schools’ closures are in place.


Key Policy Responses as of March 25, 2020

Fiscal
  • N/A.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Togo

Togo witnessed its first case of COVID-19 on March 6, 2020. The number of cases has been increasing since then, reaching 20 cases on March 24. Given its position as a regional transportation hub (serving as a base of a pan-African airline company) and strong trade ties with Asia, Togo is particularly exposed to the COVID-19. In order to contain the outbreak. Togo has taken a series of measures including closing land borders and airspace to flights from countries with high infection rates. Entries for non-citizens from countries with high infection rates is banned. Nationals and permanent residents will be subject to a mandatory quarantine for 14 days upon entry. Official travels to risky countries and gatherings of more than 100 people are banned until further notice. Furthermore, all sport or cultural events have been adjourned for 3 weeks.


Key Policy Responses as of March 22, 2020

Fiscal
  • On March 20, 2020, the authorities have announced an action plan heavily reliant on development partners’ financing. The overall financing need is estimated at about CFAF 70 billion (about $130 million or 2 percent of GDP). The immediate and direct costs of this plan is estimated at CFAF 20 billion (about $35 million or 0.6 percent of GDP) with a CFAF 2 billion self-funding. The authorities also intend to spend CFAF 50 billion (about $95 million or 1.4 percent of GDP) to improve key health infrastructure to strengthen resilience against pandemics and chronic diseases.

Monetary and macro-financial
  • On March 21, 2020, the BCEAO (the regional central bank) announced the following monetary and macro-financial measures with the aim to mitigating the negative economic impact of the COVID-19 crisis by: (i) providing FCFA 340 billion additional liquidity to bring the total liquidity made available to banks by weekly and monthly auctions to 4750 billion FCFA; (ii) extending the collateral framework to access the BCEAO’s refinancing to include CFAF 1,050 billion of bank debt of prequalified 1,700 private companies that could thus benefit from better financing conditions; and (iii) setting-up a framework with the banking system to support firms with repayment difficulties.

    Other policy announcements included: (i) allocating FCFA 25 billion to the trust fund of the West African Development Bank (BOAD) to increase the amount of concessional loans to eligible countries to finance urgent investment and equipment expenses; (ii) communicating on the special program for refinancing bank credits granted to SMEs; (iii) initiating negotiations with firms issuing electronic money to encourage its usage; and (iv) ensuring adequate provision of banknotes for satisfactory ATM operation.

Exchange rate and balance of payments
  • No mesaures.


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Tonga

As of March 25, 2020, there have been no reported COVID-19 cases in Tonga. Nevertheless, Tonga is expected to be hit hard by the containment measures it has imposed and a sharp slowdown in partner countries, which are an important source of remittances and tourism for the economy. The Government of Tonga has been introducing increasingly restrictive containment measures since January 2020. In March 2020 it toughened measures for incoming travelers, while all international cruise ships and yachts were barred indefinitely. On March 21, 2020, Tonga declared a state of National Emergency. Until April 17, 2020, all foreign nationals are banned from entering Tonga while all Tongan citizens and emergency officials arriving in the Kingdom will now have to go through a 14 day quarantine period. The government has also announced a lockdown starting on March 25, 2020, which entails closing clubs and bars and restricting public gatherings to 20 indoors and 40 outdoors.


Key Policy Responses as of March 25, 2020

Fiscal
  • The Ministry of Finance is assessing the impact of the pandemic as it prepares its budget for FY2021, starting on July 1, 2020. The government is also exploring possible options to assist affected sectors following the decision and announcement of National Emergency due to COVID-19 prevention measures.

Monetary and macro-financial
  • On March 19, 2020, the National Reserve Bank of Tonga (NRBT) Board approved the provision of liquidity support to the banking system. It also committed to easing exchange control requirements if needed. Monetary policy, which has been accommodative given low inflation and slow economic recovery, remained on hold. The NRBT is also meeting weekly with banks to ensure there is clear communication, enhanced preparedness and best practices. It is supporting banks in their effort to mitigate the negative impact of the COVID-19 virus on the economy as well as provide essential financial services to households and businesses. Commercial banks are assisting their customers affected by the COVID-19 virus on a case by case basis and depending on individual customers’ circumstances by: (i) reducing or suspending the principal loan repayments to interest only loan repayments; (ii) restructuring loans to businesses that have reduced business hours, in affected sectors such as tourism and related industries like transportation and to individuals who have been laid off; (iii) extending the terms of loans to reduce repayments; (iv) reducing loan interest rates on a case by case basis; and (v) providing access to short-term funding, if required. The NRBT is also building awareness and expectations through press releases.

Exchange rate and balance of payments
  • No measures.


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Trinidad and Tobago

Trinidad and Tobago is being hit by two shocks, the spread of COVID-19 and the sharp decline in oil prices. The number of COVID-19 confirmed cases is 60 as of March 25, 2020. The government has closed the country’s borders and adopted containment measures, including travel restrictions, suspension of all cruise ship visits, school and university closures, limits on social gatherings, and expansion of hospital capacity.


Key Policy Responses as of March 25, 2020

Fiscal
  • The fiscal package (TT$5 billion or about 3¼ percent of GDP) announced on March 23 include (i) salaries for up to 3 months for temporarily unemployed workers; (ii) VAT and income tax refunds to individuals and SMEs; (iii) liquidity support to individuals and small businesses via credit union loans at reduced interest rates and long repayment periods; and (iv) grants to hoteliers to upgrade of their facilities. (see link)

Monetary and macro-financial
  • On March 17, the central bank reduced the policy rate by 150 bps to 3.5 percent, and the reserve requirement on commercial bank deposits by 300 bps to 14 percent. Commercial banks are expected to reduce the prime lending rates (currently at 9¼ percent) by the same amount. Additionally, commercial banks have agreed to provide a 1-month moratorium on mortgage loan and instalment loan payments, without any penalty; and to waive penalty interest on overdraft facilities. Other government housing institutions will provide similar relief to their customers with 2 to 6 months payment deferrals. Money lenders have been asked to arrange deferred payments and interest rate reductions for their members. Interest rates on credit cards will be reduced by 10 to 17 percentage points of the existing rates, on a bank by bank basis. (see here)

Exchange rate and balance of payments
  • The government will increase the allocation of foreign exchange in the system, using Exim Bank and other institutions to ensure uninterrupted supply of basic items such as food and pharmaceuticals.


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Tunisia

Tunisia has reported 114 confirmed cases of COVID-19 and 3 deaths as of March 24, 2020. Authorities have been proactive in taking the necessary sanitary steps by declaring national state of emergency and adopting containment measures, including total confinement, night curfew, travel bans except repatriation and quarantining national returners. The COVID-19 shock comes at a time when Tunisia is already facing persistent macroeconomic imbalances.


Key Policy Responses as of March 23, 2020

Fiscal
  • A 2.5 billion TND emergency plan ($0.8 billion or 2 percent of GDP) was announced on March 21. The package includes the postponement of CIT payments, other taxes and social contributions, VAT exemptions, VAT refund procedures and reimbursement acceleration, rescheduling taxes and custom arrears, and others in order to provide liquidity to the private sector, limiting layoffs and protecting the most vulnerable population especially in the informal sector. The plan also includes an expansion of the budget allocation for health expenses as well as the creation of a 100 TND Million fund for the acquisition of equipment for public hospitals. From the social side, this also includes cash transfers for low income households, disabled and homeless people (150 TND million). The plan also includes a support for those who will be on temporary unemployment because of the COVID19 shock (300 TND million).

Monetary and macro-financial
  • The Central Bank of Tunisia (BCT) has reduced its policy rate in March by 100 bps. On March 20, the BCT announced a package to support the private sector, by asking banks to defer payments on existing loans and suspend any fees for electronic payments and withdrawals. Besides, the government announced a set of financial measures including the creation of investment funds (600 million TND), a state guarantee for new credits (500 million TND), the activation of a mechanism for the state to cover the difference between the policy rate and the effective interest rate on investment loans within a cap of 3 percent.

Exchange rate and balance of payments
  • No measures.


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Turkey

Turkey has reported 1,236 Covid-19 cases and 30 deaths as of March 22, 2020. The government has adopted several containment measures, including social distancing, travel bans on visitors from high-risk countries and quarantine for nationals returning from those countries, and the closures of schools, stores, and entertainment venues. Over the last month, capital outflows have been high (broadly in line with other large EMs), Turkey’s EMBI sovereign spread doubled to over 770bps, the lira depreciated 10 percent against the US dollar, and official reserves fell by US$10 billion.


Key Policy Responses as of March 23, 2020

Fiscal
  • A TL100 billion package was announced. This consists of TL75 billion ($11.6 billion or 1.5 percent of GDP) in fiscal measures, as well as TL 25 billion ($3.8 billion or 0.5 percent of GDP) for the doubling the credit guarantee fund. Key support measures include (i) raising minimum pension and cash assistance to families in need, (ii) reduced/postponed taxes for affected industries (particularly tourism), (iii) direct support to Turkish Airlines and other affected entities, (iv) extension of personal and corporate income tax filing deadlines, (v) increased work flexibility.

Monetary and macro-financial
  • The CBRT lowered the policy rate by 100bps to 9.75 percent, and a package of financial measures was introduced. Specifically, liquidity facilities were augmented, including with longer-term instruments and at discounted rates. The reserve requirements on foreign currency deposits were reduced by 500 bps for banks meeting lending growth targets. Local firms affected by the crisis were granted a 3-month moratorium on bank loan repayments (principal and interest). Exporters’ inventory financing is being supported by extending maturities for existing and new export rediscount credits. Debt enforcement and bankruptcy proceedings (except in alimony cases) have been suspended.

Exchange rate and balance of payments
  • Both gross and net reserves have declined some 10 percent from recent peaks.


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Turkmenistan

According to official media, there have been no diagnosed cases of Covid-19 in Turkmenistan as of March 25, 2020. The authorities have adopted a wide range of measures to prevent a COVID-19 outbreak in the country, including closure of borders, flight cancellations and rerouting, and mandatory COVID-19 testing for arriving travelers. Starting March 24, 2020 all sports events have been cancelled and gyms and sports clubs have been shut down in Ashgabat. The authorities have imposed restrictions on internal movement, closed roads between some provinces, and stopped rail transportation. In consultation with the WHO, the authorities have issued guidelines for protection against the spread of COVID-19.


Key Policy Responses as of March 23, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • Exchange restrictions on current international payments and transactions for private businesses reportedly have been tightened.


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Tuvalu

As of March 24, Tuvalu has no reported cases of COVID-19 within its borders. Tuvalu has established a COVID-19 National Taskforce that will act as an Advisory body to Cabinet and provide updates on a regular basis. The Taskforce has recommended, and Cabinet approved, a 14 days quarantine period for anyone traveling into the country that has transited or originated their travel in a high risk country. Quarantine is being observed in Fiji, or if someone was to slip through the net, they would be isolated in Tuvalu for 14 days to observe the same 14 days quarantine period.


Key Policy Responses as of March 24, 2020

Fiscal
  • The Government has approved AUD 200,000 in supplementary appropriation as a Coronavirus contingency fund. In addition, the Government has announced an extra AUD 5.6 million supplementary budget for the Ministry of Health. The supplementary budget will be used for specialized medical equipment, enhanced laboratory capabilities, upgrading of health facilities and increased surveillance measures to address the coronavirus threat.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Uganda

Uganda has declared 14 cases of Covid-19 as of March 25th, 2020. The Government of Uganda has taken actions to control the spread of the pandemic, including the closure of the country’s borders and all education institutions, restricting public gatherings, suspending refugee reception services, and instituting guidelines on social distancing, public health facilities and public transport.


Key Policy Responses as of March 25, 2020

Fiscal
  • The authorities have used part of their Contingency Fund in the FY2019/20 budget to finance approximately 1/5 of the Ministry of Health Preparedness and Response Plan from January to June 2020 (about USD1.3 million from a total of USD7 million). They are working closely with the private sector and other stakeholders and will suggest support measures, which are likely to include recapitalizing the Uganda Development Bank so it can provide financing for manufacturing and import substitution. The Uganda Revenue Authority has granted an extension on tax paying deadlines. Government will also increase health expenditure and is mobilizing external support.

Monetary and macro-financial
  • Bank of Uganda (BoU) issued a statement on March 20th listing the following measures: (i) BoU’s commitment to provide exceptional liquidity assistance for a period of up to one year to financial institutions that might need it; (ii) ensuring that the contingency plans of the supervised financial institutions guarantee the safety of customers and staff; (iii) putting in place a mechanism to minimise the likelihood of sound business going into insolvency due to lack of credit; (iv) waiving limitations on restructuring of credit facilities at financial institutions that may be at risk of going into distress. BoU has also worked with mobile money providers and commercial banks to ensure they reduce charges on mobile money transactions and other digital payment charges.

Exchange rate and balance of payments
  • Bank of Uganda has announced that it stands ready to intervene in the foreign exchange market to smooth out excess volatility of the exchange rate.


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Ukraine

As of March 25, there were 113 verified COVID-19 cases, with 4 deaths. Starting in mid-March, daycare, schools and universities have closed and domestic and international travel restrictions have been imposed. All shops, with the exception of food shops and pharmacies, have closed. Entertainment facilities, restaurants, cafes, sport facilities are also closed, and mass gatherings are banned. The government has also banned export of certain medical essentials, such as facial masks, personal protective equipment and ethyl alcohol.

https://covid19.com.ua/


Key Policy Responses as of March 23, 2020

Fiscal
  • Several measures have been introduced to support business. To support households, the government is planning: (i) a one-off pension increase to low-income pensioners of UAH1,000; (ii) an earlier-than-planned indexation adjustment of pensions in 2020; (iii) a moratorium on penalties and disconnection of consumers who are late on utility payments; (iv) reduced eligibility criteria for household utility subsidies; (v) an additional allowance of 150-200 percent of wage for medical professionals working with people with COVID-19. Medicines and medical devices used to prevent or combat COVID-19 have been exempt from import duties and VAT. Additionally: (i) penalties for certain tax legislation violations have been canceled for the period March 1 – May 31, 2020; (ii) a moratorium on audits and inspections has been introduced for period March 18 – May 31, 2020; (iii) the deadline for filing annual income and asset declarations has been extended to July 1, 2020; (iv) rent on land is not accrued and paid for the period March 1 – April 30, 2020; (v) non-residential real estate owned by individuals or legal persons is not subject to real estate tax for the period March 1 – April 30, 2020; (vi) payment of Single Social Contribution for several categories of payers has been canceled and penalties for late or incomplete payment and late filing has been abolished for the period March 1 – April 30, 2020. The government has also announced the creation of a stabilization fund to combat COVID-19.

Monetary and macro-financial
  • The National Bank of Ukraine has changed the operational design of monetary policy. The frequency of liquidity tenders has been doubled, two-week certificates of deposit have become one-week certificates, and short-term refinancing loans with a maximum maturity of 14 days are now issued for a period of up to one month. The NBU has also introduced long-term refinancing instrument (up to 5 years). The introduction of capital buffers—including the capital conservation buffer and the systemic buffer—will be delayed. However, banks must meet the minimum capital and regulatory capital requirements. Onsite inspections and stress testing of the banks have been delayed. Banks are also invited to temporarily refrain from distributing profits through dividend payments until at least July 2020, ensuring that financial institutions have an additional margin of safety. NBU has adopted a regulation that facilitates restructuring of loans to borrowers facing financial difficulties due to impact of the COVID-19. Penalties on clients not servicing loans during the period March 1 to April 30 should not apply if there are reasonable grounds. The NBU has been active on the foreign exchange market to smooth volatility. Finally, the NBU has announced that it may, should situation require: (i) reduce reserve requirement ratios for FX deposits; (ii) temporarily decrease the minimum LCR; (iii) announce unscheduled liquidity assistance tenders; and (iv) expand the list of eligible collateral for emergency liquidity assistance loans.

Exchange rate and balance of payments
  • No measures.


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United Arab Emirates

The UAE economy is being affected by the spread of COVID-19 as well as the sharp decline in oil prices. As of March 23, 2020, the number of COVID-19 cases stood at 198 with 2 deaths. The authorities have enacted several measures to limit the spread of the virus, including closure of schools, nurseries, shopping malls, parks, dine-in restaurants, and various tourist attractions. They have also imposed wide-ranging travel restrictions (including grounding of flights and halting visa issuance), suspended prayers at mosques and other large gatherings, and enacted teleworking arrangements in government offices. Alongside, the authorities have increased testing and scaled up disinfection efforts.


Key Policy Responses as of March 23, 2020

Fiscal
  • The authorities have so far announced about AED 26.5 billion ($ 7.2 billion or 1.8 percent of GDP) in various fiscal measures. These include: (i.) AED 16 ($4.4 billion) approved by the federal government to support the private sector by reducing various government fees and accelerating existing infrastructure projects; (ii.) AED 1.5 billion ($0.4 billion) in measures by the government of Dubai to reduce government fees, provide additional water and electricity subsidies, and simplify business procedures; and (iii.) AED 9 billion ($2.5 billion) announced by the government of Abu Dhabi as part of the ongoing “Ghadan-21” fiscal stimulus program. The new initiatives provide for water and electricity subsidies as well as credit guarantees and liquidity support to small- and medium-sized enterprises. In addition, the government of Abu Dhabi has announced a reduction or suspension of various government fees and penalties, as well as a rebate on commercial lease payments in the tourism and hospitality sectors.

Monetary and macro-financial
  • The Central Bank of the UAE (CBUAE) has reduced its policy interest rate twice by a combined 125 basis points so far this year. Furthemore, on March 14, CBUAE has unveiled a AED 100 billion package ($27 billion or 6.7% of GDP) comprising: i) zero-interest rate collateralized loans to banks (AED 50 billion); ii) allowing the use of banks’ excess capital buffers (AED 50 billion); iii) 15-25 percent reduction in provisioning for SME loans; iv) increase of loan-to-value ratio for first-time home buyers by 5 percentage points; v) limiting bank fees for SMEs; vi) waiver of all payment service fees charged by CBUAE for sixe months; vii) raising the limit on banks' exposure to the real estate sector from to 30% of risk-weighted assets, subject to adequate provisioning.

Exchange rate and balance of payments
  • No measures.



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United Kingdom

COVID-19 has been spreading rapidly across the United Kingdom with over 8,000 confirmed cases claiming more than 400 lives. In response, the government has implemented a range of measures including travel restrictions, social distancing measures, closures of entertainment, hospitality, non-essential shops and indoor premises, and increased testing. The Prime Minister has set out that the British people can only leave their homes for very limited reasons including basic food shopping, to exercise once a day and essential work.


Key Policy Responses as of March 23, 2020

Fiscal
  • Tax and spending measures include: (i) additional funding for the NHS and other public services (£5 billion); (ii) measures to support businesses (£27 billion), including property tax holidays, direct grants for small firms in the most-affected sectors, and compensation for sick pay leave; and (iii) strengthening the social safety net to support vulnerable people (by nearly £7 billion) by increasing payments under the Universal Credit scheme as well as expanding other benefits. The government is also launching with the British Business Bank the Coronavirus Business Interruption Loan Scheme to support SMEs; deferring VAT payments for the next quarter until the end of the financial year; and will pay 80 percent of the salary of furloughed employees (to a maximum of £2,500 per employee per month) for an initial period of 3 months. To support the international response, the government has made available £150 million to the IMF’s Catastrophe Containment and Relief Trust. See also: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

Monetary and macro-financial
  • Key measures include: (i) reducing Bank Rate by 65 basis points to 0.1 percent; (ii) expanding the central bank’s holding of UK government bonds and non-financial corporate bonds by £200 billion; (iii) introducing a new Term Funding Scheme to reinforce the transmission of the rate cut, with additional incentives for lending to the real economy, and especially SMEs; (iv) launching the joint HM Treasury—Bank of England Covid Corporate Financing Facility which, together with the Coronavirus Business Loans Interruption Scheme, makes £330bn of loans and guarantees available to businesses (15 percent of GDP); (v) (v) activating a Contingent Term Repo Facility to complement the Bank’s existing sterling liquidity facilities; (vi) together with central banks from Canada, Japan, Euro Area, U.S., and Switzerland, further enhancing the provision of liquidity via the standing US dollar liquidity swap line arrangements; and (vii) reducing the UK countercyclical buffer rate to 0 percent from a pre-existing path toward 2 percent by December 2020, with guidance that it will remain there for at least 12 months. The Prudential Regulatory Authority (PRA) set out supervisory expectation that banks should not increase dividends or other distributions, such as bonuses, in response to policy actions. See also: https://www.bankofengland.co.uk/coronavirus.

Exchange rate and balance of payments
  • No measures.


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United States of America

The United States is facing a widening outbreak of COVID-19 that, as of March 24, 2020, has claimed the lives of 544 Americans and infected more than 44,000 persons across all 50 states. In response, the United States has implemented a range of measures including travel restrictions, social distancing, declaration of states of emergency, closure of schools, bars and restaurants, and increased testing.


Key Policy Responses as of March 24, 2020

Fiscal
  • US$8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act and US$104 billion Families First Coronavirus Response Act which together provide 0.5 percent GDP for health care, sick leave, small business loans, and international assistance. Agreement has been reached on a US$2 trillion (around 10% GDP) that is expected to pass Congress in the coming days. The Coronavirus Aid, Relief, and Economic Security Act provides for transfers to households, extended unemployment insurance, food assistance, incentives for firms to maintain employees on payroll, loans and grants for businesses, funding for hospitals and health care infrastructure, transfers to state and local governments, and deferral of payroll tax obligations. Federal student loan obligations have been suspended for 60 days and tax filing deadlines have been delayed.

Monetary and macro-financial
  • Federal funds rate lowered by 150bp to 0-0.25bp. Purchase of Treasury and agency securities in the amount as needed. Expanded overnight and term repos. Lowered cost of discount window lending. Reduced existing cost of swap lines with major central banks and extended the maturity of FX operations; broadened U.S. dollar swap lines to more central banks.

    Federal Reserve also introduced facilities to support the flow of credit, in some cases backed by resources from the Exchange Stabilization Fund. The facilities are: (i) Commercial Paper Funding Facility to facilitate the issuance of commercial paper by companies and municipal issuers; (ii) Primary Dealer Credit Facility to provide financing to primary dealers collateralized by a wide range of investment grade securities; (iii) Money Market Mutual Fund Liquidity Facility to provide loans to depository institutions to purchase assets from prime money market funds (covering highly rated asset backed commercial paper and municipal debt); (iv) Primary Market Corporate Credit Facility to purchase new bonds and loans from companies; (v) Secondary Market Corporate Credit Facility to provide liquidity for already-issued corporate bonds; (vi) Term Asset-Backed Securities Loan Facility (TALF) to support the issuance of asset-backed securities backed by student, auto, credit card, and small business loans.

    Regulatory agencies indicated their support for banking organizations that use their capital and liquidity buffers to lend and undertake other actions to provide support to households and businesses. Fannie Mae / Freddie Mac have indicated 60-day suspension of foreclosures / evictions and a plan to reduce/suspend mortgage payments for up to 12 months for those affected by Covid-19.

Exchange rate and balance of payments
  • No measures.


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Uruguay

The first cases of COVID-19 were reported on March 13. There were 189 confirmed cases (no deaths) as of March 25. The government introduced a series of public health measures, such as school closures, cancellation of public events, and active discouragement of large gatherings. The land borders with Argentina and Brazil have been closed, cruise ship passengers and crew may no longer disembark in Uruguay’s ports, and international airline traffic has been severely restricted.


Key Policy Responses as of March 25, 2020

Fiscal
  • Additional resources to address the public health emergency have been mobilized, including by resorting to contingent credit lines from other international financial institutions. Furthermore, some tax and pension obligations will be postponed or reduced, rules for claiming the unemployment insurance are being made more flexible, older workers will be subsidized so they do not have to leave home, and assistance to the most vulnerable groups will be expanded. No estimate of the total fiscal cost of these measures is currently available.

Monetary and macro-financial
  • Loan payments for households and businesses that may be affected by the public health measures are to be deferred for up to 180 days. The fund that guarantees loans for SMEs will be expanded from US$50 million to US$500 million (utilizing financing from international organizations). That will allow to guarantee the SME loans totaling US$2.5 billion. In addition, the rate of commission charged by the fund will be reduced substantially. BROU (the country’s largest commercial bank, which is government-owned) will extend soft loans to enterprises. The financing available currently is US$50 million, which may be augmented—also with financing from international organizations—to US$120 million. In addition, direct credit program for micro and small enterprises will extend working capital loans of up to 18 months to the affected businesses at subsidized rates. Loan repayments for these enterprises are being suspended for at least 30 days.

Exchange rate and balance of payments
  • The exchange rate has been allowed to adjust, with the central bank intervening to limit undue volatility in the market.


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Uzbekistan

Uzbekistan has reported 49 cases of COVID-19 (no deaths) as of March 24, 2020. The economy is facing lower commodity prices, weaker trading partner demand, and the risk of weaker remittances from Uzbekistan citizens abroad. The authorities have implemented extensive measures to prevent the spread of the virus including: restricting travel (including international flights and domestic public transportation), closing borders (except for trade), closing schools and universities, and cancelling public events and religious gatherings. Government employees have been asked to telework or to stay home.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government announced an Anti-Crisis Fund of UZS 10 trillion (about USD 1 billion or 1½ percent of GDP) to mitigate the impact of COVID-19. It will: (i.) expand funding for healthcare, including for medicines, the costs of quarantines, and a salary supplement for medical employees; (ii.) increase the number of low-income families receiving social benefits; (iii.) provide assistance to affected businesses via interest subsidies;; and (iv.) finance public works in different regions to improve the infrastructure and support employment. The authorities also announced the temporary reduction of social contributions for individual entrepreneurs, postponing surcharges on tourism, extending the moratorium on tax audits, and delaying tax declarations for 2019 income taxes (until August). The central government also asked local governments to reduce taxes by 30 percent and provide a 6-month grace period on paying property tax.

Monetary and macro-financial
  • The central bank suggested banks defer loan payments for firms in sectors affected by COVID-19. Consequently, state-owned banks are extending maturities of loan repayments for the affected sectors, including for the national air carrier. The central bank is monitoring financial conditions but has not changed the policy rate nor requirements for regulatory capital or liquidity.

Exchange rate and balance of payments
  • No new measures.


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Vanuatu

There are no confirmed cases or deaths from COVID-19 as of March 24, 2020. The government’s response is being coordinated by the National Novel Coronavirus Taskforce (NCTF), led by the Ministry of Health and the National Disaster Management Office (NDMO). The caretaker government (a general election was held on March 19-20) has: closed all ports of entry for international flights and cruise ships; suspended departures for seasonal worker programs to Australia and New Zealand (with optional repatriation of workers already abroad); closed schools in three of six provinces indefinitely; and been encouraging social distancing. There is a temporary quarantine of the island of Aneityum because of a cruise ship that docked March 11-12 with a passenger who was later identified upon arrival in Australia as having COVID-19. Tourism, which contributes 24.6 percent of Vanuatu’s GDP, has effectively ceased.


Key Policy Responses as of March 24, 2020

Fiscal
  • 32 million vatu (US$285,000) of funding has been made available through the existing budget to support the NCTF. In addition, the government, using its existing budget envelope and with help from Australia, UNICEF, WHO, and some local businesses, has begun to expand health facilities, equipment and supplies, and further train healthcare workers, especially in Port Vila. The government, UNICEF and other NGOs/CSOs are spending on community education and awareness. With the assistance of the French government, COVID-19 tests are to be analyzed in New Caledonia. The government will provide flights and cover arrival and short-term quarantine costs in Port Vila of repatriated seasonal workers and students before they return to their homes elsewhere in Vanuatu. There have been no other announced measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Vietnam

Vietnam has reported 134 positive cases (no deaths) as of March 24, 2020. Most recent infections are imported from overseas-returning Vietnamese nationals. In addition, approximately 53,000 people are quarantined in centralized facilities or self-quarantined. The government has adopted strict containment measures, including social distancing, travel bans on all foreign travelers (except for diplomatic, official and other extraordinary purposes), screening at ports of entry, a 14-day self-isolation requirement for all international arrivals, school closures, tourist sites closures, sport, festivals and public event cancelations, and international events postponed. Other measures include strictly enforcing wearing of masks at public venues from March 16, 2020, and shutting down bars, restaurants (with 30 people capacity), gyms, and spas in Ho Chi Minh City from Mar. 24 to Mar. 31, 2020.


Key Policy Responses as of March 24, 2020

Fiscal
  • The government allocated 51 million USD for health spending from the central contingency budget. Announced measures include: (i) 30 trillion VND tax and land rental payment deferrals (for 5 months) to support affected entities; (ii) affected firms are allowed to defer their contribution (due Mar-Jun) to the pension fund with no interest penalty for late payment; (iii) tax exemptions for medical equipment; (iv) lower business registration fee effective from Feb. 25 (one- year exemption of business registration tax for newly established household business; first 3-year exemption of business registration tax for SMEs); and (v) streamline tax and custom audit and inspection at firms. The government is also considering increasing health spending by 50 percent of the central contingency budget (800 million USD); continued exemption of agricultural land use tax for households and farmers; corporate income tax relief for SMEs; and preferential tariffs on key items.

Monetary and macro-financial
  • Effective Mar.17, the State Bank of Vietnam (SBV) cut benchmark policy rates by 50-100 bps, the short-term deposit rates cap by 25-30 bps, and the short term lending rates cap for priority sectors by 50 bps; raised its remuneration rates on required VND reserves by 20 bps, and also raised interest rates by the same amount on Vietnam Deposit Insurance, Social Policy Bank, Vietnam Development Bank, People Credit Funds and micro-finance institutions’ deposits at the SBV.

    The authorities announced a credit package totaling VND 250 trillion (about 3.3 percent of GDP) from the banking sector for affected firms and households. This is time-bound from Jan. 23 to 3 months after the Prime Minister’s announcement of the ending of Covide-19 epidemic. As of Mar. 3, banks have supported more than 44,000 customers, with outstanding loans of about VND 222,000 billion, by either rescheduling repayment, exempting, and reducing interest on existing debts, exempting and reducing fees (including interbank transaction fees for small amounts, and credit information subscription fees). Several fees for securities services have been also reduced or made exempt between Mar. 19 to Aug. 31 to support the stock market.

Exchange rate and balance of payments
  • With depreciation pressures rising, the SBV announced on Mar. 23 that it would intervene in the currency market as needed to smooth excessive exchange rate volatility.


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West Bank and Gaza

As of March 23, West Bank and Gaza has reported 59 COVID-19 cases, of which zero fatalities and 17 recoveries (WHO). The authorities have implemented several measures to limit the spread of the virus including: restricting movement of all residents from homes for 14 days; closing public places, including schools, universities, tourist attractions, coffee shops, and stores except for drug stores, bakeries, and supermarkets; limiting bank services and hours of operation; restricting travel within West Bank (among governorates and villages); limiting employee attendance at government and private workplaces (except for critical staff); and imposing mandatory quarantines for those returning from abroad.


Key Policy Responses as of March 23, 2020

Fiscal
  • No measures have yet been announced. The authorities are still finalizing their 2020 budget which is expected to include measures to address the COVID-19 crisis.

Monetary and macro-financial
  • The Palestine Monetary Authority has postponed monthly/periodic loan repayments to all borrowers for the next four months, and for the tourism and hotel sectors for the next six months. It has also prohibited the collection of fees, commissions or additional interest on deferred payments. These measures are subject to extension.

Exchange rate and balance of payments
  • Not applicable.


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Yemen

As of March 25, Yemen has not reported any case of COVID-19. The spread of COVID-19 would be potentially harmful for Yemen as the possibility of rapid spread of the virus could be confronted with a poor health system that has already collapsed. After five years of conflict, the country is facing a humanitarian crisis already, with severely damaged health and general infrastructure. UN estimates that only half of the health centers in Yemen are fully functional, and there are limited testing facilities in Sana’a and Aden. The Houthi administration closed the Sana’a airport for two weeks (starting March 14) and the coalition government suspended flights from Aden since March 18 over concerns of the coronavirus outbreak. Neighboring countries have reported an increase in cases, in particular Saudi Arabia, Qatar and Bahrain.


Key Policy Responses as of March 25, 2020

Fiscal
  • No measures.

Monetary and macro-financial
  • No measures.

Exchange rate and balance of payments
  • No measures.


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Zambia

Zambia has reported 12 confirmed COVID-19 cases (no deaths) as of March 25, 2020. The government has implemented several measures to contain the spread of the virus, including the closures of schools and universities; restrictions on non-essential foreign travel; mandatory quarantine for all foreign travelers; closure of bars, cinemas, and casinos; delivery and take-out regime for restaurants; restrictions of public gatherings to at most 50 people. In addition, the Zambian economy will be adversely impacted by the large decline in copper prices, sharp depreciation of local currency, increase in yields on public debt, and economic disruptions due to lockdowns in trading partners.


Key Policy Responses as of March 25, 2020

Fiscal
  • The Zambian government has announced a 57-million-kwacha emergency fund (around 0.02 percent of GDP) to strengthen preparedness and enhance public security.

Monetary and macro-financial
  • The Bank of Zambia has announced several measures to stimulate the use of e-money and reduce the use of cash, such as waiving fees for transactions below a certain threshold; relaxing the limits on single and total daily transactions for individuals, small scale farmers, and enterprises, and removing of transaction limits for corporate wallets; reducing interbank payment processing fees.

Exchange rate and balance of payments
  • No measures.


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Zimbabwe

Zimbabwe is being hit by two shocks—the spread of COVID-19 and erratic rains in the 2019/20 that have affected the agricultural season. The country is still to recover from the Cyclone Idai and drought shocks of 2018/19. Confirmed COVID-19 cases stand at 3. There has been one death. The authorities have implemented a range of measures to try and limit the spread of the virus, including suspended gatherings of more than 50 people, suspended prayers at churches and mosques, closed all schools, colleges and universities indefinitely, and cut down employee attendance at government and private workplaces (except for critical staff).


Key Policy Responses as of March 22, 2020

Fiscal
  • The authorities’ requirements to fight Covid-19, as at March 24, 2020 stood at USD26.4 million targeting prevention and control of the disease including awareness campaigns.

Monetary and macro-financial
  • Returned the multicurrency system. Reduced bank policy rate from 35 percent to 25 percent. Reduced statutory reserve ratio from 5 percent to 4.5 percent. Increased private sector lending facility from ZW$1 billion to ZW$2.5 billion.

Exchange rate and balance of payments
  • Moved from managed floating exchange rate system to a fixed exchange rate management system.