Policy Tracker

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This policy tracker summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic. The tracker includes 196 economies. Last updated on September 11, 2020.

NOTE: The tracker focuses on discretionary actions and might not fully reflect the policies taken by countries in response to COVID-19, such as automatic insurance mechanisms and existing social safety nets which differ across countries in their breadth and scope. The information included is not meant for comparison across members as responses vary depending on the nature of the shock and country-specific circumstances. Adding up the different measures—tax and spending, loans and guarantees, monetary instruments, and foreign exchange operations—might not provide an accurate estimate of the aggregate policy support. The tracker includes information that is publicly available or provided by the authorities to country teams and does not represent views of the IMF on the measures listed.

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Afghanistan, Islamic Republic of

Background. Afghanistan reported its first confirmed COVID-19 case on February 24, 2020. As the infection spread in March, the government progressively tightened containment measures, including introducing screening at ports of entry, quarantine for infected people, and closure of public places for gathering. On March 28, it imposed countrywide strict lockdown, which was subsequently extended twice.

The pandemic and containment measures stifled domestic activity and disrupted trade and transportation. Border closures and panic-buying led to a temporary spike in prices of some foodstuffs in April, which has abated with the re-opening of borders in early June. Income and job losses, in the formal and informal sectors, and higher prices have pushed thousands of Afghan families into poverty and have threatened to reverse social development gains of the past decade. Oxfam estimates that the number of people on brink of famine in Afghanistan has risen to 3.5 million in May from 2.5 million in September last year.

Reopening of the economy:

The government has progressively eased the lockdown in over the summer, with most containment restrictions removed by end-August.

The government announced new working hours for government and non-government organizations, alternating between even and odd weekdays, from 7 am until 1 pm. On July 12, working hours of government organizations were extended from 8 am to 4 pm, with employees alternating between even and odd workdays.

On July 22, wedding halls were allowed to open. Universities and schools reopened on August 5 and 12.

On May 17, Pakistan re-opened its Torkham and Chaman borders points with Afghanistan, followed by a restoration of bilateral trade and transit at all border crossings to pre-Covid-19 status on July 13. On July 15, trade with India through Wagah border post in Pakistan resumed. At end-June, the authorities announced the resumption of domestic and international flights and exports to Europe via the air corridors.

FEWS Net reports, in urban areas, the May easing led to increasing labor availability and, in combination with assistance and Zakat, has allowed some improvement in consumption. Still, many Afghans remain in a crisis phase of food insecurity.

Key Policy Responses as of September 10, 2020

Fiscal

The government initially allocated Af 8 billion (0.5 percent of GDP) from contingency funds for emergency pandemic response, of which Af 1.9 billion (0.1 percent of GDP) for urgent health needs, such as establishing testing labs, including at border crossings; setting up special wards to boost hospitalization and care capacity; and procuring critical medical supplies.

On April 29, the government started providing free bread to the poor in Kabul, later extended to other cities. The program was ended in late June. In May, the government waived electricity bills of less than Af 1,000 (US$13) for a family residence in Kabul for two months and paid utility bills of the past two months for 50 percent of households in Kabul. The decision benefited more than 1.5 million Kabul residents. Recognizing the liquidity constraints of many taxpayers, the government extended filing deadlines for the first and second quarter of 2020 by 45 days.

The authorities are preparing a mid-year budget revision to be submitted to parliament in early-September, with the following COVID-19 related spending, including those approved in the July budget amendment:

Health package amounting to Af 6.2 billion, including for building hospitals;

Social package, including the now concluded bread distribution program of Af 2.8 billion and the World Bank-supported social distribution program in the amount of Af 20.8 billion (see below);

Wheat purchase program (Af 1.7 billion);

Transfers to provinces to finance Covid-19 response (Af 2.3 billion);

Package to support agriculture (Af 5.9 billion) and short-term jobs (Af 1.0 billion).

In 2020, the authorities envisage up to 2.9 percent of GDP for pandemic-related spending, with about 15 percent directed to health.

With the support of the World Bank grant, the authorities have rolled out a relief package, amounting to 1.6 percent of GDP, to Afghan households with incomes of US$2 per day or lower (twice the national poverty line). As about 90 percent of all households fall below that threshold, the program is near universal. Households in rural areas will receive an equivalent of US$50 in essential food staples and hygiene products, while those in urban areas a combination of cash and in-kind equivalent to US$100, in two tranches.

Monetary and Macro-financial

There have been no liquidity pressures in part thanks to Da Afghanistan Bank (DAB)’s actions to maintain confidence in the Afghani and among depositors. The authorities increased the frequency of Financial Stability Committee meetings, enhanced the monitoring of early signs of liquidity stress, and reviewed banks’ business continuity plans. DAB postponed the IFRS-9 implementation to June 2021 and froze loan classifications at the pre-pandemic cutoff of end-February. It also suspended administrative penalties and fees, with no retrospective applications for breaches/noncompliance.

DAB phased out emergency pandemic measures in July. It ended the freeze on loan classifications and recommenced the enforcement of all prudential requirements in August with flexible application of penalties and prudential triggers in recognition of persisting risks. The emergency measures for the nonbank sector were allowed to expire at end-July.

Exchange rate and balance of payments

DAB remains focused on achieving price stability in the context of a flexible exchange rate regime. With domestic demand subdued the Afghani has remained broadly stable against the US$. DAB has engaged money-service providers, who play a systemic role in financial intermediation, to ensure uninterrupted services.

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Albania

Background. The first confirmed COVID-19 case was reported on March 9, 2020. Due to its proximity and close links to Italy, Albania adopted some of the toughest lockdown measures in Europe. The parliament adopted on April 18 amendments to the penal code, legislating harsh punishments for those breeching the lockdown or quarantine. The state of natural catastrophe which enabled the government to use extended powers for its three months duration ended on June 23.

In a sign of solidarity with its neighbor and main trading partner, Albania sent teams of doctors and nurses to help fight against the COVID-19 pandemic in north Italy, one of the worst hit areas in the world.

Reopening the economy. On June 1, Albania removed all domestic restrictions to movement and travel and re-opened its land borders after virtually shutting them since mid-March. Maritime passenger transport resumed on June 22 and airlines have resumed flights on a lighter schedule since mid-June. There are no quarantine requirements for incoming visitors and tourists. Due to an increased number of cases since restrictions were lifted, Albania is not included in the list of third countries with which travel restrictions to the EU were lifted on August 8.

Most businesses are open, including bars and restaurants for outside sitting. However, the reopening led to a spike in new infections, with the number of active cases and victims rising fast. Gradual reopening started since mid-April based on a strategy prepared by the Ministry of Health, which factors in new number of cases, hospitalization and patients needing intensive care. The government wants to avoid a second lockdown and has called on citizens to abide to physical distancing measures. The use of masks indoors became mandatory on July 15. Large gatherings continue to be banned and cinemas, theaters, night clubs and swimming pools remain closed. Wedding parties are not allowed, and funerals are restricted to family members. Public transport was allowed to resume on June. Pre-university schools will re-open on September 14, with preparations being made to use a combination of shifts and on-line learning. Universities will start on November 1.

Key Policy Responses as of September 10, 2020

Fiscal

The government has adopted two support packages for people and businesses affected by the COVID-19 pandemic of a combined size of Lek 45 billion (2.8 percent of GDP) consisting of budget spending, sovereign guarantees and tax deferrals. The first package adopted on March 19 through a normative act had support measures of Lek 23bn (1.4 percent of GDP) through 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 Lek 2.5 billion (ii) Lek 6.5bn for the support of small businesses/self-employed that are forced to close activities due to the COVID-19 pandemic by paying them minimum salaries (up to two in the case of family businesses with unpaid family members), doubling of the unemployment benefits and social assistance layouts. (iii) Lek 2bn of defense spending reallocated toward humanitarian relief for the most vulnerable, (iv) Lek 11bn (0.6 percent of GDP) sovereign guarantee fund for companies to access overdrafts in the banking system to pay wages for their employees for up to 3 months with an interest rate capped at 2.85 percent for a maturity of up to 2 years. The government will bear the interest costs. The second package adopted on April 15tincludes (i) Lek 7bn (0.4 percent of GDP) fund to pay for a one-off transfer of Lk40,000 to employees of small businesses affected by the pandemic not covered in the first package, employees of large businesses laid off due to the pandemic, and employees in the tourism sector; (ii) a sovereign guarantee of Lek 15 billion (0.9 percent of GDP) to provide loans for working capital for all private companies that were tax-compliant and solvent before the pandemic. The government will guarantee 60 percent of the loans, and interest are capped at 5 percent. As of September 3, more than 94 percent of the overall budgeted direct support measures had been paid out while the take up for the first guarantee scheme was 59 percent and for the second scheme 42 percent. A third smaller support package was adopted on August 13, providing an additional minimum wage to public transport workers who resumed work one month later than the rest. The measure costing Lk135m is accommodated within the existing transport budget. The government has also adopted tax deferral measures allowing all large companies (except banks, telecommunication, public enterprises and other essential businesses) to defer payment of profit tax for the second and third quarter of 2020 in 2021. Tourism, active processing and call centers can defer payments for the rest of 2020 to 2021. Small businesses with turnover below Lk14m will not pay profit tax for the remainder of 2021.

Monetary and macro-financial

To address the liquidity bottlenecks of companies and individuals, the Bank of Albania extended a temporary suspension of requirements for loan classifications and provisioning to August 31, enabling clients to ask banks to defer loan installments without penalties. On May 28, the BoA also adopted regulations to allow banks to restructure loans within 2020 without additional provisioning or downgrades for borrowers’ status. Entry in force of more stringent classification and provisioning measures for reclassified loans was postponed by one year to 2022. Out of court restructuring for distressed borrowers under a special regulation will be possible for an additional year until 2022. On March 25, 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. The Bank of Albania suspended dividend distribution for banks until the end 2020 in order to boost capital and support lending during this period. The central bank also halved the salaries of its supervisory board and top management for the duration of the pandemic. To urge the use of internet banking and reduce the number of people requiring services in bank premises, the central bank also waived the commissions for transfers in local currency. On July 17, the Bank of Albania announced it had set up a €400 million repo line with the ECB. The line will remain in place until June 2021, unless an extension is decided

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. On June 30, the Bank of Albania announced it had intervened in the market in end-March to smooth temporary excessive volatility caused by initial disruptions of lockdown measures.

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Algeria

Background. 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. The first case of COVID-19 was reported on February 25, 2020. The authorities have been implementing containment measures since early February (e.g., cancelling flights, and imposing quarantines to repatriated Algerians). Confinement measures included 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 were cancelled, a lockdown of affected areas was ordered and a curfew was put in place in several cities including Algiers.

Reopening of the economy. The full lockdown of certain cities ended in early June, while the curfews, notably in Algiers, were relaxed. A gradual easing of the containment measured was announced and started on June 7, mostly consisting in allowing certain stores to open, under social distancing rules such as wearing masks and limiting the number of people in the stores. Faced with a resurgence in the daily number of cases, new restrictions to mobility, retail activities and social events were announced in several provinces on June 29. The authorities continue to monitor and adapt the lockdown measures as needed (latest decision on August 8 here). International borders remain closed. As of early September, the daily number of cases has gone under 300, compared to around 600 during the summer peak.

Key Policy Responses as of September 10, 2020

Fiscal

A national socio-economic recovery plan was discussed at a conference on August 18 and 19. Among other things the plan aims to ensure food and pharmaceutical security, promote a favorable business climate, and foster high value added sectors and international trade and FDI. A supplementary finance law (SFL) was enacted on June 4. It includes provisions amounting to 70bn dinars to mitigate the health and economic impacts of the COVID-19 crisis. For the health sector, this includes 3.7bn for medical supplies, 16.5bn for bonus payments to health workers, and 8.9bn for the health sector’s development. For the economic impact, the law includes 20bn for allowances to the unemployed because of COVID, and 11.5bn for transfers to poor households. Overall, in order to adjust to the new low oil price environment, the SFL plans for a reduction in current and capital spending by 5.7 percent (representing 2.2 percent of 2019 GDP) compared to the initial 2020 budget law. In response to the economic impact on household and enterprises of the lockdown measures, the authorities also announced that: (i) the declaration and payments of income taxes for individuals and enterprises have been postponed, except for large enterprises; and (ii) contractual deadlines would be relaxed and penalties for companies that experience delays in completing public contracts would be suspended.

Monetary and macro-financial

On March 15, the Bank of Algeria loweredthe reserve requirement ratio from 10 percent to 8 percent, and its main policy rate by 25 basis points to 3.25 percent. On April 6, the Bank of Algeria announced that it was easing solvency, liquidity and NPLs ratios for banks. Banks are also allowed to extend payments of some loans without a need to provision against them. On April 30, the Bank of Algeria announced that it was cutting its main policy rate from 3.25 to 3.00 percent, that it was lowering its reserve requirement ratio from 8 percent to 6 percent, and that it was lowering haircuts on government securities used in refinancing operations.

Exchange rate and balance of payments

The authorities announcedseveral measures to cut the import bill by at least USD 10 bn (6 percent of GDP). Authorities banned exports of several products, including food, medical and hygiene items.

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Angola

Background. The first COVID-19 case was reported on March 21, 2020, while community transmission started on April 27. On September 8, authorities announced plans for a gradual removal of remaining restrictions, including the resumption of commercial flights by mid-September and school activities. Authorities extended the sanitary restrictions in Luanda until October 8; expanded testing activities to hospitals, informal markets, and public institutions; made the use of masks mandatory;. Home quarantine is now allowed for national and foreign citizens returning from abroad and asymptomatic COVID-19 patients. The World Bank, the United Nations, and the African Development Bank are providing financial support and resources in several ways.

Key Policy Responses as of September 10, 2020

Fiscal

The National Assembly approved revenue and expenditure measures to fight the COVID-19 outbreak and minimize its negative economic impact. About US$40 million on additional health care spending was announced and about US$80 million are being spent on 250 Cuban doctors who arrived in Angola to help. Tax exemptions on humanitarian aid and donations and some delays on filing taxes for selected imports were granted. On July 28, the National Assembly adopted a conservative supplementary budget, aiming at securing space for additional health expenditure, while balancing the need to keep debt on a sustainable path.

Monetary and macro-financial

Since late March, 2020, the central bank (BNA) reduced the rate on its 7-day permanent liquidity absorption and expanded its credit-stimulus program to selected sectors. Financial institutions were requested to grant their clients a moratorium of 60 days for servicing debt. In April 3, the BNA increased the minimum allocation required from banks to extend credit to producers of priority products and instructed banks to provide credit in local currency to assist importers of essential goods. In May 7, the BNA reinstated its Permanent Overnight Liquidity Provision facility to provide liquidity support to banks (Kz 100 billion), and extended access to large non-financial corporations on a discount line created for the purchasing of government securities.

Exchange rate and balance of payments

On April 1, the central bank introduced an electronic platform for foreign exchange transactions, which will be progressively extended for all such transactions.

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Argentina

Background. The first confirmed COVID-19 case was reported on March 3, 2020. The authorities have adopted sweeping measures to prevent a rapid growth in infections, involving a full closure of borders and a nation-wide quarantine, beginning on March 20. The pandemic and the containment measures have had a significant economic impact, with a GDP loss of between 0.75 and 1 percent of GDP in Q1-2020. Capital Flow Management Measures (CFMs) that were already in place since August 2019 have largely protected Argentina from the impact of capital outflows.

Reopening of the economy. The government’s policy of moving from strict lockdown to a gradual reopening of the economy is contingent on the speed of contagion, defined as the length of time it takes for the number of reported cases to double. On May 8, with the doubling of contagions rising above 25 days, the government announced a gradual reopening aimed at raising regional mobilization from 50 to 75 percent in all districts, except for the Buenos Aires metropolitan area. On May 23, restrictions in the Buenos Aires metropolitan area were tightened in response to an acceleration in infections and, in early June, the mandatory lockdown was extended to other selected large cities. Amidst a continued surge in infections, on June 26 restrictions on mobility were tightened further in the capital and the surrounding Buenos Aires province. On July 17, the government announced a loosening of lockdown restrictions in the Buenos Aires metropolitan area and a phased reopening of activities. However, with the number of infections continuing to rise, the mandatory lockdown has been extended, most recently until September 20.

Key Policy Responses as of September 10, 2020

Fiscal

Announced measures (totaling about 6.0 percent of GDP, 3.9 percent in the budget and 2.1 percent off-budget, based on the authorities’ 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, social security benefits (especially to low-income beneficiaries), unemployment insurance benefits, and payments to minimum-wage workers; (iii) support for hard-hit sectors, including an exemption from social security contributions, grants to cover payroll costs; and subsidized loans for construction-related activities; (iv) demand support, including spending on public works; (v) forbearance, including continued provision of utility services for households in arrears; and (vi) credit guarantees for bank lending to micro, small and medium enterprises (SMEs) for the production of foods and basic supplies. In addition, the authorities have adopted anti-price gouging policies, including price controls for food and medical supplies and ringfencing of essential supplies, including certain export restrictions on medical supplies and equipment and centralization of the sale of essential medical supplies.

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; (iii) temporary easing of bank provisioning needs and of bank loan classification rules (i.e. extra 60 days to be classified as non-performing); and (iv) a stay on both bank account closures due to bounced checks and credit denial to companies with payroll tax arrears.

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, transfers abroad and debt service in foreign currency), and some current account transactions (surrender requirements on export proceeds, restrictions on imports of services, dividend payments abroad, and interest payments on foreign currency debt). CFMs have helped limit outflows in the wake of the pandemic. The exchange rate has depreciated by over 19 percent vis-à-vis the US dollar since early March, in line with most regional peers.

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Armenia

Background. The first confirmed case was reported on March 1, 2020. Armenia is currently facing a steep increase in COVID-19 cases with a very high infection rate per capita. The government extended a national state of emergency to September 11, 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.

Reopening of the economy. Since May, the movement restrictions were removed, and containment measures were eased, allowing for resumption of public transport, retail businesses, and restaurants. Since early June, the government declared wearing a face mask in all open public spaces mandatory and imposed fine on those not doing so.

Key Policy Responses as of September 10, 2020

Fiscal

The measures fall into three broad categories: (i) subsidized 2-3 year loans to provide short-term support to affected businesses and SMEs; (ii) direct subsidies to SMEs and businesses to help maintain their employees; (iii) grants to entrepreneurs and firms; (iv) lump-sum transfers to the vulnerable including individuals who were unemployed after the COVID-19 outbreak, families with or expecting children, micro-businesses, general population who needed help with utility bills, and temporary part-time employment. As of mid-August, the authorities have adopted 24 support packages and, together with bank supports, allocated around 144.5 billion AMD ($295m) to those.

Monetary and macro-financial

The Central Bank of Armenia (CBA) reduced the policy rate by another 50 bps to 4.5 percent on June 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 CBA undertook few foreign exchange sales to limit excessive dram volatility around the beginning of April, although since then the dram has strengthened, and the CBA has been able buy some FX. The CBA has not used macroprudential policies actively, except asking banks to consider voluntary prudent loan restructuring and payment holiday period from March to June. The CBA’s authorities are supervising banks’ liquidity positions and will act swiftly if required to safeguard financial stability.

Exchange rate and balance of payments

The exchange rate has been allowed to adjust flexibly and has appreciated to pre-pandemic level against the US$. No balance of payment or capital control measures have been adopted.

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Aruba

Background. The number of reported new Coronavirus cases has resurged significantly since reopening borders on June 15. The total number of confirmed infections now stands at 2,589 with 15 deaths since March. The outbreak is affecting Aruba through two key channels—disruption to domestic activity from voluntary and mandatory social distancing and a sharp decline in tourism. The authorities have adopted containment measures, including a shelter-in place, 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.

Reopening of the economy. On April 30, the Aruban government announced a four-phase plan to gradually relax restrictions starting May 4, and as of June 27, all economic activities resumed. On June 15, travels between the Dutch Kingdom Islands of Aruba, Bonaire and Curaçao resumed with the need of a medical test on arrival. International borders reopened to Europe, Canada, and the Caribbean, except the Dominican Republic and Haiti, on July 1st, and to the United States on July 10. The Aruban government requires travelers from 24 high risk states in the United States to upload negative Covid-19 test results online 72 hours prior to arrival, while travelers from the other 26 states can choose to have a prepaid test taken upon arrival with a mandatory quarantine while awaiting test results. Travelers also need to be insured for medical expenses should they test positive during their stay. With open borders, the Aruba Department of Infrastructure and Tourism Authority have taken action in placing signs communicating hygiene, health, and environmental protocols. At the same time, due to the resurgence of new cases, the department of health announced on August 3rd a contingency plan to slow down the spread of local transmission, which includes the launch of a mobile app for locals to facilitate the process of testing. As of September 9, bars, nightclubs and rum-shops remain close, social gatherings and home parties remain prohibited with the exception of funerals where a maximum of 25 people is allowed. In addition, masks are mandatory on all public locations, churches remain under the restrictive protocols, and visits and admissions to elderly care and nursing homes remain prohibited.

Key Policy Responses as of September 9, 2020

Fiscal

On March 26, the parliament approved the amended 2020 budget, containing a higher spending related to the healthcare sector and three supporting programs: a relief package for employees who lose their jobs due to the virus outbreak; a package to support social security; and a package to support small and medium-sized enterprises, while the planned fiscal consolidation reforms for 2020 have been postponed. The authorities reduced government expenditures, including the wage bill and goods and services, to contain the anticipated large deficit in the budget, and introduce a 3-month payroll subsidy for businesses that have seen a drop of over 25% in their monthly revenues.

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). Moreover, on May 5, the CBA further lowered reserve requirement to 7 percent. On June 30, the CBA published the results of its yearly stress test on the commercial banking sector concluding that the existing ample capital and liquidity buffers provide banks with sufficient room to withstand significant external shocks, including the COVID-19 pandemic, provided that the recovery starts in the second half of 2020 (see: https://www.cbaruba.org/cba/readBlob.do?id=6655).

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

Background. The first COVID-19 case in Australia was confirmed on January 25, 2020. Social distancing measures were increasingly tightened in late March/early April, including by banning public gatherings of more than two people and shutting down non-essential businesses. After the National Cabinet announced a three-step plan on May 8 to relax COVID-19 restrictions, States and Territories eased regional containment measures. However, overseas travel remains banned, and any arrivals in Australia are quarantined for 14 days. A recent regional COVID-19 resurgence triggered a renewed lockdown in metropolitan Melbourne from July 9. This was further tightened (stage 4 restrictions) on August 2. Restrictions (stage 3) were also put in place for the State of Victoria (outside of Melbourne) starting August 6. On September 6, the Victoria government announced a roadmap for easing restrictions, tied to declines in active COVID-19 cases. Stage 4 restrictions in metropolitan Melbourne have been extended through September 28. Some States and Territories have imposed regional travel restrictions to prevent a wider COVID-19 spread.

Real GDP contracted by 7 percent q/q in the second quarter of 2020, and high-frequency indicators point to an incipient recovery in the third quarter.

Key Policy Responses as of September 10, 2020

Fiscal

At the Commonwealth level, fiscal stimulus, consisting of expenditure and revenue measures worth A$180.9 billion (9.3 percent of GDP), has been put in place through FY2023-24, and the majority of which will be executed through FY2020-21. Measures include sizable JobKeeper wage subsidies (5.4 percent of GDP), income support to households, cash flow support to businesses, investment incentives, and targeted measures for affected regions and industries (including the HomeBuilder program supporting the construction industry). The Commonwealth government will also help finance a series of fast-track infrastructure projects across States and Territories (A$3.9 billion) and the arts and screen industries to support job creation under the JobMaker program, and has put in place a home care package to support senior citizens (A$0.3 billion). The Commonwealth government provided free childcare to around one million families through mid-July (A$0.3 billion) and announced targeted support to the education system. In mid-July, the government announced extensions of the JobKeeper wage subsidies through March 2021 and of the additional income support to households through December 2020, with payment reductions to facilitate a gradual transition to a recovery. It also instituted a new JobTrainer skills package (A$2 billion). Pandemic Leave Disaster Payment has been arranged with the State and Territory governments to provide a lump sum payment to help workers during their 14-day self-isolation period. Other measures include an allocation of up to A$15 billion to invest in residential mortgage backed securities and asset backed securities to help funding for small banks and non-bank financial institutions, and loan guarantees between the Commonwealth government and participating banks to cover the immediate cash flow needs of SMEs (up to A$20 billion). In mid-July 2020, the latter scheme was extended through June 2021, with the maximum loan size raised from A$250,000 to A$1 million and the maximum maturity extended to five years. Separately, the Commonwealth government has committed to spend an additional amount of almost A$9.6 billion (0.5 percent of GDP) to strengthen the health system and protect vulnerable people, including those in aged care, 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. State and Territory governments also announced fiscal stimulus packages, together amounting to A$36.9 billion (1.9 percent of GDP), including payroll tax relief for businesses and relief for households, such as discount utility bills, cash payments to vulnerable households, support for health spending, construction, infrastructure packages, and green investment (renewable energy and technologies).

Monetary and macro-financial

The policy rate was cut by 25 basis points twice on March 3 and 19, to 0.25 percent. On March 19, the Reserve Bank of Australia (RBA) announced yield targeting on 3-year government bonds at around 0.25 percent through purchases of government bonds in the secondary market. The RBA has maintained this policy setting in all subsequent monetary policy meetings (the last was held on September 1). To support liquidity, the 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. To assist with the smooth functioning of Australian capital markets, the RBA has broadened the range of eligible collateral for open market operations to include securities issued by non-bank corporations with an investment grade. The 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 support the provision of credit, especially to SMEs during the period of disruption caused by COVID-19, the RBA established a A$90 billion Term Funding Facility (TFF) in March for banks to access three-year funding at 25 basis points until September. The RBA has recently expanded the TFF to A$200 billion and extended the access through June 2021. The Australian Prudential Regulation Authority (APRA) has 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. APRA also announced on March 30 that it is deferring its scheduled implementation of the Basel III reforms in Australia by one year to January 2023. APRA is also temporarily suspending the issuing of new licenses for at least six months in response to the economic uncertainty created by COVID-19. On July 27, APRA updated its guidance issued in April, which expected banks and insurers to consider deferring decisions on the level of dividends or approve a dividend at a materially reduced level, with a 50 percent cap on payout ratios for the remainder of this calendar year. APRA also expects banks to conduct regular stress testing to inform decision-making and make use of capital buffers to absorb the impact of stress to continue to lend to households and businesses. APRA announced on March 23 that loans on repayment deferrals in the context of COVID-19 need not be treated as being in arrears for a period of up to six months for capital adequacy and regulatory reporting purposes for borrowers who have been meeting their repayment obligations. On July 7, the Australian Banking Association announced that banks will extend the period of deferred repayments by up to another four months for affected borrowers. APRA also extended the regulatory approach on deferred repayments to cover a maximum period of up to 10 months until March 31, 2021. In addition, APRA clarified that loans that are restructured before March 31, 2021 to put the borrower on a sustainable financial footing may continue to be regarded as performing loans for capital adequacy purposes.

Exchange rate and balance of payments

The exchange rate has been allowed to adjust flexibly to absorb economic shocks.

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Austria

Background. Daily new cases have continued to climb up with the effective reproductive rate of above 1. A pickup in the infection rate has prompted the authorities to reintroduce mandatory mask wearing in shops, banks, and post offices, effective on July 24, 2020. During the initial outbreak, the authorities progressively tightened containment measures between mid-March and mid-April. Initially targeted to travel to and from Italy and self-quarantine for people with symptoms, the measures progressed to bans on large gathering in public spaces, replacing schools, and university classes with home learnings, and isolation of several ski resorts. By March 16, leaving home was banned by law with limited exceptions, restaurants and shops not delivering daily products were closed, and enforced by administrative and police measures, and a number of communities and regions were declared risk areas and put under quarantine. For all judicial and administrative procedures, the clock was put on hold to avoid hardship due to missed deadlines.

Reopening of the economy. A gradual re-opening of the economy has started after April 13, from small shops, construction and garden centers, while other stores and hairdressers were allowed to open at the beginning of May. By mid-May when religious services, outdoor sports, museums, libraries, and archives reopened, and the Bundesliga was allowed to restart. Open air markets and business premises are exempted from the mandate on mouth and nose protective masks since June 1. The re-opening process is expected to last through June though some steps were accelerated recently due to low infection rates, such as the reopening of the borders with Germany, Switzerland, Lichtenstein, Czech Republic, Slovakia, and Hungary from June 5. Since June 15, the standing obligation for all persons to wear a face mask was limited to public transportation, pharmacies and services when a 1-meter distance cannot be maintained, or no other protective measures are available. On 16 June, travelling restrictions were lifted for most European countries. Adhering to EU policies, Austria lifted a travel ban with 15 countries, with the notable exceptions of US, Brazil, India, and Russia.

Key Policy Responses as of September 10, 2020

Fiscal

The total fiscal package announced on March 15 amounts to 38 billion euros (about 9.5 percent of 2019 GDP). Financing includes: 4 billion euros for the health care system, long-term care, short-term work, and to compensate self-employed, family- and micro-business for the loss of earnings related to the sickness; 9 billion euros in guarantees to companies, including exporters and the tourism industry; 10 billion euros for the deferral of personal and corporate income taxes (for 2020), social security contributions (3 months), and VAT payments (until end-September 2020). The General Civil Code was enacted on March 15 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 with the possibility to extend it by another three months (up to September). Under this provision working hours may be reduced to up to 10 percent (later revised to 30 percent), at 80 to 90 percent of regular pay. Employers only pay the hours worked, while the rest is paid from the budget. A new phase of short-term work arrangement with mandatory training is under discussion. From April 2, households could delay rent payments to their landlords until end-2020. Households and SMEs may also delay their debt servicing by 3 months. Funding for short-term work was increased from € 3 to € 5 billion on April 13, to € 10 billion on April 30, and again to € 12 billion on May 19 while the time frame for the submission of applications extended. The authorities are rolling out new fiscal measures including tax relief measures for the hospitality sector of € 500 million and support to non-profit organizations of € 700 million open for 6 months. The fixed cost subsidy scheme has been expanded and extended by another 6 months from September, with rate at 100 percent (instead of 75 percent in the initial version). To jump-start the economy, a new tax incentive was introduced for companies that recruit apprentices, with € 2,000 per position created during March 16 and October 31 of this year. On June 16, the package was increased to € 50 billion (13 % of GDP) to include stimulus measures. On the expenditure side measures include investment in climate protection, affordable housing, health, and digitalization and a one-off support for unemployed and families. Several specific tax relief measures are aimed at the agricultural and forestry sectors, culture and publishing. The reduction of the lowest income tax rate from 25 to 20 percent, planned for 2021, was brought forward and made retroactive to January 2020.

Monetary and macro-financial

For monetary policy at the currency union level, please see Euro Area section. 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 and extended it on April 16 to May 18.

Exchange rate and balance of payments

No measures.

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Azerbaijan

Background. Azerbaijan has been adversely affected by COVID-19 and a collapse of oil prices. The authorities reported the first confirmed COVID-19 case on February 29, 2020.

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 response measures. To contain the spread of COVID-19, the authorities introduced a special quarantine regime (state of emergency) starting March 24. It included border closures, mandatory quarantine of citizens returning from abroad, prohibition of mass gatherings, restriction of domestic movements; closure of retail outlets, airports, and transportation hubs; social distancing, and disinfection of public spaces.

Reopening of the economy. Starting May 4, the authorities began a staged relaxation of restrictions, enabling many businesses, facilities, and public areas to reopen and reestablishing freedom of private vehicular travel between cities and districts. On June 19, as new COVID-19 cases rose with the reopening (with cases doubling between June 1-18), the authorities announced retightening of the quarantine regime (including the closure of borders until August 1, closure of establishments such as shopping malls, cinemas, and museums in the capital and big cities, and requiring permits for people to leave their homes in these cities). On July 17, the special quarantine regime was extended in 13 cities and districts until August 31, with tighter provisions in place until August 5. With new inflections starting to decline in early August, the authorities relaxed some of the lockdown restrictions in 7 cities (e.g., a few beaches were reopened and the requirement to receive SMS permission to leave home was eased). On August 29, the special quarantine regime was extended until September 30.

Key Policy Responses as of September 10, 2020

Fiscal

The authorities have increased spending on public health (AzN 8.3 million or .01 percent of GDP) and created a COVID Response Fund for public health needs (AzN 114 million or 0.14 percent of GDP). The government transferred AzN 20 million (.02 percent of GDP) to the Fund, with additional contributions coming from the public and private sectors. Ten modular hospitals are expected to be built (one of which has been completed) adding 2,000 beds at an estimated cost of AzN 15.3 million. Azerbaijan's government has also provided AzN 8.5 million ($5 million) to the COVID-19 Fund as part of the WHO’s Strategic Preparedness and Response Plan. On April 4, the authorities announced support to the affected businesses and individuals in the amount of AzN 3.3 billion (4.1 percent of GDP). Measures aimed at redressing damage to entrepreneurs and supporting incomes include: partial coverage of salaries (AzN 215 million); support to microentrepreneurs (AzN 80 million); temporary public jobs (AzN 54 million); subsistence and unemployment payments (AzN 230 million); pensions (AzN 200 million); targeted social assistance (AzN 4.5 million); energy and education subsidies (AzN 20 million); allocation of additional funds to the Entrepreneurship Development Fund (AzN 50 million). On June 2, the President approved amendments to the Tax Code, providing tax benefits to businesses affected by the COVID pandemic. The amendments grant a one-year exemption from land and property tax to selected sectors, including tourism, passenger road transportation, and cultural facilities. Income taxpayers will also receive a 75 percent exemption and taxpayers filing under simplified procedures a 50 percent exemption. Moreover, the rental property tax in the COVID-affected areas is reduced from 14 percent to 7 percent. On June 23, the Cabinet of Ministers announced a one-time extension of social assistance announced as part of the April 4 relief package for the unemployed and low-income people who lost earnings because of the special quarantine regime. An additional lump-sum payment of AzN 190 will be paid once to the individuals who received social assistance under the April 4 relief package. On August 6, the parliament passed a revised 2020 budget which reflected a lower oil price ($35 a barrel) and growth assumptions (-5 percent). The transfer from the Oil Fund was increased by AzN 850 million to offset lower state budget (SB) revenues, while SB expenditures were increased by some AzN 600 million. Overall, the 2020 SB deficit has increased from AzN 2.8 billion to AzN 3.4 billion (4.8 percent of GDP), while the consolidated government deficit increases from AzN 1.9 billion to AzN 8.4 billion (11.9 percent of GDP).

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. On May 1, the CBA lowered the ceiling of the interest rate corridor by 100 bps to 8 percent. The authorities have extended the blanket deposit guarantee until December 4, 2020. The guarantee covers all manat (foreign currency) deposits within a 10 (2½) percent interest rate cap. On June 19, the CBA lowered the refinancing rate by 25 bps to 7 percent, lowered the ceiling of the interest rate corridor to 7½ percent, and lowered the floor of the corridor by 25 bps to 6½ percent. On July 30, the CBA lowered the refinancing rate by 25 bps to 6¾ percent, and similarly shifted the floor and ceiling of the corridor downwards to 6¼ and 7¼, respectively. On April 23, the CBA undertook several measures to assist the financial sector. This included: (I) a relation of capital requirements (system wide and the countercyclical capital buffer) and risk weights on mortgage loans; (ii) a moratorium on late fees and interest rate penalties; (iii) guarantees on insurance premiums; and (iv) suspension of inspections of credit institutions. On April 27, the CBA appointed temporary administrators in four banks. Two of the banks were closed on April 28, with the other two closed on May 12. On May 19, the CBA signed a $200 million swap agreement with the EBRD, aimed at improving the flow of financial resources to the real sector. The swap enables the EBRD to provide domestic currency credit support to local companies, including for short-term liquidity needs, working capital and restructuring of exposure for existing clients, as well as trade finance and emergency support to key iinfrastructure providers.

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

Background. The Bahamas has so far reported 2723 confirmed cases of COVID-19, with 63 deaths (as of September 9). The Bahamas initially reopened its borders for international travel on July 1, as part of a phased plan that began with a reopening for boaders and private aviation on June 15. However, following the reopening, confirmed cases increased rapidly, leading the government to issue a new order for travel procedures and restrictions on July 22 and new lockdown restrictions in August. All international travelers are allowed in but must at their own expense quarantine for 14 days at a government facility and at the end of the 14 days period submit a negative PCR test. For inter-island travel, the requirement of the PCR test results was removed, except for New Providence but a 14-day quarantine is still required upon arrival at destination. Lockdown restrictions have been gradually rolled back since late August. Starting September 8, restrictions on activities were eased further, such as providing indoor dining and in-store services under specific protocols (except for New Providence) and extending beach access time for all islands. A daily curfew from 10pm to 5am remains in place.

Key Policy Responses as of September 9, 2020

Fiscal

The government announced various support measures totaling B$121.7 million (1 percent of GDP) , including (i) B$15 million for health care, (ii) B$4 million for food programs, (iii) B$15.9 million as income support for the self-employed, (iv) B$20 million to support business loans to SMEs with an additional B$5 million allocated to grants to assist with payroll expenses, (v) B$60 million to provide tax deferrals and credits to companies with a minimum of 25 employees and annual sales of B$3 million that retain at least 80 percent of staff, and (vi) B$1.8 million to support to Family Islands (specifically to be used for any COVID-19 related expenditure).

Monetary and macro-financial

The Central Bank of The Bahamas (CBOB) 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

The CBOB has suspended all exchange control approvals for domestic bank dividends. This position will be periodically reviewed, with a view to determining a medium-term position by September 2020. For commercial banks, the ceiling on the Bahamian open position on foreign exchange transactions has been relaxed to the maximum of 5 percent of Tier11 capital, removing the more binding limit of B$5 million on net long exposures that constrained most institutions. The CBOB suspended approval of applications to purchase foreign currency for transactions via the Investment Currency Market (ICM) and the Bahamas Depositary/Depository Receipt (BDR) program. Both programs fund external portfolio investments. The CBOB has requested the National Insurance Board to repatriate some of its external assets, excluding any exposures to Bahamas and Caribbean domestic issuers.

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Bahrain

Background. Bahrain has been hit by the spread of COVID-19 and by the recent sharp decline in oil prices. The first case of COVID-19 was reported on February 24, 2020. To contain the rapid spread of COVID-19, the authorities have expanded social distancing and stay-at-home measures: 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; introducing mandatory use of masks while in public; and switching to remote working at public entities. Recently introduced measures include a reduction of private schools’ tuitions by 5-10 percent and a provision to accommodate expatriates in temporary housing where social distancing practices can be maintained. The authorities are also expanding intensive care units (ICU) facilities should the existing stock of ICU beds become insufficient.

Reopening measures. In a series of steps over April 9-23, the authorities have permitted reopening of retail stores subject to some strict operational conditions. Stores that reopen should require every customer to wear a mask, operate with a reduced number of employees, and prevent overcrowding at their premises, ensuring continuous sterilization of premises setting up queues to enter to enforce social distancing.

Key Policy Responses as of July 29, 2020

Fiscal

A BD 560 million ($1.5 billion or 4.2 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 BD 177 million ($470 million or 1.3 percent of GDP), which has subsequently been added to the 2020 budget on July 13, 2020. On April 8, 2020 a further BD 5.5 million enhancement to social benefits for lower income families was announced. On April 20 the authorities announced their objective to reduce non-priority government agencies expenditure by up to 30 percent and delay some capital expenditure to accommodate lower oil revenues due to the decline in oil prices. Other measures announced include the extension of the existing package to drivers, driving instructors and nurseries, as well as a proposal to delay the collection of some claims on nationals. On June 29, the authorities approved new measures to extend some of the support adopted in the previous package. The new measures include i) payment of 50 percent of salaries for Bahrainis working in the most affected sectors for a further three months starting in July 2020; ii) extend the payment of electricity and water bills for Bahrainis for a further three months starting in July 2020; iii) reduce by 50 percent work permit fees and exempt the most affected sectors from work permit fee for three months starting in July 2020; and iv) expand financial support to hard hit sectors through Tamkeen. At end-July 2020 the authorities approved the following new measures: i) for three months, exempting industrial companies operating in the industrial zone and exporting more than 30 percent of production from paying rent; ii) exempting companies hardest hit by the crisis from paying the commercial record registration or renewal fee for 2020; iii) exempting households from paying municipality fees on their first residence for three months; and iv) exempting tourist facilities from paying the tourism fee for the third quarter of 2020.

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 ($10 billion or 28 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; and (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

Background. Bangladesh reported the first confirmed cases of COVID-19 on March 8. On March 23, the government declared a general holiday from March 26 to May 30, leading to the closure of government offices, private offices, and courts, and shorter operating hours for commercial banks. On April 8, the government restricted operations in Rohingya refugee camps to critical services and assistance only, citing the need to minimize risk within the camp setting. While the number of cases remains low, reluctance to be tested presents a challenge.

Reopening of the economy. On May 28, the authorities announced that closures and movement restrictions would be gradually lifted starting May 31. Civil servants have returned to their offices and public transport in Dhaka has resumed. 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 ($16.4 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. The RMG sector accounts for more than eighty percent of the country’s exports. The industry has been hit by the cancellation or postponement of several billion US dollars in orders from major retailers in importing countries. Another concern for the authorities stems from historic monsoon floods which affected close to four million people, with nearly one-third of the country underwater. This will likely have a negative impact on agricultural production, possibly leading to higher food imports and emergency outlays.

Key Policy Responses as of September 10, 2020

Fiscal

The government has introduced a series of fiscal measures to contain and mitigate the impact of the COVID-19 outbreak. At end-March, the Ministry of Finance issued a revised budget for FY20 including additional resources to fund the Ministry of Health’s COVID-19 Preparedness and Response Plan and expanding existing transfer programs that benefit the poor. Increased allocation has been made to the Open Market Sale program to facilitate the purchase of rice at one-third of the market price, and the Ministry of Disaster Management and Relief is distributing food supplies at the district level. On March 31, the Ministry of Finance announced a Tk. 50 billion (about USD 588 million) stimulus package for exporting industries to be channeled through a refinance scheme operated by Bangladesh Bank. The amount of the loan was increased in July-August by an additional Tk. 60 billion following pressure from factory owners. Loan proceeds will be used to pay worker salaries, primarily through mobile financial services, and the scheme is expected to benefit close to 4 million workers for a four-month period. Exporting firms that have laid off workers will not qualify for the loans. The Ministry of Finance will also subsidize interest payments on up to Tk. 500 billion in working capital loans by scheduled banks to businesses. On April 15th, the Prime Minister announced the allocation of Tk. 21.3 billion under a housing scheme for the homeless, Tk. 7.6 billion for poor people having lost their jobs as a result of the pandemic, Tk. 7.5 billion to provide health insurance for government employees most at risk, and a Tk. 1 billion bonus payment for government doctors and health workers treating COVID-19 patients. The Prime Minister also announced that the government would cover Tk. 20 billion in interest payments on behalf of 13.8 million loan recipients negatively impacted by the national shutdown. The National Board of Revenue has suspended duties and taxes on imports of medical supplies, including protective equipment and test kits. The FY21 Budget presented on 11 June includes higher allocations for health, agriculture, and social safety net programmes. As a precautionary measure, the government has decided that until further notice, funds from the budget for low-priority development projects will not be released. It has approached international financial institutions and bilateral development partners seeking budget support.

Monetary and macro-financial

The focus of Bangladesh Bank (BB) 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. The repo rate was lowered from 6 percent to 5.75 percent effective March 24th and was further reduced to 5.25 percent effective April 12th. The repo rate was cut again from 5.25 percent to 4.75 percent recently, effective July 30th. The CRR was initially reduced from 5 percent to 4.5 percent (daily-basis) and from 5.5 percent to 5 percent (bi-weekly basis), with a further reduction to 3.5 percent and 4 percent, respectively, from April 15. Recently, CRR was cut to 1.5% (daily basis) and 2.0% (bi-weekly basis) for offshore banking operation, effective July 1, and 1.0% (daily basis) and 1.5% (by-weekly basis) for NBFIs, effective June 1. BB has also raised the advance-deposit ratio (ADR) and investment-deposit ratio (IDR) by 2 percent to facilitate credit to the private sector and improve liquidity in the banking system. The Export Development Fund was raised to $5 billion, with the interest rate now fixed at 2 percent and the refinancing limit increased. BB has created several refinancing schemes amounting to a total of Tk 380 billion, a 360-day tenor special repo facility and a credit guarantee scheme to support exporters, farmers, SMEs and to facilitate the implementation of the government stimulus packages. To further support farmers, BB also announced an agriculture subsidy program that will take effect for 15 months until mid-2021. In addition, BB has taken measures to delay non-performing loan classification, relax loan rescheduling policy for Non-Bank Financial Institutions (NBFIs), waive credit card fees and interests, suspend loan interest payments, impose restrictions on bank dividend payments, extend tenures of trade instruments, and ensure access to financial services.

Exchange rate and balance of payments

Foreign exchange rules were eased by Bangladesh Bank to provide foreign currency to the Bangladeshi nationals who are visiting abroad and facing problem in returning home due to travel disruptions, and to allow foreign owned/controlled companies operating in Bangladesh to access short term working capital loans from their parent companies/shareholders abroad to meet actual needs for payments of 3-month wages and salary. International factoring was introduced to accelerate exports. BB also resumed sales of the US dollar to offset extra pressure on the market caused by lower remittance inflows following the COVID-19 outbreak.

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Barbados

Background. The government took swift actions to contain the spread of the virus. Within days of the first confirmed case (March 16), measures to activate isolation and treatment centers, impose limits on public gatherings, and establish supplementary medical facilities were taken. On April 3, a 24-hour curfew became effective restricting non-essential personnel to their residences and closing non-essential businesses. Enhanced screening measures are in place at all ports of entry but the mandatory 14-day quarantine for all travelers arriving in Barbados has been replaced with a testing program to facilitate the resumption of tourism. Spillovers from the global pandemic to the critical tourism sector have been significant with the shut-down of commercial airlift at end-March, which resulted in widespread labor furloughs and temporary hotel closures. Commercial airlift resumed on a limited basis in July but prospects for the recovery of tourism remain highly uncertain. The virtual collapse in tourism in recent months—which accounts for 40 percent of economic activity—will significantly depress overall economic activity in 2020.

Reopening of the Economy. The authorities adopted a four-phase plan to reopen the economy. The shift to phase 2 occurred on May 4 with a modest relaxation of social and economic restrictions. Specifically, the 24hr curfew was replaced with a nightly curfew and the resumption of construction, manufacturing, and food production/distribution services. Phase 3 commenced on May 18 with the phased re-opening of remaining businesses and trades but with restrictions, such as social distancing requirements, temperature testing protocols, and limited admittance to retail spaces. More recently, the curfew was lifted effective July 1 and quarantine procedures for travelers arriving in Barbados have been relaxed ahead of the resumption of commercial airlift in July. Phase 4, which is characterized as the resumption of life as normal, will be triggered upon development and procurement of a vaccine.

Key Policy Responses as of September 10, 2020

Fiscal

The Government of Barbados (GoB) identified upfront emergency health and capital expenditures needed to manage and mitigate the spread of infection. This includes resources to refurbish the hospital and clinics, build isolation centers, and provision critical medications and supplies. In addition, the GoB will 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 and the introduction of a Household Survival Program. The latter involves a minimum income for households made unemployed by COVID-19 and supplemental unemployment benefits though the National Insurance Scheme. In addition, the clearance of roughly 1 percent of GDP in outstanding income tax and VAT arrears will provide an infusion of liquidity to households and businesses, and establishment of a Tourism Loan facility will provide urgent working capital and investment loans to hotels. The authorities recently rolled out a deferred public wage-savings scheme (BOSS) to help finance a stepped-up capital investment program intended to boost growth while the tourism sector recovers from the COVID shock. On balance, the authorities are targeting a 1 percent of GDP primary surplus in 2020 as compared to the 3 percent target announced during the March budget presentation.

Monetary and macro-financial

The Central Bank of Barbados (CBB) announced a series of measures (effective April 1, 2020) to help support commercial banks and other deposit-taking institution manage the economic fallout from the coronavirus shock. Specifically: i) the Bank’s discount rate at which it provides overnight lending to banks and deposit-taking non-banks licensed under the Financial Institutions Act was reduced from 7 percent to 2 percent; ii) the securities ratio for banks was lowered from 17.5 percent to 5 percent; iii) the 1.5 percent securities ratio for non-bank deposit taking licensees was eliminated; and, iv) the Bank indicated it stands ready to make collateralized loans for up to six months as liquidity support for licensees. These measures follow an agreement brokered by the GoB for commercial banks to provide forbearance 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

Background. The first confirmed case of COVID-19 was reported on February 28. 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—limited relative to other countries—include travel restrictions (e.g., cancelations of international flights and ground transportation), social distancing (e.g., self-isolation rules for the sick, and their first and second-level contacts; and a ban on gatherings/events with international participation), and recommendations for schools and education. In some regions such as Minsk, there has also been a cancelation of public events, and additional recommendations for work, education and businesses.. In order to facilitate travel abroad, the Ministry of Health has developed a certificate of the absence of Covid, and is identifying clinics where the certificate and a test can be obtained for a fee. Policy measures are elaborated below. First re-opening measures became effective in mid-June: The national airline Belavia continues to update its international flight schedule, restrictions on transit truckers were lifted, and self-isolation rules for travelers returning from a specific list of countries were cancelled. In addition to the impact of the Covid pandemic, Belarus faces a gradual loss of oil price subsidies from Russia through the “tax maneuver” till 2024, the economic impact of protests and strikes that are taking place since the presidential election of August 9, 2020, and the recent oil-price shock and its negative impact on the price of Belarus’ exports of refined products.

Key Policy Responses as of September 10, 2020

Fiscal

The government has announced a package of fiscal measures, which include additional resources for the healthcare sector (including salary allowances for essential personnel) and tax relief and tax deferral measures to support businesses. Some of these measures are being implemented on the local government level (e.g. in Minsk on June 1 and June 11). The possible total fiscal impact of these measures has not yet been published. In addition, public sector salaries are being kept at least at the legislated minimum and subsidies are being granted to public sector organizations forced into part-time employment or to stand idle for a specified time.

Monetary and macro-financial

Key measures include: (i) credit holidays, i.e., guidance to banks to postpone principal repayments and interest on loans in a targeted manner; (ii) mitigation of a number of prudential requirements: softening of assets classification requirements; including looser requirements on FX loans; increasing the maximum risk standard for one debtor; suspending indexation of regulatory capital of banks or other financial corporations; lowering the liquidity coverage ratio; and softening credit risk requirements for systemically important borrowers when calculating the normative capital adequacy ratio (iii) guidance on suspension of dividend distributions; (iv) softening of recommendations on interest rate ceilings on deposits and credits, and the associated risk assessment; (v) recommendations to banks on restraining from increasing interest rates on restructured debt; (vi) partially releasing the capital conservation buffer; (vii) extending the maturity of the central bank’s refinancing loans for banks. The central bank also reduced the policy rate twice during the Covid pandemic period to 7,75 percent (from July 1). See also: https://www.nbrb.by/press/10042; https://www.nbrb.by/press/10060; http://www.nbrb.by/press/10167 (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

Background. Belgium registered the first confirmed COVID-19 case on February 4, 2020. The minority government—which had been granted enhanced executive powers until June 30, 2020—has implemented a range of measures to reduce the spread of the coronavirus, including closures of schools and all non-essential activities, a ban on all gatherings, limiting movement to essential needs, ban of non-essential travel abroad. The economy contracted by 3.5 percent and 12.1 percent (q/q) in the first and second quarters of 2020, respectively.

Reopening of the economy. The government has been implementing a phased reopening plan conditional on health outcomes. On this basis, manufacturing and business services sectors were reopened on May 4, followed by shops on May 11 and May 18. Schools also started to gradually reopen as of May 18. Hospitality, cultural, and non-contact sports activities (without audience) as well as religious services were allowed to resume as of June 8. As of July 1, recreational activities and venues (e.g., swimming pools, wellness centers, casinos, cinemas, indoor playgrounds, etc.) and events with an audience of up to 200 (400) persons indoors (outdoors) were reopened while shopping restrictions have been relaxed. Restrictions on domestic travel and travel within the EU/Schengen area have largely been lifted, though restrictions remain in place for countries where Covid-19 risks are considered high. In response to a rise in the number of new cases, the government decided on July 23 and 27 to put a 5th phase of reopening on hold and to further decentralize decision-making regarding localized restrictions. It also imposed new preventive measures that came into effect on July 29. On August 20, the government decided to ease some restrictions, such as on shopping and events, that came into effect on August 24, while keeping social distancing rules (incl. a “social bubble” of 5 persons per family) in place until at least end-September. Schools, except universities, have fully reopened in September, with in-person classes.

Key Policy Responses as of September 10, 2020

Fiscal

The government has put in place a package of fiscal measures to address the crisis, detailed in their Stability Program and the July 2020 Monitoring Committee Report, with an estimated budget impact of €16.4 bn (about 3.4 percent of GDP), together with some €52 bn (about 12 percent of GDP) of loan guarantees. Key measures include: (i) boosting health expenditure and hospital funding; (ii) increasing support for those in temporary unemployment and self-employed; (iii) liquidity support through postponements of social security and tax payments for companies and self-employed; (iv) solvency support through measures allowing losses in 2020 to be offset against income tax liabilities (backward and forward); and (v) additional support to affected firms and households provided by subnational governments. A reinsurance scheme for short-term trade credit insurance, and other socio-economic measures further support these efforts. In June, measures have been adopted to extend existing support schemes until August or end-2020, provide additional support to hard-hit sectors and vulnerable groups, and extend and modify the bank guarantee scheme to improve access, in particular for SMEs.

Monetary and macro-financial

For monetary policy at the currency union level, please see Euro Area section. 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) and signaling that it will remain unchanged until at least mid-2021 as part of forward guidance; (ii) a ban on short-selling stocks between March 18 and May 18; and (iii) postponement of debt repayment due to banks and insurers by affected households and companies to September 30, 2020. In parallel with the modification to the bank loan guarantee scheme, the debt service moratorium on bank loans has been extended to end-December 2020.

Exchange rate and balance of payments

No measures.

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Belize

Background. The first case of COVID-19 was reported on March 23. In response, the authorities closed borders and the international airport, closed schools, and implemented mandatory quarantines. They also declared a national state of emergency and nighttime curfew during April, under which people were not allowed to leave their homes except for buying essential goods, attending medical appointments, or to work in essential services. The national state of emergency was later extended until end-June, although with less stringent regulations. These measures we effective to contain the pandemic until early June. However, there have been a second wave of infections since then, with the number of cases increasing to 818 and the number of deaths to 12 as of August 27.

The COVID-19 pandemic came when the economy was already in recession due to drought and a slowdown in tourism in the second half of 2019. The impact of the pandemic on the economy is projected to be severe due to the collapse in tourism activity and the indirect effects of the necessary containment and mitigation measures. As a result, Belize is projected to experience a deep recession in 2020 and only a gradual recovery as the pandemic wanes.

Reopening of the economy. The national state of emergency ended in June, with more businesses allowed to reopen. The country was planning to reopen to foreign tourists from mid-August, but these plans have been postponed due to the resurgence of Covid-19 cases.

Key Policy Responses as of August 27, 2020

Fiscal

Belize has announced fiscal stimulus amounting to BZ$25 million (about 1 percent of GDP) in 2020 to provide short term relief to employees affected by the crisis, especially those in the tourism sector. So far, more than 40,000 applications for unemployment relief have been approved. The government has also introduced a bill to parliament that seeks to increase the maturity of treasury notes by an additional ten years and freeze the annual salary increment of public sector employees in 2020.

Monetary and macro-financial

The Central Bank of Belize has adopted 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 of commercial 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

Background. Benin reported its first COVID-19 case on March 16, 2020. The authorities have implemented strong containment and social distancing measures since March 31, including the partial lockdown (cordon sanitaire) around ten cities most exposed to the pandemic to isolate the contaminated population and contain the spread of the virus. They have also (i) significantly limited the transit of people across land borders; (ii) restricted the issuance of entry visas to the country; (iii) introduced a systematic and compulsory quarantine of all people coming to Benin by air; (iv) suspended all public gatherings; (v) introduced a ban on the movement of public transportation; and (vi) made wearing face mask in public compulsory. The economic impact of the pandemic has already begun to materialize through higher Eurobond spreads and lower cotton prices, while a more widespread domestic outbreak could significantly impair exports, further reduce confidence and capital inflows, and cause a significant disruption to economic activity. In addition to Covid-19, Benin is also being impacted by the closure of border with Nigeria since end-August 2019. Government policy is responding to both developments.

Reopening of the economy. The authorities have announced measures to gradually start reopening the economy, Middle schools, high schools and universities resumed their activities on May 11, 2020, while the kindergartens and day-care centers will remain closed until the start of the forthcoming school year. Public transportation, places of worship and bars resumed their activities on June 2, 2020. Finally, the cordon sanitaire was lifted on May 6, 2020, once the government’s mass screening plans were put in place. For this purpose, the authorities installed laboratories in each of Benin’s 12 departments and started a nationwide screening program. Since the start of the program, the authorities have conducted over 67,000 coronavirus tests throughout the country.

Key Policy Responses as of September 10, 2020

Fiscal

The authorities have developed an ambitious response plan to covid-19 pandemic, which aims at raising healthcare spending, granting cash transfers to vulnerable households, and providing support to impacted businesses. More specifically, the response package consists of: (i) an increase in health spending by CFAF 60 billion to cover the cost of purchasing medical equipment, the construction of temporary centers to care for people who are sick, and quarantine arrangements for at-risk populations; (ii) a total of CFAF 50 billion to help the most vulnerable segments of the population through various forms of cash transfers; and (iii) a CFAF40 billion to support struggling businesses through targeted and temporary tax exemptions and a relaxation of certain payment rules. The cost of this plan for 2020 has been set at CFAF 150 billion (1.7 percent of GDP).

Monetary and macro-financial

The regional central bank (BCEAO) for the West-African Economic and Monetary Union (WAEMU) has taken steps to better satisfy banks’ demand for liquidity and mitigate the negative impact of the pandemic on economic activity. The BCEAO adopted a full allotment strategy at a fixed rate of 2.5 percent (the minimum monetary policy rate) thereby allowing banks to satisfy their liquidity needs fully at a rate about 25 basis points lower than before the crisis. On June 22, the Monetary Policy Committee cut by 50 basis points the ceiling and the floor of the monetary policy corridor, to 4 and 2 percent respectively. The BCEAO has also: (i) extended the collateral framework to access central bank refinancing to include bank loans to prequalified 1,700 private companies; (ii) set-up a framework inviting banks and microfinance institutions to accommodate demands from customers with Covid19-related repayment difficulties to postpone for a 3 month renewable period debt service falling due, without the need to classify such postponed claims as non-performing; and (iii) introduced measures to promote the use of electronic payments. In addition, the BCEAO launched in April 2020 a special 3-month refinancing window at a fixed rate of 2.5 percent for limited amounts of 3-month "Covid-19 T-Bills" to be issued by each WAEMU sovereign to help meet immediate funding needs related to the current pandemic. The amount of such special T-Bills issued by Benin amounted to 1.5 percent of GDP. Benin has been recently allowed to issue the equivalent of 1.5 percent of GDP of new 3-months Covid-19 T-Bills that banks may refinance with the BCEAO for their term to maturity at 2 percent. Finally, WAEMU authorities have extended by one year the five-year period initiated in 2018 for the transition to Basle II/III bank prudential requirements. In particular, the regulatory capital adequacy ratio will remain unchanged at end-2020 from its 2019 level of 9.5 percent, before gradually increasing to 11.5 percent by 2023 instead of 2022 initially planned.

Exchange rate and balance of payments

No measures.

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Bhutan

Background. Bhutan confirmed its first case of COVID-19 on March 6, 2020. Until July 30, active cases had flattened, with no evidence of community transmission and no deaths. However, on August 11th the government announced its first nationwide lockdown, following report of a COVID-19 positive case in a returning traveler who had been released from quarantine. A National Taskforce endorsed a guideline that ensures that every zone is a self-contained unit with access to essential shops and services. Under the lockdown, all schools, offices, and commercial establishments are to remain closed. Since the start of the pandemic, the economic impact of COVID-19 has been substantial, driven by the adverse impact on the tourism and related services sector.

Reopening of the economy. The PMO office announced a three phased unlocking starting August 31 and incrementally through September 7. On June 19, 2020, the Prime Minister announced a range of changes including easing of restrictions for some ‘lower risk’ businesses, and all government agencies to discontinue "work from home" from June 22. All agencies are encouraged to minimize face-to-face interactions and make use of technology for meetings and other official correspondences. 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. For non-Bhutanese, exits are allowed. Incoming non-Bhutanese are scrutinized and quarantined where applicable. On March 27, more containment measures were imposed on public gatherings, travel (within and outside Bhutan), business and entertainment, games and sports and civil service, corporate, private, and other agencies. With the resumption of domestic air travel in India from May 25th and train services from June 1st, the Bhutanese in India who wish to return to the country can now take Indian domestic airlines. Upon arrival in Bhutan, they will have to report to the relevant COVID-19 task force for the mandatory 21-day quarantine.

Key Policy Responses as of September 9, 2020

Fiscal

The government announced a National Resilience Fund for mitigating COVID-19 linked job losses and salary cuts. The support included grant for individuals directly affected by the pandemic and full interest waiver on loans contracted since April 10, 2020 until June 2020. These measures were extended until September 2020, and partial (50 percent) interest waiver will continue until March 2021. In addition, fiscal stimulus in the FY 2020-21 budget includes the implementation of an Economic Contingency Plan (ECP) aimed at helping different sectors, including tourism resilience, agriculture, Build Bhutan and improvement of farm roads over and above annual budget (Nu 4 billion) and allocating higher level of capital outlay to frontload and accelerate activities from the 12th Five Year Plan. Current expenditure has been rationalized in response to expected fall in revenues and to ensure that it is covered by the domestic revenue. A budget of Nu.1.3 billion has been re-appropriated for health, essential food and fuel, quarantine and related initiatives. Support will be provided to FCB to stock essential food and non-food items. It is deepening fiscal decentralization with upscaling of national grants. Other measures: an additional resource of Nu. 2 billion will be provided to the Ministry of Health to meet health-related spending; Business Income tax (BIT) and Corporate Income tax (CIT) filing for the income year 2019 was deferred until June 30, 2020 and tax payments, for tourism and related sectors (hotel, airlines and tour operators) are deferred until December 31, 2020, while for other sectors until September 30, 2020; deferred payment of sales tax and customs duty on essential items (March to June 2020); waiver of payment of rent and other charges (April-December 2020) by tourism-related business entities leasing government properties, deferral of electricity charges payment for industry (till December 2020), free electricity and wi-fi services to hotels serving as quarantine facility (July-September 2020). As of May 25, the government will be refunding the 5 percent sales tax collected on telecom services collected on or after January 16, 2020. The government is mobilizing additional resources such as grants and concessional borrowing as well as bilateral and in-kind financing to support capital spending. Investments in GovTech is allowing Bhutan to reap benefits during COVID-19 including fast disbursement of cash relief funds.

Monetary and macro-financial

Effective April 14, Phase I monetary relief measures were introduced by the RMA. Many of these measures were extended under Phase II (July 8), including the waiver of interest on loans (until September 2020) and partial waiver (until March 2021), extension of deferred monthly loan instalment repayment (until June 2021), granting financial institutions the provision of bridging loans as concessional term-based loan (5% interest rate for the tenure of the loan) for CIT and BIT filing business agencies, conversion of concessional working capital soft loans to tourism, manufacturing and wholesale business (April-June 2020) to term loans for 4 years at 5% rate, extension of soft loans to cottage and small industries through the CSI Development Bank (microloans at 2 percent interest for agriculture and rural activities and working capital loans at 4 percent interest rate) by 12 months to June 2021. The government and the RMA will conduct an in-depth assessment of NPLs from July 2020 to facilitate rehabilitation and/or foreclosures of NPLs. To facilitate the implementation of Phase I measures, RMA further reduced the Cash Reserve Ratio (CRR) by 200 basis point to 7 percent. RMA will open a liquidity window for FSPs (inter-bank borrowing system) and will release liquidity through reduction of CRR only if the liquidity crunch is of a systemic nature. The RMA is further promoting the use of digital banking platforms during the current lockdown situation.

Exchange rate and balance of payments

On March 24, ban on select food product (e.g., betel leaf, betel nut) import from India has been imposed to curb the spread of COVID-19. As of June 29, import of luxury motor vehicles and bikes have been suspended.

Links

COVID-19 in Bhutan

Press Release on Government Announcement of Nationwide Lockdown. August 11, Prime Minister’s Office

Standard Operating Procedures (Monetary measures phase II). July 13, Royal Monetary Authority

Press Release Comprehensive National Response to the Challenges of the COVID-19 Pandemic Phase II, June 26. ROYAL GOVERNMENT OF BHUTAN PRIME MINISTER’S OFFICE

Notification of Fiscal Measures, Phase II. Public Notification "Monetary Measures in response to COVID-19", April 14, 2020 Royal Monetary Authority

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Bolivia

Background. The first two cases of COVID-19 were confirmed in Bolivia on March 10, 2020. As of May 20, there are 4481 confirmed cases, and 189 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. On April 14th the national quarantine was extended to April 30th. On April 29, the national quarantine was extended until May 11. The state of national quarantine (with reopening modifications) remains in effect till August 31. National elections have been delayed for a second time owing to the pandemic. Cases continue to rise (over 90,000 to date).

Reopening of the economy. From May 11, Bolivia implemented a “dynamic quarantine”. Departments and cities will be classified in three categories: High, Medium, Low Risk, with evaluations every 7 days. Those at high risk will be kept to rigid rules, and the others will have more flexibility. The following restrictions remain until August 31 at all risk levels: border closure, suspension of national and international flights, suspension of school activities, suspension of public events, social distance of one and a half meters, use of masks in public places. For medium risk locations: 6 hours work per day, use of motorcycles and bikes for work purposes, business hours from 06:00 to 15:00, circulation until 17:00. For low risk: 8 hours work per day, business hours from 06:00 to 16:00, from 19:00 to 05:00 confinement for those under 18, those over 60 can leave home from 06:00 to 12:00. For the whole country food delivery service is allowed from 09:00 to 22:00. The bank system will work from Monday to Friday from 07:00 to 15:00.

On April 17, the IMF approved Bolivia’s request for emergency financial assistance of about US$327 million under the Rapid Financing Instrument. The loan has not been approved so far by the Legislative Assembly in Bolivia owing to stiff resistance from the majority party in Congress, Movement to Socialiam (MAS). As of August 12, the Central Bank eliminated the RFI financing from its statistical records.

Key Policy Responses as of August 27, 2020

Fiscal

The authorities have proposed direct relief payments of about $US 73 per child to be paid to households with children in public schools, a measure calculated to provide most of its benefits to poorer households. This payment will be extended to students in private schools from May 18. In addition, the government plans to deliver food to 1.5 million of families ($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 and gas for all households. From April 30th, the government will also provide $US 73 to citizens who do not receive any other benefits or draw a salary from the public or the private sector. The authorities also postponed the payment of some taxes (corporate income tax, VAT and transaction tax) with the possibility to pay them in tranches. Payment of corporate income tax is deferred till May and independent workers will be allowed to claim tax deductions against their expenses on health, schooling, food and related expenditures. The government is creating a fund of approx. $US 219 million to support the operations of micro, small and medium businesses. This fund will provide soft loans to companies so that they may pay wage bills without layoffs for two months (companies can withdraw $US 1230 per employee, repayable in 18 months). Imports of respiratory equipment in the amount of $200 million is planned, while ICU capacity is being doubled. Two new transfers to households were announced (pending in Congress): Bono Salud for all individuals who previously received the universal transfer. And Bono Contra el Hambre, for all individuals eligible for the universal transfer as well mothers who are already recipients of targeted cash transfer and peopke with disabilities. The following 5 financial tools are implemented to inject resources into the economy and preserve 4 million jobs (announced): a) Fondo de reactivación (FORE): The objective of this fund is to partially fi