Coronavirus: What countries are doing to minimize economic damage

Coronavirus has wrecked global markets in a way comparable to the global financial crisis. Nations are unrolling emergency plans to save their economies.

Germany

The German government is providing €1 billion ($1.1 billion ) in credit for businesses and companies of all sizes. The credit will be delivered through the state-owned KfW business development bank.

The government also announced a number of tax measures to ensure liquidity for companies. Late payment fines for loans may be waved for companies hit hard by the slowdown caused by the outbreak. Financial support will also be given to the Robert Koch Institute, the country’s public health institute.

Germany’s Ministry for Education and Research is expected to receive €145 million for the development of a vaccine. The country has also set aside €50 million to repatriate German tourists stranded around the world.

The German government said last week the KfW has around €500 billion to help support its economy.

The southern state of Bavaria announced on Monday a fund worth up to €10 billion to help the region withstand the coronavirus. The fund allows the local government to buy stakes in faltering companies to prevent insolvencies.

Companies with up to 250 employees can apply for loans between €5,000 and €30,000. The fund will also be used to guarantee 80% of loans taken by companies threatened by default.

Bavaria is home to nine blue-chip DAX-30 companies including car manufacturer BMW, engineering giant Siemens and sports retailer Adidas.

German Finance Minister Olaf Scholz told the newspaper Die Zeit Wednesday that European countries must show “solidarity” with hard-hit countries like Italy.

“A country like Italy must now spend billions to support its economy. This must not be allowed t

Spain

Prime Minister Pedro Sanchez announced measures worth €200 billion to help companies and protect workers and other vulnerable groups affected by the escalating coronavirus.

The Spanish government plans to mobilize €117 billion ($129 billion) for the package, with private companies providing the rest.

Some €600 million ($660 million) will be pumped into basic social services.

Half of the assistance measures, which are worth 20% of Spain’s economic output, are state-backed credit guarantees for companies, and the rest includes loans and aid for vulnerable people.

France

France has pledged a €45 billion ($50 billion) aid package for small businesses in addition to tens of billions already promised for French workers forced to stop working because of shop and restaurant closures and strict new quarantine measures.

UK

Newly appointed Chancellor of Exchequer, Rishi Sunak, announced a $14.5 billion emergency fiscal stimulus on March 11 to tackle the coronavirus pandemic.

The stimulus will support the UK’s National Health Service (NHS) and refund the cost of businesses for 2 weeks. The UK is also offering state-backed loans worth $400 billion (15% of the UK’s GDP) for businesses in the retail and hospitality industries struggling in the sudden economic paralysis caused by mass self-quarantine.

United States

US President Donald Trump’s administration has proposed a stimulus package that could be worth as much as one trillion dollars (€900 billion).

The measure would include a tax cut for wage-earners, $50 billion for the airline industry and $250 billion for small businesses. Senator Mitt Romney also proposed $1,000 in payouts for ordinary US citizens. The enactment of the financial package must wait for Congress to agree on it.

The US Federal Reserve announced two new finance mechanisms on Tuesday to combat economic damage. The first is to help households and businesses stay afloat and the second funds major financial institutions for up to 90 days.

The new mechanism will allow companies including JP Morgan, Goldman Sachs, HSBC, Morgan Stanley, Deutsche Bank Securities, BNP Paribas Securities and Nomura Securities to use debt holdings as collateral for credit from the Federal Reserve. The program will be in place for at least six months.

On Tuesday, Trump said the White House was discussing a “substantial” spending bill with Congress that would include immediate cash payments to Americans.

Canada

Canada is expected to unveil a $21 billion stimulus package on March 18. The package includes economic support for Canadians and businesses in order to stave off a recession.

Australia

Australia has announced a fiscal stimulus package worth $11 billion to tackle the coronavirus pandemic. The package includes a one-off payment of AUD $750 ($451) for nearly 6.5 million lower-income Australians.In addition, the package will be used to save 120,000 apprentice jobs and support small and medium-sized firms. The fiscal stimulus package is nearly one % of Australia’s GDP.

Source: dw.com