Coronavirus outbreak

$117b and counting: Govts loosen purse strings to ease virus pain

Cleaning staff changing air filters on board an Emirates aircraft in Dubai as part of sterilisation efforts against the coronavirus. The aviation industry is among sectors hard hit by the virus outbreak. PHOTO: AGENCE FRANCE-PRESSE
Cleaning staff changing air filters on board an Emirates aircraft in Dubai as part of sterilisation efforts against the coronavirus. The aviation industry is among sectors hard hit by the virus outbreak. PHOTO: AGENCE FRANCE-PRESSE

Nations planning aid such as cash handouts, tax breaks and loan support

Japan and Thailand added to a fast-rising global tally of government stimulus to counter the economic damage from the coronavirus outbreak, while Italy is considering doubling its aid as the nation went into lockdown.

Canada, Australia and the US are also drafting special economic plans around the virus.

More than US$84 billion (S$116.6 billion) in budget support has been pledged or is under consideration by governments around the world.

Some have allocated new money for cash handouts and hospitals, while several are planning targeted measures such as tax breaks and loan support.

The World Bank separately has allocated US$12 billion in virus aid for developing economies, while the International Monetary Fund said it is making available US$50 billion to help countries deal with the virus, including $10 billion at zero interest for the poorest nations.

Here is a look at what has been announced by governments so far.

CHINA

Top leaders signalled a "more proactive" fiscal policy, alongside steps already taken by the authorities to cushion the economy and support financial markets.

Among the upcoming measures: more targeted, phased tax cuts; increase in local government special bond quota; more fiscal transfers from central government to local virus-hit regions.

JAPAN

Prime Minister Shinzo Abe's administration rolled out a second package on Tuesday to tackle effects of the virus.

  • SINGAPORE

  • $6.4 billion has been allocated in the annual Budget towards the virus response and support for businesses and consumers.

    Of that, $800 million is dedicated to combating the virus, and the bulk will go to the Health Ministry.

    Deputy Prime Minister and Finance Minister Heng Swee Keat said yesterday that the Government is working on a second stimulus package.

It includes an additional 1.1 trillion yen (S$14.6 billion) in loan support and 430.8 billion yen in aid for medical professionals and those affected by school closures.

That package adds to 500 billion yen allocated last month in low-cost loans to companies affected by the virus, bringing total virus-related measures to 2.03 trillion yen.

SOUTH KOREA

Some 11.7 trillion won (S$13.6 billion) was allocated in a special budget to aid medical response, businesses and households; Yonhap News said officials are discussing expanding that amount. Tax breaks, rent subsidies were announced on Feb 28.

AUSTRALIA

Fiscal stimulus worth as much as A$20 billion (S$18.1 billion) will be announced today, said Sky News.

Treasurer Josh Frydenberg has said the government is preparing to spend billions of Australian dollars to help businesses cope with the virus fallout.

INDONESIA

A stimulus package worth 10.3 trillion rupiah (S$996.7 million) includes fiscal incentives, grants to local governments and a boost to social security funds. A second, bigger tranche is being planned to help middle-income earners.

THAILAND

The government approved a package of stimulus measures on Tuesday that it said will inject about 400 billion baht (S$17.7 billion) into the economy to counter effects of the virus. It includes 180 billion baht of concessionary loans as well as tax cuts. That would add to just-passed budget that is expected to spur 640 billion baht in investment.

HONG KONG

A HK$120 billion (S$21.4 billion) relief package was announced in the annual Budget. This includes HK$10,000 payment to each permanent resident 18 years or older.

MALAYSIA

RM20 billion (S$6.6 billion) has been allocated in a special stimulus package. It includes aid for businesses, especially tourism, lower minimum pension contributions, tax payment extensions and infrastructure upgrades.

The new government is reviewing the package to see whether it can add to the stimulus and give support to the poorest 40 per cent of the population.

ITALY

Prime Minister Giuseppe Conte said yesterday that the government will allocate an emergency sum of €25 billion (S$39.4 billion) to fight the novel coronavirus outbreak that has killed 631 people in Italy.

Italy will immediately use half of these resources and keep the other half in reserve. The government had previously earmarked €7.5 billion.

BRITAIN

A £30 billion (S$54 billion) economic stimulus plan was launched yesterday. Measures include a year-long suspension of a property tax paid by smaller firms.

The Bank of England also cut its key interest rate by half a percentage point to 0.25 per cent, introduced a new programme for cheap credit and reduced a special capital buffer to give banks more room to lend.

FRANCE

The government wants to lighten social and tax burdens for businesses such as restaurants, hotels and bus companies, as well as give loan guarantees to small and medium-sized enterprises.

GERMANY

German Chancellor Angela Merkel's government took steps to assist businesses affected by the virus fallout, including loosening rules for short-term work compensation and providing tax breaks to firms.

The government has refrained from major stimulus in response to the outbreak amid reluctance to boost debt, even as confirmed cases surpass 1,000.

UNITED STATES

President Donald Trump is calling for payroll tax relief while lawmakers draft a second stimulus package in response to the virus. A US$7.8 billion (S$10.8 billion) emergency spending Bill to fund response to the outbreak was signed last Friday.

CANADA

The government is set to announce measures soon to buffer the economy from virus and oil-price effects.

Finance Minister Bill Morneau has said the focus will be on targeted measures for the health system and businesses while downplaying the need for major spending or a tax package.

BLOOMBERG, AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on March 12, 2020, with the headline '$117b and counting: Govts loosen purse strings to ease virus pain'. Print Edition | Subscribe