How Different Countries are Responding to the Coronavirus Economy
Around the world, central banks as well as governments are doing what they can as well to stimulate and protect their economies. The European Central Bank (ECB) announced an $820 billion stimulus plan which include buying government and corporate bonds and other assets, as well as pumping cash into financial markets deeply rattled by the pandemic. . And the Reserve Bank of Australia (RBA) just cut their interest rates to 0.25% while a total amount of $11 billion have been committed to stimulate the economy.
For the United States, the Senate on Wednesday March 18 passed the House’s $8.3 billion relief bill meant to fortify the healthcare system in preparation for the increased number of patients that are expected. The Federal Reserve also cut the benchmark interest rate to the target range of 0-0.25% while there is a work on a bill that could exceed $1 trillion, which includes low interest loans, unemployment insurance and cash payments to individuals who are temporarily out of work due to their place of employment having closed down as a result of the pandemic. Apart from that, the United States have also banned flights coming from Europe including United Kingdom and Ireland. This is to ensure that the spread of the virus is tamed from those importing it into the country.
In the United Kingdom, the Bank of England reduced benchmark rates to 0.1% in order to keep borrowing costs low and be in line with how countries are preparing to increase spending in order to mitigate the impact of COVID-19. Also, it will increase its holdings of the Kingdom’s government bonds by 200 billion pounds.
On March 19, the Canadian government announced new rules on employment insurance as well as $27 billion plan to help Canadians out of the situation. Combined with other measures, the government announced the roll out of $82 billion to support its citizens and the economy and that is more than 3% of the economy, according to the Prime Minister. This money will be put in the pocket of vulnerable Canadians every two weeks, support small business owners struggling to pay salaries of workers as well as the nurses and doctors working round the clock to save the lives of the citizens.
In Nigeria, apart from the government closing and limiting the air transportation to only two airports and also reducing the price of PMS, the apex monetary authority (Central Bank of Nigeria) has rolled out three different measures in less than two weeks in order to reduce the impact on the Nigerian economy. The CBN has reduced interest rate on all CBN intervention funds from 9% to 5%, encouraged banks to restructure their loan terms with customers, provided N50 billion in loan for sectors critically affected by the pandemic, announce $1 trillion intervention fund as well as technically devalued the naira to somewhat reflect market fundamentals.
Related: Why the CBN will devalue the currency in 2020
In Italy, all the citizens are in a lock down. It first started with the government locking down the country’s capital- Milan, before going ahead to impose ban on all non-essential travelling and gatherings. The entire Italy is currently on a lock down as the government has enforced the military to be all out in ensuring the citizens comply with the directives. The government is also trying to increase its 2020 budget deficit by 20 billion euros, as well as ready to spend about $28 billion on stimulus measures to defend the country from the pandemic. According to Bloomberg which quoted two officials who preferred not to be identified, the stimulus package include help for workers facing temporary layoffs, boosting a guarantee fund for loans to small- and medium-sized companies, compensation for firms whose turnover has plunged more than 25% and some form of moratorium for business and personal mortgage repayments.
For Spain, the Coronavirus battle is for both the government and the private sector to fight. A total amount of $220 billion dollars have been committed to stimulate the economy away from the pandemic. Of the $220 billion, about $121 billion will be provided by the Spanish government while the remaining $99 billion will be provided by the private sector. Small and Medium Enterprises affected by the pandemic will be given special consideration in order to bring back growth in economic activities.
The Egyptian Central Bank held an unscheduled meeting on Monday March 16th and it cut the overnight lending rate by 3% to 10.25% from 13.25% and the overnight deposit rate to 9.25% from 12.25%. Those are the lowest rates since early 2016, before Egypt embarked on a three-year IMF-backed economic reform programme. Further, the Central Bank is giving businesses and individuals a six-month moratorium for credit repayments as well as canceled ATM fees for the same period. The country is also closing schools and halted flights as part of its effort to contain the pandemic. According to Bloomberg, the government said it has allocated 100 billion Egyptian pounds ($6.4 billion) to combat the coronavirus, without specifying what the funding will go toward.