Spending Measures in Response to COVID-19

updated:2021-01-27    

Introduction

This paper focuses on spending measures adopted by BRITACOM jurisdictions that consist of 36 Council Member Tax Administrations and 30 Observers, with a view to providing suggestions on shielding households and businesses from the economic shock of the COVID-19 pandemic and buffering the human and economic impact of the pandemic. The material in this paper is mainly selected from websites of BRITACOM, IMF, OECD, official websites of BRITACOM jurisdictions, etc.
 
The COVID-19 pandemic has been sweeping the world over the past year, resulting in countless confirmed cases and deaths. To fight the pandemic, governments around the world have taken containment measures, confining people to their homes and shutting down social activities. All facets of the global economy were hard hit, notably travel and tourism. The BRITACOM jurisdictions have announced or adopted fiscal measures including spending measures to mitigate the health and economic impacts of the COVID-19 crisis.
 
1. Spending measures
 
1.1 Afghanistan, Islamic Republic of
 
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. 
 
The authorities are preparing a mid-year budget revision to be submitted to parliament in September, which will include the following COVID-19 related spending, including those approved in the July budget amendment: (i) Health package amounting to 6.2 billion Af, including for building hospitals; (ii) Social package, including the now concluded bread distribution program of 2.8 billion Af and the World Bank-supported social distribution program in the amount of 20.8 billion Af; (iii) Wheat purchase program 1.7 billion Af; (iv) Transfers to provinces to finance COVID-19 response (2.3 billion Af); (v) Package to support agriculture (5.9 billion Af) and short-term jobs (1 billion Af).
 
1.2 Angola
 
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.
The National Assembly approved revenue and expenditure measures to fight the COVID-19 outbreak and minimize its negative economic impact. About 40 million $ on additional health care spending was announced and about 80 million $ are being spent on 250 Cuban doctors who arrived in Angola to help.
 
1.3 Armenia
 
The government has implemented several measures to combat COVID-19: (i) direct subsidies to SMEs and businesses to help maintain their employees; (ii) grants to entrepreneurs and firms; (iii) 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. So far, the authorities have adopted 22 support packages and allocated over 73 billion AMD (137.9 million $) to those.
 
1.4 Bangladesh
 
March. The Ministry of Finance issued a revised budget for FY 2020 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. The Ministry of Disaster Management and Relief is distributing food supplies at the district level.
 
June 11. The FY 2021 Budget presented on June 11  includes higher allocations for health, agriculture, and social safety net programs. 
 
1.5 Cambodia
 
August. The government extended for two more months allowance subsidy for garment and tourism sectors and cash relief program for poor and vulnerable families.
 
1.6 Congo, Democratic Republic of
 
A preparedness and response national plan to deal with the pandemic has been designed with support from development partners. The plan mainly focuses on actions to (i) strengthen early detection and surveillance and foster technical and operational coordination within the government; (ii) improve the quality of medical care to infected patients; and (iii) develop effective preventive communication strategies and enhance medical logistic platforms. The plan’s budget is estimated at 135 million $ (0.3 percent of GDP).
 
1.7 Côte d’Ivoire
 
March 31. The government announced a package of economic measures to prop the income of the most vulnerable segments of the population through agricultural input support and expanded cash transfers, and support public entities in the transport and port sectors to ensure continuity in supply chains. In this regard, the authorities created 4 special Funds to be spent over 2 years.
 
1.8 Cyprus
 
Cyprus has implemented an economic support package that is estimated to amount to 899 million € (4.5 percent of GDP) in 2020 for the health sector, households and businesses. The package includes: (i) a 100 million € support for the health sector to combat the pandemic; (ii) income support for households including leave allowance for parents and those with health issues; (iii) wage subsidy for affected businesses to maintain jobs, grants to small businesses and self-employed, and support for the tourism sector, and (iv) interest subsidy for new business and housing loans for four years, which benefit both businesses and households.
 
1.9 Djibouti
 
The government announced a package of measures to respond to the shock amounting to 2.4 percent of GDP. It includes increases in health and emergency spending in support of households and firms affected by the pandemic. Additional support to vulnerable households so far has been provided in the form of food vouchers.
 
1.10 Ethiopia
 
April 3. The Prime Minister’s office announced a COVID-19 Multi-Sectoral Preparedness and Response Plan, with prospective costing of interventions of 1.64 billion $ (about 1.6 percent of GDP). The funds were expected to be allocated as follows: (i) 430 million $ (0.4 percent of GDP) for health sector response under a worst-case scenario of community spread with over 100,000 COVID-19 cases of infection in the country, primarily in urban areas; (ii) 282 million $ (0.3 percent of GDP) for provision of emergency shelter and non-food items; (iii) The remainder (293 million $, 0.3 percent of GDP) would be allocated to agricultural sector support, nutrition, the protection of vulnerable groups, additional education outlays, logistics, refugees support and site management support. 
 
1.11 The Gambia
 
March. The authorities prepared a 9 million $ (0.5 percent of GDP) COVID-19 action plan. The government reallocated 500 million GMD (0.6 percent of GDP) from the current budget to the Ministry of Health and other relevant public entities for containment measures to prevent and control the spread of the COVID-19 outbreak. The government also launched a student relief fund to support Gambian students abroad and a 800 million GMD (15.8 million $) nation-wide food distribution program to benefit 84 percent of the households. In addition, 2000 tons of fertilizer were distributed to support the needs of farmers.
 
July. The supplementary appropriation approved by the National Assembly in July includes a 546 million GMD relief package to various sectors, including the municipal councils, public entities, the tourism sector and the media.
 
1.12 Georgia
 
August 6. The Prime Minister unveiled the list of new/modified measures to support the citizens of Georgia to cope with the pandemic: (i) The government will provide 200 GEL one-time assistance to all children below 18. There are 800 thousand citizens of Georgia of this age. The total cost will be about 160 million GEL. (ii) The government will help the students from vulnerable families (with the social score below 150 thousand) to cover one semester of their university tuition. About 33 thousand students are expected to benefit from this initiative. Total cost 35 million GEL. (iii) 300 GEL per person benefit will be provided to the self-employed, who lost their job during the pandemic and applied for government assistance, but were refused, as they failed to provide required documents. 
 
1.13 Germany
 
To combat the COVID-19 crisis and subsequently support the recovery, the federal government adopted two supplementary budgets: 156 billion € (4.9 percent of GDP) in March and 130 billion € (4 percent of GDP) in June. 
 
1.14 Greece
 
The government has announced a fiscal package of measures totaling about 14 percent of GDP (24 billion €), including loan guarantees, financed from national and EU resources (some of the latter involves reprogrammed funds). Key measures include: (i) health spending for hiring of 3,300 doctors and nurses, procurement of medical supplies, and cash bonuses to health sector workers; (ii) temporary transfers to vulnerable individuals, including cash stipends and full coverage of pension and health benefit payments for employees working in hard hit firms and for self-employed professionals, extension of unemployment benefits, support for short-term employment, subsidies to households with delinquent loans tied to their primary residency and paid leave for parents who have children not going to school.
 
1.15 Hungary
 
May 20. The government announced a new wage subsidy program for new hires, with the condition for a company of keeping a worker for at least nine months.
 
A first wave of fiscal measures were introduced earlier in the epidemic, including, on the spending side, about 245 billion HUF (0.6 percent of GDP) was reallocated to the healthcare sector.
 
1.16 Italy
 
May 15. The government adopted a further 55 billion € (3.5 percent of GDP) “Relaunch” package of fiscal measures. It provides, among other things, further income support for families (14.5 billion €), funds for the healthcare system (3.3 billion €), and other measures to support businesses, including grants for SMEs and tax deferrals (16 billion €). 
 
August 8. The government adopted a new third support package. Labor and social measures (12 billion €) include, among other things, additional income support for families and some workers.
 
1.17 Kazakhstan
 
The anti-crisis package includes cash payments to the unemployed and self-employed, an increase in pension and social benefits, additional health spending, and support for employment and business. Following the reintroduction of the quarantine in early July, the authorities are developing new measures to support the economy and vulnerable population, including cash transfers to individuals who have lost jobs due to the quarantine.
 
1.18 Kuwait
 
The government allocated 500 million KD (1.6 billion $ or 1.5 percent of GDP) additional funds to support efforts in fighting the spread of COVID-19.
 
1.19 Mongolia
 
March 27. A comprehensive set of fiscal measures for consideration was proposed by the cabinet to protect vulnerable household and businesses and to support the economy. These include increase of child allowance and unemployment benefits. 
 
May 6. A second package of fiscal measures (amounting to roughly 2 percent of GDP) was announced to protect the vulnerable groups. These include: (i) a further increase in child money allowance; (ii) a scale-up of food stamp allowance; and (iii) an increase in social welfare pensions for the elderly, disabled, dwarfs, orphans, and single parents with more than 4 children. 
 
August 5. The government announced the extension or modification of COVID-19 fiscal measures. Extending measures through the end of the year include child money allowance. Modification of measures include: (i) increased food stamp allowance; (ii) increased social welfare pensions; and (iii) reduced social security contribution. A supplementary budget which contains these measures will be submitted to Parliament in mid-August for approval.
 
1.20 Morocco
 
The authorities have created a special fund dedicated to the management of the pandemic, of about 2.7 percent of GDP financed by the government and by voluntary contributions from public and private entities which will be tax deductible. This fund will cover the costs of upgrading medical facilities and support businesses and households impacted by the pandemic. Their employees who become temporarily unemployed and are registered with the pension fund will receive 2,000 DH a month.
 
1.21 Myanmar
 
Measures include the allotment of 300 million MMK (0.2 million $) to the Ministry of Health and Sports for additional health related expenditures. Households without a regular income are being provided with food during the long holidays. The National Food Reserve has been allocated 38 billion MMK. Government expenditure is being reprioritized to provide space for potential COVID-19 related spending.
 
1.22 Nepal
 
April 26. Informal sector workers who have lost their jobs due to the ongoing crisis will be given the opportunity to participate in public-works projects for a subsistence wage or receive 25 percent of local daily wage should they choose not to participate.
 
1.23 New Zealand
 
Announced fiscal measures include: (i) healthcare-related spending to reinforce capacity (0.3 percent of GDP); (ii) a permanent increase in social spending to protect vulnerable people (0.8 percent of GDP); (iii) a lump sum 12-week wage subsidy to support employers severely affected by the impact of COVID-19 (5.1 percent of GDP); (iv) infrastructure investment (1 percent of GDP) ;(v) support for the aviation sector (0.2 percent of GDP); (vi) tourism recovery package (0.1 percent of GDP); (vii) government housing program (0.2 percent of GDP); and (viii) school infrastructure upgrade (0.1 percent of GDP).
 
1.24 Nigeria
 
Contingency funds of 984 million N (2.7 million $) have been released to Nigeria’s Center for Disease Control, and an additional 6.5 billion N (18 million $) was distributed for purchasing more testing kits, opening isolation centers and training medical personnel. Grant of 10 billion N (28 million $) was released to the Lagos State to increase its capacity to contain the outbreak. The Federal Government adopted a revised budget for 2020 in response to the COVID-19 shock. A 500 billion N (0.3 percent of GDP) COVID-19 intervention fund is included in the revised budget to channel resources to additional health-related current and capital spending (tests, supplies and facilities) and public works programs to support the incomes of the vulnerable. The coverage of the conditional cash transfer program has been broadened and an allocation of 150 billion N to support state and local governments’ spending needs has been made available through the budget. 
 
1.25 Pakistan
 
A relief package worth 1.2 trillion PKR was announced by the federal government on March 24, which has been almost fully implemented. FY 2021 budget also includes further actions. 
 
1.26 Papua New Guinea
 
April 2. The PNG government announced a 5.6 billion K economic stimulus package in the parliament. The government has announced 500 million K support from superannuation savings to employees affected by the economic slowdown. Moreover, the government has allocated 645 million K more to support health, security and economic sector.
 
1.27 Peru
 
July. The government has announced a subsidy for electricity payments of 800 million PEN (0.1 percent of GDP). The government’s approved fiscal support package is of over 7 percent of GDP.
 
1.28 Qatar
 
Migrant workers who are in quarantine or undergoing treatment will receive full salaries.
 
1.29 Rwanda
 
The government’s Economic Recovery Plan in response to the pandemic is estimated at about 3.3 percent of GDP. Support to vulnerable households takes the form of a food distribution program (door-to-door provision of basic food stuffs every three days), cash transfers to casual workers, subsidized access to agricultural inputs, and measures to ensure poor households’ access to basic health and education. The salaries of top civil servants for the month of April were redirected to welfare programs.
 
1.30 Samoa
 
April 7. The government has put together the first phase of the fiscal and economic response package, amounting to 66.3 million WST (about 3 percent of GDP). The package, approved by parliament on April 7, 2020, is centered around the mission of “Support the private sector so they can feed the nation”.
 
June 30. Parliament approved the FY 2021 budget, including the second phase of the fiscal and economic response package that amounts to 83.1 million WST (about 3.8 percent of GDP). The budget is centered around the mission of “Weaving a prosperous and secure future for Samoa together” and includes a similar set of measures as in the first stimulus package. 
 
1.31 Saudi Arabia
 
March 20. A 70 billion SAR (18.7 billion $ or 2.8 percent of GDP) private sector support package was announced on March 20. The government has made budgetary reallocations (47 billion SAR) to increase the resources available to the Ministry of Health to fight the virus.
 
April 3. The government authorized the use of the unemployment insurance fund to provide support for wage benefits, within certain limits, to private sector companies who retain their Saudi staff (9 billion SAR, 0.4 percent of GDP).
 
April 15. Additional measures to mitigate the impact on the private sector were announced, including temporary electricity subsidies to commercial, industrial, and agricultural sectors (0.9 billion SAR). 
 
1.32 Senegal
 
The government implements a resilience package of up to 7 percent of GDP anchored in a revised budget. It consists of four main pillars: (i) improving the health system, (ii) strengthening social protection, (iii) stabilizing the economy and the financial system to support the private sector and employment, and (iv) securing supplies and distribution for key foodstuffs, medicine and energy products.
 
1.33 Sierra Leone
 
April 22. The government announced plans to introduce incentives for healthcare workers, including a risk allowance, as well as plans to recruit 4,000 additional health workers. The authorities’ Quick Action Economic Response Program seeks to mitigate the broader socio economic impact by: ensuring a stable supply of essential commodities and food; providing support to SMEs; and scaling up social protection and public works for the most vulnerable.
 
1.34 Singapore
 
The authorities have announced 5 packages of measures on February 18, March 26, April 6, April 21, and May 26 amounting to 92.9 billion $ (19.7 percent of GDP). Funds to contain the outbreak are about 800 million $ (mainly to the Ministry of Health). 
 
1.35 Slovak Republic
 
Measures introduced by the new coalition government include: (i) wage compensation for affected businesses and self-employed, and subsidies to individuals without income (the “First Aid” program); (ii) enhanced unemployment benefits, and sickness and nursing benefits; (iii) rental subsidies; and (iv) higher medical spending. These measures are estimated to amount to 2.0 billion EUR.
 
1.36 Somalia
 
June. Cabinet approved a revised 2020 supplemental budget that reflects substantial donor support and allows for additional transfers to federal member states and the Banadir region to help them respond to the impact of the pandemic.
 
1.37 South Korea
 
March 17. The supplementary budget includes additional 10.9 trillion KRW spending on disease prevention and treatment, loans and guarantees for business affected, support for households affected, and support for local economies affected.
 
April 30. The supplementary budget includes an increase in spending by 8 trillion KRW to fund an emergency relief payment program of 14.3 trillion KRW that provides transfers to households.
 
July 14. The government announced an overview of a new policy package. The package includes three main components: digital economy, green technology, and social safety net. A total of 67.7 trillion KRW accumulated will be invested by 2022, and by 2025 a total of 160 trillion KRW (114.1 trillion KRW from fiscal investment) will be invested. 
 
1.38 South Sudan, Republic of
 
The government has allocated a COVID-19 fund of 8 million USD. Of which, 5 million USD was allocated to the Ministry of Health to combat the pandemic.
 
1.39 Sudan
 
August 10. The revised 2020 budget was approved by the Sovereign council on August 10, 2020. The approved budget includes new policy measures to address the current dire economic situation and reduce the impact of COVID-19.
 
1.40 Suriname
 
April 8. Provides 400 million SRD for health-related spending, and allows the government to exceed the budget without having to inform the parliament.
 
May 11. The Minister of Finance announced two funds: one of 400 million SRD to support unemployment, pensions, and assistance for children and one of 300 million SRD to support local production.
 
1.41 Tajikistan
 
The Government is providing lump-sum assistance equivalent to minimum wage to vulnerable households and other socially disadvantaged groups. Health workers are to receive supplemental pay. Government is providing free medical care to citizens placed under medical care and COVID-19 patients, as well as sick leave and compensation benefits. Government is providing grain, seed and fuel to farms to boost food security.
 
1.42 Timor-Leste
 
April 20. The government approved a stimulus package (150 million $, about 10.5 percent of GDP) to manage economic and financial risks from the COVID-19 including: (i) cash transfers with a monthly basic income to over 214,000 households, worth 100 $ per month per household, lasting for 3 months; wage subsidies (60 percent of the wage cost) for formal sector employees (for 30,000 workers); (ii) the purchase of three months emergency supply of rice; and (iii) provide stipends to over 4,200 Timorese students studying overseas.
 
1.43 United Arab Emirates
 
July 11. Dubai has announced a new package worth 1.5 billion AED (0.4 billion $) to help the economy cope with the effects of the coronavirus pandemic.
 
The authorities have so far announced about 26.5 billion AED (7.2 billion $ or 2 percent of GDP) in various fiscal measures. 
 
1.44 Uruguay
 
June. Starting in June, the government subsidized employment by paying companies 5,000 MXN per month (about 1/3 of the current minimum wage) for three months for each new hire. The cost of expanding the unemployment insurance, of assisting older workers, and of cash transfers is estimated at 400 million $ (0.7 percent of GDP). As a solidarity measure, the salaries of better-paid public officials are being reduced by up to 20 percent, with the savings directed to the newly-established Coronavirus Fund. Currently, this fund finances the cash subsidies and food assistance for the most vulnerable, together with the cash subsidies for the employees in the construction industry affected by the pandemic-related work stoppages.
 
Older workers will be subsidized so they do not have to leave home, and assistance to the most vulnerable groups (cash and direct provision of food) will be expanded. 
 
1.45 Ukraine
 
The floor for unemployment benefit has been increased from 650 UAH to 1,000 UAH for applicants whose employment history does not qualify them for a full benefit. For those with sufficient records of participation in labor market and contributions to pension system, this minimum amount is increased from 1,630 UAH to 1,800 UAH. The law governing unemployment benefits has been amended to introduce a new type of entitlement, so called furlough benefit related to a quarantine. The Cabinet of Ministers has been granted the right to determine its amount and set it at 2/3 of the basic wage, but not exceeding the minimum wage which is 4,723 UAH. Employers are compensated for wages paid to partially furloughed employees, under the provision that pension contributions were paid in the six months prior to the quarantine. The first disbursement of 2.3 billion UAH for this purpose from the COVID-19 fund in the budget has been executed, in parallel with 4.25 billion UAH for other unemployment benefits.
 
2. Main features
 
2.1 All jurisdictions have announced and/or implemented spending measures such as additional spending, cash payments, cash transfers, social benefits and so on to combat the COVID-19 pandemic.
 
2.2 Most jurisdictions have adopted spending measures in the health sector including increased health spending on testing, treatment, prevention, medical equipment acquisition, hospital building, staff overtime salaries, and research and development of vaccine.
 
2.3 Many jurisdictions have provided support for hard-hit sectors such as tourism and transport.
 
2.4 Many jurisdictions have offered support to the severely affected SMEs and self-employed like wage subsidies to maintain jobs. 
 
2.5 Some jurisdictions have given additional support to vulnerable and poor families such as cash transfers, electricity and water subsidies, food aid, child allowance, and unemployment benefits.
 
 
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