Global economies have so far announced close to $9 trillion in fiscal support to fight the economic fallout of the coronavirus pandemic, with G20 nations contributing the most.
Global economies have so far announced close to $9 trillion in fiscal support to fight the economic fallout of the coronavirus pandemic, with G20 nations contributing the most. The majority of the fiscal measures announced have been in terms of equity injections, guarantees, and other quasi-fiscal measures, amounting to $4.6 trillion, said the International Monetary Fund (IMF). The G20 nations have announced $4.4 trillion in direct budget support. The IMF estimates are as on May 13 and presumably do not include Prime Minister Narendra Modi’s announcement of a Rs 21 trillion package to help the most troubled industries and migrants.
“The estimates focus on discretionary revenue and spending measures but exclude deferral of taxes and social security contributions to the extent possible. We exclude them because they involve a temporary delay of revenue, which would be collected in the future (sometimes within the same fiscal year),” the IMF said. As in April the G20 advanced and emerging market economies account for the bulk of the global fiscal support of $8 trillion. The revenue and spending measures for G20 nations account for 4.5% of the GDP on average while loans, equity, and guarantees stood at over 5%. The fiscal measures take various forms and have different budgetary and debt-related implications, the IMF said.
Apart from Canada, South Africa, Australia, and the United States all other G20 economies have stressed on loans, equity injects and other fiscal measures, while these four have announced more spending and revenue measures. Fiscal measures in terms of loans, equity injections and guarantees stood at around 6.5% of the GDP for Italy, which is one of the worst affected nations, while its spending measures stood at less than 1% of the GDP. Interestingly China’s budgetary support and other fiscal measures stand below 1% of its GDP while India’s spending and revenue measures were way less than 1%, other measures were close to 1%, as on May 13.
Prime Minister Narendra Modi had announced a Rs 21 trillion economic package for the economy on May 12. The package was further broken down into five tranches by the Finance Minister Nirmala Sitharaman, announcing loan guarantees, farm sector reforms and making India more lucrative for foreign companies. The package announced by the government is 10% of India’s GDP.