WED, MAY 20 2020-theG&BJournal- Governments around the globe have put forward $9 trillion as fiscal support in response to the COVID-19 pandemic. The amount is $1 trillion more than the estimates just over a month ago, according the International Monetary Fund (IMF) latest update on global fiscal support to protect people against the coronavirus pandemic.
The breakdown provided by IMF economists, Bryn Battersby, W. Raphael Lam, and Elif Ture, shows that direct budget support is currently estimated at $4.4 trillion globally, and additional public sector loans and equity injections, guarantees, and other quasi-fiscal operations (such as non-commercial activity of public corporations) amount to another $4.6 trillion.
‘’The upward revision was largely because of a second wave of measures by governments as the economic fallout from the pandemic proves more severe.
For example, the United States approved an additional fiscal package of $483 billion on April 23. Japan revised its initially conditional cash transfers program into a universal one to provide an additional $83 billion in support to households on April 20, while France and Korea introduced additional measures such as transfers to support households.
As in April, the Group of Twenty (G20) advanced and emerging market economies account for the bulk of the global fiscal support—$8 trillion. The total revenue and spending measures for G20 countries account for 4.5 percent of GDP on average, larger than those during the global financial crisis.’’
The economists noted that the fiscal measures take various forms and have different budgetary and debt-related implications.
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 estimates also include separate classification for governments’ provision of loans and equity injection that have an immediate effect on the government balance sheet, as well as guarantees that expose the governments to risks if the guarantees were called in down the road.’’
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