• From the beginning of the year through March 18, 2020 16 central banks have cut rates. 24 more rate cuts by central banks by mid-year: JP Morgan • Fiscal policy is projected to add 1.3 percentage points to global GDP this year: JP Morgan 1. CHINA Number of Cases Share in Global GDP Share in World Exports Share in World Imports Exports by India Imports by India 81,008 17% 18% 16% 10% 19% Fiscal Policy • The central government issued a stimulus package for expansion of production capacity for virus-related goods and services. • Tax deduction and fee-waiving policies issued for enterprises and taxpayers in relevant industries, including medical services, public transportation and delivery of daily necessities. • Industries severely hit by epidemic, including transportation, catering, accommodation and tourism, as well as enterprises and individuals who donated critical medical products, also eligible for tax deductions. • Central government provided subsidies in the form of loan payments for producers of virus-related products and for start-ups that were severely affected. • Local governments required to guarantee and facilitate the delivery of critical medical products and daily necessities. • Municipal governments also issued their own measures, including offering funds and credits for antivirus- related industries and businesses, reducing rental payments, and deducting taxes and fees for severely affected industries and individuals. By March 4 2020, the Ministry of Finance arranged a total of 110.48 billion Yuan of special funds for epidemic prevention and control, 71.43 billion Yuan of which has been used. The fiscal authority also increased the 1.85 trillion Yuan of quota of newly issued local government bonds to mitigate the adverse impact of the epidemic. Between January and February, nearly 70% of the quota (approximately 1.2 trillion Yuan) of local government bonds had been issued. Monetary Policy • The People’s Bank of China eased market credit through conventional policy instruments, including open market operations, reserve requirement ratios, loan facilities, refinancing and rediscount policies. Lending rate cut by 10 bps on Feb 10, 2020. • Financial institutions have cut the loan rate and are providing additional credit to virus related manufacturers and the daily necessity retail and delivery sectors, as well as producers of critical medical products. • For SMEs, the commercial banks required to roll over debt contingencies. Reducing rent, waiving fees for SMEs. • The central bank also required commercial banks to improve the quality of services, including establishing a ‘green channel’ for COVID19-related businesses, and increasing e-payments and online services. • Financial institutions offering additional credit to the trading industry for the importation of medical products from abroad.
You've reached the end of your free preview.
Want to read all 54 pages?
- Winter '19
- Government, Economy of India, Government of India