April 14, 2020
The World was busy warming up for the 2020 Summer Olympics when the Coronavirus Disease 2019 (“the Virus” or “COVID-19”) hit the globe. On Wednesday, 11 March 2020, the World Health Organization (WHO) declared the Virus a global pandemic and since then, countries have been scrambling to protect their territories and citizens from the effect of the Virus. It is a global nightmare, which has led to unprecedented cancellation of several local and global events, sharp drop in crude oil prices, uncertainty in financial market, collapse in air travel requests and global manufacturing and supply chain disruptions.
As different countries around the world make socio-economic adjustments to mitigate the impact of the Virus, what the post-COVID-19 world will look like cannot be predicted with certainty. This article evaluates what some countries are doing to mitigate the economic impact of the Virus and Nigeria’s response to the pandemic.
Global steps to tackle the economic impact
Policy makers across the world are taking actions to boost their crippling economies and provide some relief to citizens and businesses who are most affected by the pandemic.
Italy put forward a €25 billion fiscal package last month to support businesses and the Economy Minister, Roberto Gualtieri, announced plans for “significantly larger” fiscal measures. The Italian government also extended the 2019 annual Value Added Tax (VAT) return deadline from 30th April to 30th June 2020.
The U.S. has recorded over 10 million unemployment claims and in response, it signed a $2 trillion stimulus package into law on 27 March 2020. This is the largest emergency aid in U.S. history. The law known as CARES Act will send money directly to tens of millions of Americans affected by the Virus, using information from 2018 and 2019 tax returns to determine the citizens that are entitled to an “economic income payment” and the amount of stimulus payment to be given. This is an indirect way of ensuring filing compliance from U.S. citizens. Non-filing citizens can only receive a stimulus cheque if they received social security retirement or disability benefits in 2019. The CARES Act also covers the refund for hospitals and health care providers treating any uninsured COVID-19 patients while small businesses will be issued two months grants to help them retain their staff members.
In China, the government has taken steps to curb the economic impact, for example, the Chinese Central Bank (CCB) cut the rate on reverse repurchase agreement (this is the purchase of securities with the agreement to sell them at a higher price at a specific future date) by 20 basis points. In addition, tax returns filing due dates for February and March 2020 have been extended, while, the scope of VAT exemption was expanded to include importation of goods, and the income derived from the transportation of the important goods and materials needed to overcome the COVID-19 crisis.