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Coronavirus

Fiscal actions of $11.7 trillion expended for COVID-19 pandemic and associated lockdowns – IMF

The IMF report shows that the sum of $11.7 trillion was expended in different fiscal interventions for the COVID 19 pandemic and the associated lockdowns.

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Fiscal actions of $11.7 trillion expended for COVID-19 pandemic and associated lockdowns – IMF, WHO records highest daily increase in COVID-19 cases, Apple, Google launch COVID-19 exposure notifications in phones for contact tracing, Hydroxychloroquine, Oil and Gas companies revenues plummet by over N84 billion in 3 months, COVID-19, Coronavirus, access bank mourns staff

The Fiscal Monitor 2020 report released by the International Monetary Fund (IMF) shows that the sum of $11.7 trillion, or close to 12 percent of global GDP, was expended in fiscal actions and interventions relating to the COVID-19 pandemic and associated lockdowns.

According to the report, half of the fiscal actions consisted of additional spending or forgone revenue, including temporary tax cuts, while the other half is in form of liquidity support, including loans, guarantees, and capital injections by the public sector.

READ: IMF list unpopular policies CBN must reverse

According to the report…

  • This forceful response by governments has saved lives, supported vulnerable people and firms, and mitigated the fallout on economic activity. However, the consequences of the crisis for public finances, combined with the revenue loss from the output contraction, have been massive.
  • In 2020, government deficits are set to surge by an average of 9 percent of GDP and global public debt is projected to approach 100 percent of GDP, a record high.
  • The COVID-19 pandemic has prompted an unprecedented fiscal response worldwide to support health systems and provide lifelines to vulnerable households and firms. Fiscal measures announced as of September 11, 2020, are estimated at $11.7 trillion globally, or close to 12 percent of global GDP.
  • The size and composition of fiscal support has varied vastly by country reflecting in part countries’ available fiscal space. Advanced economies and large emerging markets account for the bulk of the global fiscal response.

READ: Nigeria allocates N3.12 trillion to service debt in 2021, as fiscal quagmire undermines ambitious recovery

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What you should know

  • The advanced and large emerging markets had a large chunk of the global fiscal response, as they were the first to be hit by the health crisis.
  • Also their central banks had the capacities to provide the required massive monetary stimulus to avoid crisis and as well their treasuries were able to finance the deficits at lower interest rates.
  • The fiscal response in low-income developing countries, which were later hit by the pandemic, was largely based on the available budget which was smaller because of the subsisting tighter financing constraints.
  • The debt build-ups in several countries added to global debt vulnerabilities that existed before the pandemic.
  • According to the report, 54 percent of low-income countries were deemed to be in debt distress or at high risk of debt distress as of September 2020, up from 51 percent at the end of 2019.

READ: IMF Loan to Nigeria Explained

Why this matter

The massive fiscal support undertaken since the start of the COVID-19 crisis has saved lives, livelihoods and impacted positively on the economy.

READ: IMF urges Nigeria to increase monetary reforms to boost balance of payments

No amount is too huge to be expended to save lives and several economies from imminent collapse or crisis by way of fiscal interventions. Several central banks implemented palliative measures aimed at ensuring the financial stability of their economies in light of the ongoing Covid-19 pandemic and lockdown effects on businesses.

READ: Nigeria needs structural and monetary policy reforms to unlock potential – IMF

Johnson is a risk management professional and banker with unbridled passion for research and writing. He graduated top of the class with B.sc Statistics from the University of Nigeria and an MBA degree with specialization in Finance from Ambrose Alli University Ekpoma, with fellowships from the Association of Enterprise Risk management Professionals(FERP) and Institute of Credit and Collections management of Nigeria (FICCM). He is currently pursuing his PhD in Risk management in one of the top-rated universities in the UK.

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Coronavirus

South African President appeals to wealthy countries not to hoard COVID-19 vaccines

South African President, Cyril Ramaphosa has called on the world’s wealthiest countries to stop “hoarding” vaccines.

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South Africa High commission in Nigeria shuts its offices, South Africa announces 21-day lockdown following spike in Coronavirus cases

The South African President, Cyril Ramaphosa has urged the world’s wealthiest countries to stop “hoarding” vaccines and called for an end to “vaccine nationalism.”

He made this call at the World Economic Forum’s virtual Davos Agenda event, where he clearly cautioned that some countries had ordered more supplies of vaccines than they needed, and that this was counterproductive to the global recovery effort.

According to him,

  • “Ending the pandemic worldwide will require greater collaboration on the rollout of vaccines, ensuring that no country is left behind in this effort”
  • “The rich countries of the world went out and acquired large doses of vaccines from the developers and manufacturers of these vaccines, and some countries have even gone beyond and acquired up to four times what their populations need”
  • “That was aimed at hoarding these vaccines and now this is being done to the exclusion of other countries in the world that most need this”

What they are saying

According to Africa CDC Director, John Nkengasong, the African continent is quite facing a “very aggressive second wave” of the pandemic, with mortality increasing on average 18% across the 55 African member states last week.

“We as a continent must recognize that vaccines will not be here when we want them, but as such we need to really focus on the public health measures that we know work”

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He however praised the progress of the African Vaccine Acquisition Task (AVAT) Team, which he said was created when AU nations realized “how the world’s richest countries are behaving.”

What you should know

  • South Africa is the country, worst hit by Covid-19 on the continent.
  • As at date, the country had recorded more than 1.4 million cases with 41,117 deaths.
  • The African Vaccine Acquisition Task (AVAT) Team has secured a provisional 270 million doses for AU member states directly, in addition to the 600 million expected from the World Health Organization’s COVAX initiative.

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Coronavirus

IMF optimistic about global economy but warns new Covid variants could affect recovery

IMF is quite optimistic about the fortune of the global economy but expressed fear that the new Covid variant could derail economic recovery.

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IMF

The International Monetary Fund (IMF) has expressed optimism about the global economy but warns that the new COVID 19 variant could affect the global economic growth, according to its latest World Economic Outlook.

According to the report, “the institution now expects the global economy to grow 5.5% this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022”.

According to its Chief Economist, Gita Gopinath:

  • “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens.
  • “There remains tremendous uncertainty and prospects vary greatly across countries.
  • China returned to its pre-pandemic projected level in the fourth quarter of 2020, ahead of all large economies. The United States is projected to surpass its pre-Covid levels this year, well ahead of the euro area.
  • “Policy actions should ensure effective support until the recovery is firmly underway, with an emphasis on advancing key imperatives of raising potential output, ensuring participatory growth that benefits all, and accelerating the transition to lower carbon dependence.”

What you should know

  • There has been a surge in the number of reported cases of the new variant Covid-19 infections and deaths over the past few months.
  • The new variant has been described as being more infectious and potentially deadlier than the original strain.
  • The IMF had cut its GDP forecasts for the euro zone this year by 1%.
  • It is being projected that the 19-member region, which has been severely hit by the pandemic, would grow by 4.2% this year.
  • Germany, France, Italy and Spain — the four largest economies in the euro zone — also saw their growth expectations cut for 2021.
  • Economic activity in the region slowed in the final quarter of 2020 and this is expected to continue into the first part of 2021. The IMF does not expect the euro area economy to return to end-of-2019 levels before the end of 2022.
  • IMF revised its GDP forecast upward by 2% points on the back of a strong momentum in the second part of 2020 and additional fiscal support, with GDP expected to grow to 5.1% this year.

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Coronavirus

FG says N10 billion disbursed funds not only for Covid-19 vaccines

FG has clarified that the N10 billion it earlier disbursed was not only for the development of Covid-19 vaccines.

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Nigeria might fall into recession - Budget Office, FG not enjoying dividend of trillions spent on CBN, NPA, other MDAs - Akabueze

The Ministry of Finance, Budget and National Planning has said that the N10 billion it released for vaccine development is not only for the production of Covid-19 vaccines.

This was disclosed by the Director-General of the Budget Office, Mr. Ben Akabueze, representing the Finance Minister during a meeting with the National Assembly Joint Committee on Health on Monday, reported by NTA.

Following the announcement of the disbursement of the sum of N10 billion to the Ministry of Health for the development of Covid-19 vaccine, the Joint Committee scheduled a meeting with the Ministers of Finance and Health for clarifications on the funds.

READ: Covid-19: EU says it will force vaccine companies to respect supply contract

“The joint committee is invited to note that N10 billion has been released, to the Federal Ministry of Health under the budgetary vote referenced in above,” Akabueze said.

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Ibrahim Oloriegbe,  Chairman, Senate Committee on health, said the Committee wanted to know what the use of the funds was for and urged against the implementation of a lockdown.

“We got to see that what was released was in line with what was already there, for preparing the country for all other vaccines arrangements

“So our economy, we only need to live with covid, we cannot with due respect, contaminate Nigeria with a lockdown, it will badly affect our economy,” Oloriegbe said.

READ: Covid-19: U.S. donates field hospital worth $1.3m to Nigeria

The committee also said the total aim is to see how Nigeria can develop its capacity towards the development of vaccines,

The Joint Committee, therefore, resolved that the Minister of Health who was absent at the meeting should appear before it on Tuesday for a breakdown on the proposed use of the funds.

What you should know: Nairametrics reported last week that the Federal Government, through the Ministry of Finance, announced the sum of N10billion for the production of vaccines in Nigeria, to fight the coronavirus.

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