April 15, 2020
Tax and fiscal policy responses are playing a critical role in limiting the hardship caused by containment measures, and should continue to do so as governments seek to support households and businesses, protect employment and pursue economic recovery from the global pandemic, according to new OECD analysis.
Tax and Fiscal Policy in Response to the Coronavirus Crisis, a report requested of the OECD by the Saudi G20 Presidency, was presented today during a virtual meeting of G20 Finance Ministers and Central Bank Governors. The report takes stock of the emergency tax and fiscal policy measures introduced by countries worldwide. It discusses how tax and fiscal policy can cushion the impact of continued containment and mitigation policies and subsequently support economic recovery. It also outlines the major policy reforms that will be needed to prepare for restoration of public finances.
The report shows that while many governments have taken rapid, extensive and often unprecedented action, getting the support to the most vulnerable households and firms still poses significant challenges. It underlines that developing countries will need specific support – notably significant financial support – for helping health and fiscal systems withstand the current shocks.
“Tax policy responses have been strong and rightly focused to date on providing liquidity,” said OECD Secretary-General Angel Gurría. “This has helped maintain confidence through an unprecedented shock. These efforts will need to continue as containment is relaxed gradually, to ensure a strong recovery. We should meanwhile map out the trajectory to a tax system that can help restore public finances while sharing the burden evenly.”
Maintaining business cash-flow has been a core goal of the fiscal policy measures. Measures include extending deadlines for tax filing, deferral of tax payments, faster tax refunds, more generous loss offset provisions, and some tax exemptions.
Governments have also helped businesses retain their workers through short-time work schemes or wage subsidies, and have extended income support to households, eased access to and expanded eligibility for sick-leave benefits, and sometimes broadened the coverage of unemployment benefits to self-employed workers.
The report points out that as containment is gradually relaxed, expansionary fiscal policy may be needed for a sustained period to stimulate broader household consumption and business investment where recovery is anaemic. Stimulus could foster resilience to health risks and encourage decarbonisation, while policy coordination will make stimulus more effective. 
Tax policy can contribute to covering the costs of the crisis, according to the report. The unprecedented nature of the crisis should prompt debate on how wide-ranging tax reforms, including solidarity levies, carbon taxes and supporting greater progressivity across the tax system, can help governments better restore public finances. Low-income countries could benefit from new international efforts to address the challenges they face in taxing cross-border activity and offshore assets.
Addressing the tax challenges posed by digitalisation of the economy, and ensuring that Multinational Enterprises pay a minimum level of tax, will become more prominent issues after the crisis. The increased use of digital services and the need to collect more revenues could provide new impetus to efforts to reach agreement internationally, the report said.
Compliments of the OECD.

April 16, 2020
The Federal Reserve on Thursday announced that its Paycheck Protection Program Liquidity Facility is fully operational and available to provide liquidity to eligible financial institutions, which will help support small businesses.
The Small Business Administration’s Paycheck Protection Program, or PPP, guarantees loans extended by qualified lenders to small businesses so that those businesses can keep workers employed. The Federal Reserve’s facility will support the effectiveness of the PPP by extending credit to financial institutions that make PPP loans, using such loans as collateral. Supplying financial institutions with additional liquidity will help increase their capacity to make PPP loans.
Additional information on the facility, which is managed by the Federal Reserve Bank of Minneapolis on behalf of the Federal Reserve System, can be found here.
Compliments of the Federal Reserve. 

April 15, 2020
Today, the Commission, in cooperation with the President of the European Council, has put forward a European roadmap to phase-out the containment measures due to the coronavirus outbreak.
While we are still in firefighting mode, the necessary extraordinary measures taken by Member States and the EU are working. They have slowed down the spread of the virus and saved thousands of lives. However, these measures and the corresponding uncertainty come at a dramatic cost to people, society and the economy, and cannot last indefinitely.
President of the European Commission Ursula von der Leyen said: “Saving lives and protecting Europeans from the coronavirus is our number one priority. At the same time, it is time to look ahead and to focus on protecting livelihoods. Even though conditions in the Member States still vary widely, all Europeans rightly ask themselves when and in what order the confinement measures can be lifted. Responsible planning on the ground, wisely balancing the interests of protection of public health with those of the functioning of our societies, needs a solid foundation. That’s why the Commission has drawn up a catalogue of guidelines, criteria and measures that provide a basis for thoughtful action. The strength of Europe lies in its social and economic balance. Together we learn from each other and help our European Union out of this crisis.”
Commissioner for Health and Food safety Stella Kyriakides said: “Returning to normality after the corona lockdowns will require a carefully coordinated and European approach between Member States, based on science and in the spirit of solidarity. It is crucial that our healthcare systems have the capacity to treat increases in new cases, that essential medicines and equipment are available and that we have large-scale testing and tracing capacity in place. We know that this road will be long and gradual and that the consequences of this unprecedented health crisis will be long lasting. Until effective treatments and a vaccine are found, we will have to learn to live with this virus. But Europe will be back on its feet, together and united. This is the only way.”
While recognising the specificities of each country, the European roadmap establishes the following key principles:
• Timing is essential. Deciding that the time has come to begin to relax confinement should be based on these criteria:
o Epidemiological criteria showing that the spread of the disease has significantly decreased and stabilised for a sustained period.
o Sufficient health system capacity, for example taking into account the occupation rate for intensive care units, the availability of health care workers and medical material.
o Appropriate monitoring capacity, including large-scale testing capacity to quickly detect and isolate infected individuals, as well as tracking and tracing capacity.
• We need a European approach. While timing and modalities for lifting containment measures differ between Member States, we need a common framework that is based on:
o Science with public health at its centre, while acknowledging that ending restrictive measures involves balancing public health benefits with social and economic impacts.
o Coordination between Member States, to avoid negative effects. This is a matter of common European interest.
o Respect and solidarity. This is essential for both health and socio-economic aspects. At a minimum, Member States should notify each other and the Commission in due time before they lift measures and take into account their views.
• Phasing-out confinement requires accompanying measures, including:o Gathering harmonised data and developing a robust system of reporting and contact tracing, including with digital tools that fully respect data privacy;
o Expanding testing capacity and harmonising testing methodologies. The Commission – in consultation with the European Centre for Disease Prevention and Control – has adopted Guidelines today on different coronavirus tests and their performance;
o Increasing the capacity and resilience of national health care systems, in particular to address the predicted rise in infections after lifting restrictive measures;
o Continuing to reinforce medical and personal protective equipment capacities.
o Developing safe and effective treatments and medicines, as well as developing and fast-tracking the introduction of a vaccine to put an end to the coronavirus.
NEXT STEPS
The Commission’s roadmap lists concrete recommendations Member States should consider when planning to lift containment measures:
• Action should be gradual: measures should be lifted in different steps, with sufficient time left between them to measure the impact.
• General measures should progressively be replaced by targeted ones. For example, protecting the most vulnerable groups for longer; facilitating the gradual return of necessary economic activities; intensifying regular cleaning and disinfection of transport hubs, shops and workplaces; replacing general states of emergencies with targeted government interventions to ensure transparency and democratic accountability.
• Internal border controls should be lifted in a coordinated manner. Travel restrictions and border controls should be removed once the border regions’ epidemiological situation converges sufficiently. External border should be reopened in a second stage and take account of the spread of the virus outside the EU.
• The re-start of economic activity should be phased-in: there are several models that can be implemented, e.g. jobs suitable for teleworking, economic importance, shifts of workers, etc. The entire population should not return to the workplace at the same time.
• Gatherings of people should be progressively permitted, taking into account the specificities of different categories of activity, such as:
1. Schools and universities;
2. Commercial activity (retail) with possible gradation;
3. Social activity measures (restaurants, cafes) with possible gradation;
4. Mass gatherings
• Efforts to prevent the spread of the virus should be sustained, with awareness campaigns to encourage the population to keep up the strong hygiene practices and social distancing.
• Action should be continuously monitored and preparedness developed for returning to stricter containment measures as necessary.
While confinement measures are gradually lifted, there is a need to strategically plan the recovery, revitalising the economy and getting back on a path of sustainable growth. This includes enabling the twin transition towards a greener and digital society, and drawing all lessons from the current crisis for the EU’s preparedness and resilience. The Commission will develop a Recovery plan, based on a revamped proposal for the next long-term EU budget (Multiannual Financial Framework) and the updated Commission Work Programme for 2020.
Compliments of the European Commission.

April 14, 2020
The COVID-19 pandemic has caused an unprecedented human and health crisis. The measures necessary to contain the virus have triggered an economic downturn. At this point, there is great uncertainty about its severity and length. The latest Global Financial Stability Report shows that the financial system has already felt a dramatic impact, and a further intensification of the crisis could affect global financial stability.
Since the pandemic’s outbreak, prices of risk assets have fallen sharply. At the worst point of the recent selloff, risk assets suffered half or more of the declines they experienced in 2008 and 2009. For example, many equity markets—in economies large and small—have endured declines of 30 percent or more at the trough. Credit spreads have jumped, especially for lower-rated firms. Signs of stress have also emerged in major short-term funding markets, including the global market for U.S. dollars.
CONTINUE READING…
Compliments of the International Monetary Fund.

With daily updates about the economic impact of the Coronavirus (COVID-19) on businesses and questions about the relief offered by the U.S. Government agencies, EACC has put together an overview of state and federal relief available to offset economic losses. American & European small and medium size businesses are facing an unprecedented economic disruption due to the COVID-19 outbreak Congress has put together various loan programs to help those businesses.
Concrete as a first step the U.S. President signed into law the CARES Act, which offers up to $376 billion in relief for American workers and small businesses.
Programs available for relief funding are:
1. The CARES Act for Small Businesses, by the U.S. Department of Treasury: The Paycheck Protection Program (under the CARES Act) is providing small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead. This resource also includes the necessary application forms. 
2. Economic Injury Disaster Loan Emergency Advance, by the U.S. Small Business Administration: This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
3. Paycheck Protection Program by the U.S. Small Business Administration: An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.
NEED MORE HELP:If you have questions or need assistance applying for the above relief programs, we encourage you to reach out to the EACC. We are here to help you connect you with the right resources to help you through the process and manage the labyrinth of paperwork. You can reach us by email at ybr[at]eaccny.com.

April 8, 2020 |
Today, the European Union is launching its “Team Europe” package to support partner countries in the fight against the coronavirus pandemic and its consequences. The objective of the “Team Europe” approach is to combine resources from the EU, its Member States, and financial institutions, in particular the European Investment Bank and the European Bank for Reconstruction and Development.
The European Commission and the European Investment Bank have already pledged financial support amounting to more than €15.6 billion from existing programmes. EU Member States underlined today their commitment to contribute to this joint endeavour and to make similar contributions, as well as and the European Bank for Reconstruction and Development. The overall figure of the “Team Europe” package reaches more than 20 billion euros.
The EU will help the most vulnerable countries in Africa, the EU’s neighbourhood – the Western Balkans, the Eastern Partner countries, the Middle East and North Africa, parts of Asia and the Pacific, Latin America and the Caribbean. It will focus also on the people most at risk, including children, women, the elderly, and disabled people, as well as migrants, refugees, internally displaced persons and their host communities.
The support of the European Union will focus on:
• Responding to the immediate health crisis and the resulting humanitarian needs. This will include supporting the response plans of the World Health Organisation and the United Nations, and providing humanitarian support in affected countries;
• Strengthening health, water and sanitation systems, as well as partner countries’ capacities and preparedness to deal with the pandemic; and
• Mitigating the immediate social and economic consequences, including support to the private sector with a focus on Small and Medium-sized Enterprises, and government reforms to reduce poverty.
The EU, as global actor and major contributor to the international aid system, will promote a coordinated multilateral response, in partnership with the United Nations, International Financial Institutions, as well as the G7 and the G20.
The “Team Europe” package was launched in the context of a videoconference of the EU Development ministers, chaired by High Representative Josep Borrell. Commissioner for International Partnerships, Jutta Urpilainen and Olivér Várhelyi, Commissioner for Neighbourhood and Enlargement, presented the proposal for the approach as described in the Joint Communication by the Commission and the High Representative on a global response to fight the pandemic, adopted on 8 April 2020.
Compliments of European External Action Service (EEAS).

April 9, 2020 |
The Federal Reserve on Thursday took additional actions to provide up to $2.3 trillion in loans to support the economy. This funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.
“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Federal Reserve Board Chair Jerome H. Powell. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
The Federal Reserve’s role is guided by its mandate from Congress to promote maximum employment and stable prices, along with its responsibilities to promote the stability of the financial system. In support of these goals, the Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit in the economy.
The actions the Federal Reserve is taking today to support employers of all sizes and communities across the country will:
• Bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The PPP provides loans to small businesses so that they can keep their workers on the payroll. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value;
• Ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program. The Department of the Treasury, using funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will provide $75 billion in equity to the facility;
• Increase the flow of credit to households and businesses through capital markets, by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF). These three programs will now support up to $850 billion in credit backed by $85 billion in credit protection provided by the Treasury; and
• Help state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities. The Treasury will provide $35 billion of credit protection to the Federal Reserve for the Municipal Liquidity Facility using funds appropriated by the CARES Act.
The Main Street Lending Program will enhance support for small and mid-sized businesses that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year. Eligible banks may originate new Main Street loans or use Main Street loans to increase the size of existing loans to businesses. Banks will retain a 5 percent share, selling the remaining 95 percent to the Main Street facility, which will purchase up to $600 billion of loans. Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers. Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. Firms that have taken advantage of the PPP may also take out Main Street loans.
The Federal Reserve and the Treasury recognize that businesses vary widely in their financing needs, particularly at this time, and, as the program is being finalized, will continue to seek input from lenders, borrowers, and other stakeholders to make sure the program supports the economy as effectively and efficiently as possible while also safeguarding taxpayer funds. Comments may be sent to the feedback form until April 16.
To support further credit flow to households and businesses, the Federal Reserve will broaden the range of assets that are eligible collateral for TALF. As detailed in an updated term sheet, TALF-eligible collateral will now include the triple-A rated tranches of both outstanding commercial mortgage-backed securities and newly issued collateralized loan obligations. The size of the facility will remain $100 billion, and TALF will continue to support the issuance of asset-backed securities that fund a wide range of lending, including student loans, auto loans, and credit card loans.
The Municipal Liquidity Facility will help state and local governments better manage cash flow pressures in order to continue to serve households and businesses in their communities. The facility will purchase up to $500 billion of short term notes directly from U.S. states (including the District of Columbia), U.S. counties with a population of at least two million residents, and U.S. cities with a population of at least one million residents. Eligible state-level issuers may use the proceeds to support additional counties and cities. In addition to the actions described above, the Federal Reserve will continue to closely monitor conditions in the primary and secondary markets for municipal securities and will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments.
All of the facilities mentioned above are established by the Federal Reserve under the authority of Section 13(3) of the Federal Reserve Act, with approval of the Treasury Secretary.
The Federal Reserve remains committed to using its full range of tools to support the flow of credit to households and businesses to counter the economic impact of the coronavirus pandemic and promote a swift recovery once the disruptions abate.
Term Sheet: Term Asset-Backed Securities Loan Facility (PDF)
Term Sheet: Primary Market Corporate Credit Facility (PDF)
Term Sheet: Secondary Market Corporate Credit Facility (PDF)
Term Sheet: Municipal Liquidity Facility (PDF)
Term Sheet: Paycheck Protection Program Lending Facility (PDF)
Main Street Lending ProgramTerm Sheet: Main Street New Loan Facility (PDF)Term Sheet: Main Street Expanded Loan Facility (PDF)
Compliments of the Federal Reserve Board.

April 7, 2020
• ECB adopts an unprecedented set of collateral measures to mitigate the tightening of financial conditions across the euro area
• Temporary increase in the Eurosystem’s risk tolerance in order to support credit to the economy
• ECB eases the conditions for the use of credit claims as collateral
• ECB adopts a general reduction of collateral valuation haircuts
• Waiver to accept Greek sovereign debt instruments as collateral in Eurosystem credit operations
• ECB will assess further measures to temporarily mitigate the effect on counterparties’ collateral availability from rating downgrades
The Governing Council of the European Central Bank (ECB) today adopted a package of temporary collateral easing measures to facilitate the availability of eligible collateral for Eurosystem counterparties to participate in liquidity providing operations, such as the targeted longer-term refinancing operations (TLTRO-III). The package is complementary to other measures recently announced by the ECB, including additional longer-term refinancing operations (LTROs) and the Pandemic Emergency Purchase Programme (PEPP) as a response to the coronavirus emergency. The measures collectively support the provision of bank lending especially by easing the conditions at which credit claims are accepted as collateral. At the same time the Eurosystem is increasing its risk tolerance to support the provision of credit via its refinancing operations, particularly by lowering collateral valuation haircuts for all assets consistently.
The emergency collateral package contains three main features.
First, the Governing Council decided on a set of collateral measures to facilitate an increase in bank funding against loans to corporates and households. This will be achieved by expanding the use of credit claims as collateral, in particular through the potential expansion of the additional credit claims (ACCs) frameworks. The ACC framework provides the possibility to National Central Banks to enlarge the scope of eligible credit claims for counterparties in their jurisdictions. This includes the possibility to accept loans with lower credit quality, loans to other types of debtors, not accepted in the ECB’s general framework, and foreign-currency loans.
In this respect, the Governing Council decided to temporarily extend the ACC frameworks further by:
• Accommodating the requirements on guarantees to include government and public sector guaranteed loans to corporates, SMEs and self-employed individuals and households in the ACC frameworks in order to also provide liquidity against loans benefiting from the new guarantee schemes adopted in euro area Member States as a response to the coronavirus pandemic;
• Enlarging the scope of acceptable credit assessment systems used in the ACC frameworks, for example by easing the acceptance of banks’ own credit assessments from internal rating-based systems that are approved by supervisors;
• Reducing the ACC loan level reporting requirements to allow counterparties to benefit from the ACC frameworks even before the necessary reporting infrastructure is put in place.
Second, the Governing Council further adopted the following temporary measures:
• A lowering of the level of the non-uniform minimum size threshold for domestic credit claims to EUR 0 from EUR 25,000 previously to facilitate the mobilisation as collateral of loans from small corporate entities;
• An increase, from 2.5% to 10%, in the maximum share of unsecured debt instruments issued by any single other banking group in a credit institution’s collateral pool. This will enable counterparties to benefit from a larger share of such assets.
• A waiver of the minimum credit quality requirement for marketable debt instruments issued by the Hellenic Republic for acceptance as collateral in Eurosystem credit operations.
Third, the Governing Council decided to temporarily increase its risk tolerance level in credit operations through a general reduction of collateral valuation haircuts by a fixed factor of 20%. This adjustment aims to contribute to the collateral easing measures while maintaining a consistent degree of protection across collateral asset types, albeit at a temporarily lower level.
These measures are temporary for the duration of the pandemic crisis and linked to the duration of the PEPP. They will be re-assessed before the end of 2020, also considering whether there is a need to extend some of these measures to ensure that Eurosystem counterparties’ participation in its liquidity providing operations is not adversely affected.
In addition, as part of the regular review of its risk control framework, the Governing Council decided to adjust the haircuts applied to non-marketable assets, both in the general collateral framework and for ACCs, by fine-tuning some of the haircut parameters. This adjustment, which is not linked to the duration of the PEPP, applies in addition to the temporary haircut reduction and thus further supports the collateral easing measures while maintaining adequate risk protection. This leads on average to a further haircut reduction of this type of collateral by around 20%.
Furthermore, the Governing Council has mandated the Eurosystem committees to assess measures to temporarily mitigate the effect on counterparties’ collateral availability from rating downgrades arising from the economic impact of coronavirus, while continuing ensuring collateral adequacy.
Compliments of the European Central Bank.

April 9, 2020 | 23:05
1. The COVID-19 pandemic constitutes an unprecedented challenge with very severe socio-economic consequences. We are committed to do everything necessary to meet this challenge in a spirit of solidarity.
2. A coordinated and comprehensive strategy is necessary to deal with health emergency needs, to support economic activity and to prepare the ground for the recovery. This strategy should combine short, medium and long-term initiatives, taking account of the spill overs and interlinkages between our economies and the need to preserve confidence and stability.
3. Several measures have already been taken at the national and EU levels, as set out in the statement of the Eurogroup in inclusive format of 16 March. A subsequent letter of the President of the Eurogroup of 24 March outlined further elements of policy response under consideration. The European Council, in its statement of 26 March, invited the Eurogroup to present proposals on the economic response to the COVID-19 pandemic within two weeks. Replying to the Leaders’ mandate, this report takes stock of actions taken thus far and outlines a comprehensive and coordinated economic response.
Coordinated actions taken so far at the level of the Member States, the EU and the euro area
4. Since the onset of the crisis, Member States have continuously stepped up efforts to support the economy.
5. A timely, temporary and targeted discretionary fiscal stimulus is being provided in a coordinated manner. Significant public resources are directed to strengthen the healthcare sector and civil protection mechanisms and to support affected workers and economic sectors. To date, the aggregate amount of Member States’ discretionary fiscal measures amounts to 3% of EU GDP, a threefold increase since 16 March, on top of the significant impact of automatic stabilisers.
6. Furthermore, Member States have so far committed to provide liquidity support for sectors facing disruptions and companies facing liquidity shortages, consisting of public guarantee schemes and deferred tax payments, which are now estimated at 16% of EU GDP, up from 10% on 16 March. 
7. The Ministers of Finance stand ready to take further measures as needed, as developments unfold.
8. Flexibility in EU rules. On 23 March, Ministers of Finance agreed with the assessment of the Commission that the conditions for the use of the general escape clause of the EU fiscal framework, a severe economic downturn in the euro area or the Union as a whole, are fulfilled. This offers the flexibility necessary to the national budgets to support the economy and to respond in a coordinated manner to the impact of the COVID-19 pandemic. Overall fiscal guidance will be provided within this framework and as part of a streamlined European Semester exercise. We welcomed the Commission’s decision to issue a specific temporary state-aid framework to expedite public support to companies, while ensuring the necessary level playing field in the Single Market as well as the recent extension of the framework to cover support for research, testing and production relevant in the fight against the COVID 19 pandemic. We also welcome the Commission’ guidance on the use of all the flexibilities offered by the EU public procurement framework in this emergency situation, issued on the 1st of April.
9. Use of the EU budget. We welcome the proposals by the Commission to make best use of existing EU budget resources to fight the crisis. The proposal for a Coronavirus Response Investment Initiative was approved by the European Parliament and the Council and is in force as of the 1st of April. This will allow the use of EUR 37 billion under cohesion policy to address the consequences of the COVID-19 crisis. In addition, the scope of the Solidarity Fund was broadened to include major public health crises. Starting from the 1st of April, this allows the hardest hit Member States to get access to financial support of up to EUR 800 million in 2020.
10. Monetary Policy. We welcome the resolute action taken by the European Central Bank to support liquidity and financing conditions to households, businesses and banks, which will help to preserve the smooth provision of credit to the economy. On 18 March, the ECB decided to launch a EUR 750 billion Pandemic Emergency Purchase Programme (PEPP), to expand the range of eligible assets under the corporate sector purchase programme (CSPP) and to ease the collateral standards. These measures are aimed at ensuring that all sectors of the economy can benefit from supportive financing conditions that enable them to absorb the Covid-19 shock.
11. Financial Stability: We welcome the guidance provided by supervisory authorities to financial institutions on the interpretation and application of the regulatory requirements in the current exceptional circumstances. We also welcome the release of capital buffers. To overcome the financing pressures faced by firms and households, making full use of the flexibility provided for in the regulatory framework is essential. We will continue to monitor closely the evolution of the situation and to coordinate European and national measures. Where necessary, we stand ready to take further actions, including legislative measures, if appropriate to mitigate the impact of Covid-19.
Additional crisis response instruments and preparing the ground for the recovery
12. At this critical juncture, we are ready to step up the EU response to support, bolster and complement efforts made so far. We are committed to ensure the conditions for an adequate response to the crisis in every EU Member State. In that context, measures envisaged by the European institutions should be implemented in light of the severity of the economic consequences of the pandemic on individual Member States.
13. EU budget flexibility. We welcome the Commission’s proposals regarding the further temporary flexibility in the use of EU funds, such as allowing transfers between funds, regions and policy objectives, abandoning national co-financing requirements and supporting vulnerable members of society. This will help to mobilise effectively the EU budget to face the repercussions of the COVID-19 pandemic.
14. Emergency Support. We agreed that a dedicated COVID-19 instrument to support the financing of emergency aid, through the provision of grants, is necessary, to first and foremost reinforce our healthcare systems. In this context, we welcome the Commission proposal of 2 April to re-activate the Emergency Support Instrument in the context of the COVID-19 outbreak. This instrument can at this stage provide support of EUR 2.7 billion from EU budget resources. Its firepower can be strengthened rapidly, through additional voluntary contributions from Member States. We call on Member States to explore ways to further reinforce the Emergency Support Instrument in the context of the legislative process.
15. Strengthening EIB activities. We welcome the initiative of the EIB Group to create a pan-European guarantee fund of EUR 25 billion, which could support EUR 200 billion of financing for companies with a focus on SMEs, throughout the EU, including through national promotional banks. We invite the EIB to operationalize its proposal as soon as possible and stand ready to put it in place without delay, while ensuring complementarity with other EU initiatives and the future Invest EU programme. This initiative is an important contribution to preserving the level playing field of the single market in light of the national support schemes.
16. Safety nets in the EU and EA. Safety nets are in place in the euro area and the EU. In the euro area, the ESM is equipped with instruments that could be used, as needed, in a manner adapted to the nature of the symmetric shock caused by COVID 19. We propose to establish a Pandemic Crisis Support, based on the existing ECCL precautionary credit line and adjusted in light of this specific challenge, as a relevant safeguard for euro area Member States affected by this external shock. It would be available to all euro area Member States during these times of crisis, with standardised terms agreed in advance by the ESM Governing Bodies, reflecting the current challenges, on the basis of up-front assessments by the European institutions. The only requirement to access the credit line will be that euro area Member States requesting support would commit to use this credit line to support domestic financing of direct and indirect healthcare, cure and prevention related costs due to the COVID 19 crisis. The provisions of the ESM Treaty will be followed. Access granted will be 2% of the respective Member’s GDP as of end-2019, as a benchmark. With a mandate from the Leaders, we will strive to make this instrument available within two weeks, while respecting national procedures and constitutional requirements. The credit line will be available until the COVID 19 crisis is over. Afterwards, euro area Member States would remain committed to strengthen economic and financial fundamentals, consistent with the EU economic and fiscal coordination and surveillance frameworks, including any flexibility applied by the competent EU institutions. The Balance of Payments Facility can provide financial support to Member States that have not adopted the euro. It should be applied in a way which duly takes into account the special circumstances of the current crisis. 
17. SURE. In the spirit of solidarity and in light of the exceptional nature of the COVID -19 crisis, we agree on the need to establish, for the duration of the emergency, a temporary loan-based instrument for financial assistance under Article 122 of the Treaty on the Functioning of the European Union. We will strive to make the instrument operational as soon as possible. In this context, we welcome the Commission proposal of 2 April to set-up a temporary instrument supporting Member States to protect employment in the specific emergency circumstances of the COVID-19 crisis. It would provide financial assistance during the time of the crisis, in the form of loans granted on favourable terms from the EU to Member States, of up to EUR 100 billion in total, building on the EU budget as much as possible, while ensuring sufficient capacity for Balance of Payments support, and on guarantees provided by Member States to the EU budget. The instrument could primarily support the efforts to protect workers and jobs, while respecting the national competences in the field of social security systems, and some health-related measures. This proposal should be taken forward without delay in the legislative process. The Member States’ position on this emergency instrument does not pre-judge the position on future proposals related to unemployment insurance. Consistent with its legal basis, access to the instrument will be discontinued once the COVID-19 emergency has passed.
18. We agree that a coherent strategy in the EU is needed to support Member States’ efforts to return to a normal functioning of our societies and economies and to promote a relaunch of economic activity and investment to ensure sustainable growth.
19. Recovery Fund. In this context, we also agreed to work on a Recovery Fund to prepare and support the recovery, providing funding through the EU budget to programmes designed to kick-start the economy in line with European priorities and ensuring EU solidarity with the most affected member states. Such a fund would be temporary, targeted and commensurate with the extraordinary costs of the current crisis and help spread them over time through appropriate financing. Subject to guidance from Leaders, discussions on the legal and practical aspects of such a fund, including its relation to the EU budget, its sources of financing and on innovative financial instruments, consistent with EU Treaties, will prepare the ground for a decision.
20. Upcoming MFF. The next EU Multiannual Financial Framework (MFF) will play a central role in the economic recovery. It will have to reflect the impact of this crisis and the size of the challenges ahead, by setting the right priorities, to allow Member States to effectively address the fallout of the coronavirus crisis, to support the economic recovery, and ensure that cohesion within the Union is maintained through solidarity, fairness and responsibility. We welcome the Commission’s intention to adapt its MFF proposal to reflect the new situation and outlook.
21. Roadmap for Recovery. Work is ongoing on a broader Roadmap and an Action Plan to support the recovery of the European economy through high quality job creation and reforms to strengthen resilience and competitiveness, in line with a sustainable growth strategy. It should put in place the conditions to relaunch our economies whilst promoting economic convergence in the EU and reducing any fragmentation resulting from the crisis, including through the rapid restoration of the full functionality of the Single market. The President of the Commission and the President of the European Council, in consultation with other institutions, including the ECB, have started work to this end. The Eurogroup stands ready to contribute and support this endeavour.
22. Today we are engaged in an effort to safeguard the health and lives of European citizens and to tackle the immediate economic challenge. This includes the fiscal means Member States need to finance the necessary measures. The recovery of the European economy poses a big challenge. We will act together in solidarity and we will deliver. This includes the necessary progress in strengthening the European Union.
Next steps
23. The Eurogroup will pursue the work needed taking into account the intention of the Council Presidency to take the legislative proposals forward without delay.
Compliments of the European Council.

A message from Kristalina Georgieva, IMF Managing Director | April 9, 2020
Introduction: A Crisis Like No Other
I want to begin by wishing my personal best to everyone—for you and your families’ health and safety during these difficult times.
Today we are confronted with a crisis like no other. Covid-19 has disrupted our social and economic order at lightning speed and on a scale that we have not seen in living memory. The virus is causing tragic loss of life, and the lockdown needed to fight it has affected billions of people. What was normal just a few weeks ago—going to school, going to work, being with family and friends—is now a huge risk.
I have no doubt that we will overcome this challenge. Our doctors and nurses are fighting it around the clock, often risking their lives to save the lives of others. Our scientists will come up with solutions to break COVID-19’s grip. Between now and then, we must marshal the determination of all—individuals, governments, businesses, community leaders, international organizations—to act decisively and act together, to protect lives and livelihoods. These are the times for which the IMF was created—we are here to deploy the strength of the global community, so we can help shield the most vulnerable people and revitalize the economy.
The actions we take now will determine the speed and strength of our recovery. That will be the focus of the IMF’s 189 member countries when we meet in our virtual Spring Meetings next week.
It is what I will concentrate on today.
Where We Stand: the Status of the Global Economy
First, let’s look at where we stand. We are still faced with extraordinary uncertainty about the depth and duration of this crisis.
It is already clear, however, that global growth will turn sharply negative in 2020, as you will see in our World Economic Outlook next week. In fact, we anticipate the worst economic fallout since the Great Depression.
Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020. Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year.
The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries. Everybody hurts.
Given the necessary containment measures to slow the spread of the virus, the world economy is taking a substantial hit. This is especially true for retail, hospitality, transport, and tourism. In most countries, the majority of workers are either self-employed or employed by small and medium-sized enterprises. These businesses and workers are especially exposed.
And just as the health crisis hits vulnerable people hardest, the economic crisis is expected to hit vulnerable countries hardest.
Emerging markets and low-income nations—across Africa, Latin America, and much of Asia—are at high risk. With weaker health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums—where social distancing is hardly an option. With fewer resources to begin with, they are dangerously exposed to the ongoing demand and supply shocks, drastic tightening in financial conditions, and some may face an unsustainable debt burden.
They are also exposed to massive external pressure.
In the last two months, portfolio outflows from emerging markets were about $100 billion—more than three times larger than for the same period of the global financial crisis. Commodity exporters are taking a double blow from the collapse in commodity prices. And remittances—the lifeblood of so many poor people—are expected to dwindle.
We estimate the gross external financing needs for emerging market and developing countries to be in the trillions of dollars, and they can cover only a portion of that on their own, leaving residual gaps in the hundreds of billions of dollars. They urgently need help.
The encouraging news is that all governments have sprung into action and, indeed, there has been significant coordination. Our Fiscal Monitor next week will show that countries around the world have taken fiscal actions amounting to about $8 trillion. In addition, there have been massive monetary measures from the G20 and others.
Many of the poorer nations are also taking bold fiscal and monetary action, even as they grapple with this fundamental shock to their systems—and with far less firepower than their rich-country counterparts.
So this is a snapshot of where the global economy stands today.
There is no question that 2020 will be exceptionally difficult. If the pandemic fades in the second half of the year—thus allowing a gradual lifting of containment measures and reopening of the economy—our baseline assumption is for a partial recovery in 2021. But again, I stress there is tremendous uncertainty around the outlook: it could get worse depending on many variable factors, including the duration of the pandemic.
And crucially, everything depends on the policy actions we take now.
What Needs to be Done: a 4-Point Plan
My next point is about building the bridge to recovery. We see four priorities:
• First, continue with essential containment measures and support for health systems. Some say there is a trade-off between saving lives and saving livelihoods. I say it is a false dilemma. Given this is a pandemic crisis, defeating the virus and defending people’s health are necessary for economic recovery. So the message is clear: prioritize health spending for testing and medical equipment; pay doctors and nurses; make sure hospitals and makeshift clinics can function. For many countries—particularly in the emerging and developing world—this means carefully reallocating limited public resources. It also means increasing the flow of resources to these countries. That includes the flow of vital goods: we must minimize disruptions to supply chains and, with immediate effect, refrain from export controls on medical supplies and food.
• Second, shield affected people and firms with large, timely, targeted fiscal and financial sector measures. This varies according to country circumstances, but it includes tax deferrals, wage subsidies and cash transfers to the most vulnerable; extending unemployment insurance and social assistance; and temporarily adjusting credit guarantees and loan terms. Some of these measures have been taken in the first wave of policy support. Many countries are already working on a second wave. Lifelines for households and businesses are imperative. We need to prevent liquidity pressures from turning into solvency problems and avoid a scarring of the economy that would make the recovery so much more difficult.
• Third, reduce stress to the financial system and avoid contagion. Our upcoming Global Financial Stability Report will analyze the range of vulnerabilities in the financial sector. Banks have built up more capital and liquidity over the past decade, and their resilience will be tested in this rapidly changing environment. The financial system is facing significant pressures, and monetary stimulus and liquidity facilities play an indispensable role. Interest rates have been lowered in many countries. Major central banks have activated swap lines and created new ones to reduce financial market stress. Enhancing liquidity for a broader range of emerging economies would provide further relief. Importantly, it would also lift confidence.
• Fourth, even as we move through this containment phase, we must plan for recovery. Again, we must minimize the potential scarring effects of the crisis through policy action now. This requires careful consideration of when to gradually ease restrictions, based on clear evidence that the epidemic is retreating. As measures to stabilize the economy take hold and business starts to normalize, we will need to move swiftly to boost demand. Coordinated fiscal stimulus will be essential. Where inflation remains low and well-anchored, monetary policy should remain accommodative. Those with greater resources and policy space will need to do more; others, with limited resources will need more support.
The IMF: All Hands on Deck
This leads me to the role of the IMF.
We are working 24/7 to support our member countries—with policy advice, technical assistance and financial resources:
• We have $1 trillion in lending capacity and are placing it at the service of our membership.
• We are responding to an unprecedented number of calls for emergency financing—from over 90 countries so far. Our Executive Board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100 billion in financing. Lending programs have already been approved at record speed—including for the Kyrgyz Republic, Rwanda, Madagascar, and Togo—with many more to come.
• We are reviewing our tool kit to see how we might better use precautionary credit lines to encourage additional liquidity support, establish a short-term liquidity line, and help meet countries’ financing needs via other options—including the use of SDRs. And where we might be unable to lend because a country’s debt is unsustainable, we will look for solutions that can unlock critical financing.
• We have revamped our Catastrophe Containment and Relief Trust to provide immediate debt relief to low-income countries affected by the crisis, thereby creating space for spending on urgent health needs rather than debt repayment. We are now working with donors to increase the CCRT to $1.4 billion to extend the duration of the debt relief.• And together with the World Bank, we are calling for a standstill of debt service to official bilateral creditors for the world’s poorest countries.
I am proud of the staff of the IMF for stepping up in this crisis. And I look forward to the discussions during the Spring Meetings next week on what more we can do.
Conclusion: A Test of Our Humanity
Let me conclude with a line from Victor Hugo who once said: “Great perils have this beauty, that they bring to light the fraternity of strangers”.
It is this common threat that brings us all together, to harness the greatest strengths of our humanity—solidarity, courage, creativity, and compassion. We don’t know yet how our economies and way of life will change, but we do know we will come out of this crisis more resilient.
Thank you very much.
Compliments of the International Monetary Fund.