Six members of the Gulf Cooperation Council have pledged over $120 billion to help their economies fight the impact of the coronavirus, officially known as COVID-19, and stop businesses going bankrupt.
Central banks and governments across the world have scrambled to put stimulus measures into place to prop up their economies and contain the fallout. Overnight, the US Senate leaders and the Trump administration reached agreement on a $2 trillion stimulus package, setting the stage for swift passage of the massive legislation through both chambers of Congress.
In an unprecedented move on Monday, the US Federal Reserve said that its capacity to buy debt and support the economy was virtually without limit. Analysts have praised the speed and depth of commitment by central banks and governments across the world in responding to the virus.
“The central banks have responded immediately, no delays. That’s about the best thing that could happen… The central banks know what they have got to do, I think the governments know what they have got to do. And we'll worry about paying for it later,” said Professor Stephen Thomas, associate dean, MBA programmes at Cass Business School in Dubai and London.
Here’s everything announced so far in the GCC:
Saudi Arabia: $32 billion
Saudi Arabia last week unveiled stimulus measures to the tune of 120 billion Saudi riyals to help the economy weather the challenges of the coronavirus pandemic and lower oil prices.
The sum includes a package of 50 billion riyals announced earlier to support small and medium-sized businesses coupled with a further 70 billion riyals to aid businesses through postponement of tax payments and exemptions of various government levies and fees.
On March 18, Saudi Arabia cut its 2020 budget by almost 5 percent, aimed at keeping its finances intact amid oil prices plunging by nearly 60 per cent year-to-date as a price war for market share rages in the oil market.
UAE: $34.3 billion
The UAE government on Sunday approved an additional 16 billion UAE dirhams to ease the impact of the coronavirus on the country, raising the country’s total stimulus package to 126 billion dirhams.
The new package of measures aims to reduce the cost of doing business, support small businesses and accelerate the implementation of major government infrastructure projects.
On March 14, the Central Bank of (UAE) announced a comprehensive economic support scheme worth 100 billion dirhams. The central bank noted that it is prepared to support the country’s banking system in mitigating any downside risk from the pandemic.
Credit ratings company Moody’s Investors Service said that the central bank’s package would “soften coronavirus’ blow to economy and banks.”
The emirates of Abu Dhabi and Dubai both announced additional packages.
Abu Dhabi Executive Council will offer 5 billion dirhams in subsidies focused on water and electricity subsidies for citizens, commercial and industrial activities, and electricity connection fees subsidies for SMEs. A 3-billion-dirham SME credit guarantee program has also been set up and performance guarantees for projects of up to 50 million dirhams have been waived for start-ups this year.
Abu Dhabi also announced up to a 20 percent payback on rentals for the restaurant, tourism, and entertainment sectors. Tourism and entertainment sector municipality fees have been suspended this year. Authorities have also created a 1-billion-dirham fund to enhance liquidity and sustain balance between supply and demand for stocks on Abu Dhabi Securities Market.
Dubai announced on March 12 a 1.5 billion dirham package, which includes 15 focused initiatives aimed at reducing the cost of doing business and simplifying business procedures, especially in the commercial, retail, external trade, tourism, and energy sectors.
Oman: $20.8 billion
The Central Bank of Oman (CBO) on Wednesday announced a 8 billion Omani rial stimulus package aimed at providing additional liquidity to the country's financial institutions.
CBO increased the financing ratio for lenders from 87.5 percent to 92.5 percent, allowing banks to lend more money.
The central bank said it had reduced existing fees related to banking services and avoided introducing new fees.
Oman’s finance ministry slashed its civil, military and security agency budgets by 5 percent. Other measures include tourism and municipality tax breaks as well as postponement of credit instalment payments.
“The decisions issued by CBO are highly motivational. These decisions will help in the current economic situation and contribute to achieving financial stability and will stimulate the growth of economy in the Sultanate,” Dr Nasser Al Mawali, dean of the College of Banking and Financial Studies said.
Bahrain: $11.4 billion
Bahrain has announced a 4.3 billion Bahraini dinar economic stimulus package, equivalent to 29.6 percent of the Kingdom’s annual GDP, to support its citizens and the private sector amid the ongoing coronavirus pandemic.
The eight-point-package includes a draft law that concerns paying the salaries of all private sector employees from the unemployment fund for three months.
Bahrain has doubled its liquidity fund to 200 million dinars and announced a waiver on utility bills for three months. The Kingdom has also allowed Bahraini nationals to delay payment of bank loans by six months.
During the three months, individuals and businesses will also be exempted from municipal and industrial land rental fees, while tourism-related companies will be exempted from tourism levies.
The central bank of Bahrain banned lenders from freezing customers’ accounts in case of job loss or retirement.
Kuwait: $1.5 billion
Kuwait’s government approved a draft law authorizing additional funding to the tune of 500 million Kuwaiti dinars to ministries and state agencies to fight the impact of coronavirus on March 16.
The country’s central bank has reduced the discount rate to 1.5 percent from 2.5 percent.
The central bank has also suspended fees on point of sales devices and ATM withdrawals, in addition to increasing the limit for contactless payments to 25 dinars from 10 dinars.
Kuwait has also set up a 10 million dinar fund, financed by Kuwaiti banks, to combat coronavirus.
Qatar: $20.6 billion
Qatar has announced a stimulus package worth 75 billion Qatari riyals to provide financial and economic incentives for the private sector.
The government funds were asked to increase investments in the stock exchange by 10 billion riyals. Food and medical goods in the country were exempted from customs duties for six months.
The government has also announced utilities bill exemption for SMEs.
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