Global Responses of Countries to the Financial Impact of Covid-19

It is no hidden fact that the pandemic has caused a draining effect on the global economy, besides the severe health damage we witnessed. The pandemic brought the economic activities to a near-standstill of all the countries worldwide, as they imposed strict restrictions on the masses’ movement.Fin

The pandemic was expected to plunge every country in the world into a recession by the end of 2020. Many developing economies were already encountering challenges like weaker growth, and with the COVID-19 crisis, challenges got even harder, and damages were difficult to sustain.

Talking about the economy, we cannot ignore the working class and especially the less privileged ones. The individuals responsible for the household income lost their jobs at small and medium-sized companies. Most financial leaders around the globe expressed their concerns for the middle and lower class.

Mr. David Robert Malpass, the President of World Bank Group, said, “The challenges that COVID-19 has brought upon us signifies an unprecedented crisis with devastating effects on the economy and the health around the world.” He also said, “If we don’t move quickly to strengthen systems and resilience, recent years’ development gains can easily be lost. Also, this crisis will likely hit the most vulnerable countries. Especially, the people and that too in the hardest way possible.”

Record of people hit by extreme poverty worldwide during Co-vid 19 crisis:

1. Sub-Saharan Africa-23 million people.

2. South Asia-16 million people.

3. East Asia and Pacific- 4.5 million people.

4. Latin America and Caribbean-3 million people.

5. The Middle East and North Africa- 2.7 million people.

Even most vulnerable countries acquired developed digital payments infrastructure and a secure social cash transfer system to respond rapidly to the COVID-19 financial crisis’s negative impacts. In this article, we will be looking at continents and countries worldwide and their response to the economic impact on their citizens.

Canada, USA, and Latin American Countries:

• The Canadian government provided (£1,150; $1,400) per month for up to four months to people who lost income source due to the pandemic.
• The Government of USA stated that all Americans earning below the payroll of $99,000/year or responsible for 90% of household income will be receiving $1,200/month (£964) per adult.
• Costa Rica’s government announced a monthly allowance of $220 for every citizen who lost their jobs in the COVID-19 crisis.
• In Chile, the government made payments worth $15 under the initiative called “Bono COVID-19” straight to the accounts of 2 million people who were mostly informal workers in April. These payments were possible because they had their national ID linked to the primary account.
• In El Salvador, the authorities targeted the citizens’ houses with low electricity consumption (below 250 Kilowatts), estimated to be 1.5 billion households. They announced a fund transfer of $300 to each of these accounts.
• The Government of Brazil added 1 million households to their Bolsa Familia program. The Brazilian government also established a current three-month emergency fund transfer program of $115 each per month or 60% of the informal workers’ minimum wage.
• The Government of Columbia launched a new cash transfer program that transferred a single transaction of $108 to 3 million informal workers and their families. The program “Solidarity Income” ensured payments through banks for the half-identified and also mobile transfers.

Asian Continent:

• The Government of India initiated a new three-month cash transfer program through which the government paid $6.50 into 204 million accounts of female beneficiaries of the existing program “PMJDY” (Pradhan Mantri Jan-Dhan Yojna). The government also paid $13 (₹945, INR) each to 35 million beneficiaries under the NSAP (National Social Assistance Program) for the aged, widows, and the disabled who benefit from social pensions.

• The Pakistani government launched a four-month “EECP” (Ehsaas Emergency Cash Program) for 10 million citizens. The program identified 3 million affected families through the country’s socio-economic database. An SMS campaign was helpful to inform low-income families about the program’s benefit.

• In Thailand, the government announced a three-month cash transfer that would pay $153 monthly to each of the 9 million workers not covered by the Social Security Fund. The cost of this financial support operation was 4 billion USD. In February, Hong Kong announced an online transfer of funds amounting to $1,280 per adult citizen. The Government of Japan paid $931 per adult citizen in February.

African Continent:

• The Government of Burkina Faso declared a $10 million cash transfer for the informal worker, fruit and vegetable seller. This relief specially focused on transferring funds to women’s accounts.

• In Kenya, the government allocated $19 per month to 1 million people under the Inua Jamii program. Their national treasury issued an additional $100 million to support the program in response to the COVID19 crisis.

• The Government of Zimbabwe, on 31st March, announced 550,000 USD per month to be set aside for three crucial consecutive months for an emergency funds transfer program to support and reach 1 million vulnerable citizens.

• The SASSA (South African Social Security Agency) provided early payments of social grants to the elderly citizens and citizens with disabilities from the date 31st March. The amount of the grants was increased post-April due to the COVID19 crisis.

According to Caroline Pulver a senior consultant working on poverty reduction, these were the approximate number of financial reliefs provided in the mentioned countries. These statistics depict the adversities the pandemic has caused to the financial status of the people around the world.

Where governments were limited by financial resources to help their citizens, major corporations worldwide showed their help and support in the fight against the pandemic. Let us look at some companies who devoted their wealth and resources to the well-being of people.

Quick Actions and Financial Support from the Corporates:

• Amazon, the company, owned by the richest man in the world, created a $25 million fund to support their delivery drivers and off space workers.

• Alphabet, Google’s parent company, assembled a COVID-19 fund to provide sick leaves to their employees working globally.

• Giorgio Armani, the company known for its finest Italian clothing, donated $1.43 million to four hospitals in Rome and Milan.

• The Tata group in India pledged a donation of ₹15 billion (INR) to support the fight against COVID-19.

• Paytm contributed ₹5 billion (INR) to the PM care fund India’s leading digital payment platform.

• In Morroco, Colas Afrique provided food and health essentials to over 1300 low-income families living in remote areas.

• In Sub-saharan Africa, the International Finance Corporation, an extension of the World Bank Group, invested $1.1 billion for the relief funds. These relief funds included loan amounts totaling $300 million to financial institutions in Kenya and Nigeria. This loan amount was used to lend funds to small and medium-sized enterprises (SMEs) facing disruptions caused by COVID-19.

To sum it up.

Though citizens below the poverty line took the hardest hit from the pandemic, they were still able to receive some relief funds from their government and foreign entities.

With governments initiating online funds transfers to their vulnerable citizens, the Digital payment system saw a rapid boost. Since there is acceleration in the digitalization of payments, the governments’ utilization of digital payment systems also brought up new updates in the systems, leading them to be more secure, accessible, and quick. 

We will never know when the next crisis will hit us or how significant the impact would be. Still, the governments will have to digitalize all the transfers of funds and secure them online to support the people financially.