International COVID-19 Stimulus and Relief Packages: A Guide

As of Feb. 24, 2021, over 112 million people have been infected with COVID-19 and more than 2.5 million people have died worldwide. This has been further compounded by an economic crisis caused by the disease’s disruption to the world economy, resulting in millions of people losing their livelihoods and exacerbating global poverty.

The International Monetary Fund (IMF), estimates that the world economy, as measured by real gross domestic product (GDP), shrank as much as -3.5% in 2020. The MSCI All Country World Index (ACWI), which tracks large- and mid-cap companies in 50 developed and emerging countries around the world, fell into a bear market during March 2020, and didn’t pass its pre-COVID-19 high until late August.

In response to this crisis, governments and central banks worldwide have enacted sweeping and sizable stimulus measures to counteract the disruption caused by the coronavirus and provide relief to those suffering from the pandemic.

In this article, for the sake of ease of comparison, all amounts have been converted to U.S. dollars using the exchange rate at the time of writing.

Here is a list of what each country or region is doing. We’ve divided up each response into monetary policy, managed by central banks, and fiscal policy, managed by central governments:

China

The COVID-19 pandemic is believed to have started in China, as it had the earliest large-scale outbreak in Wuhan. As a result, China responded with stimulus and relief efforts earlier than most countries. This means China may be a useful leading indicator of how both the lockdown and its associated economic downturn will shake out, and the speed of the recovery.

China Monetary Policy

China’s central bank, the People’s Bank of China (PBOC), has implemented several policy measures aimed at providing monetary stimulus. It was the first major central bank to act during the crisis. The People’s Bank of China refers to liquidity injections through repurchase agreements as “reverse repo operations,” though most other central banks refer to them as “repo operations.” They will be referred to as “repo operations” here for the sake of consistency.

The PBOC has cut a number of interest rates since the beginning of the crisis. It cut its benchmark one- and five-year prime rates twice, once in Feb. 16, 2020 and then again on April 19, 2020. This brought the one-year rate down from 4.15% to 3.85% and the five-year rate down from from 4.80% to 4.65%. It also cut its one-year medium term lending facility (the rate at which it lends to banks) twice, once Feb. 16, 2020, and again on April 15, 2020. This brought the interest rate for the lending facility down from 3.25% to 2.95%, the lowest level since it was introduced in 2014. On April 23, it lowered the interest rate on its targeted medium-term lending facility, a loan program meant to shore up struggling parts of the economy, from 3.15% to 2.95%. On April 10, it cut its standing lending facility interest rates by 0.30%. The PBOC cut the rate on its seven-day repo agreements on March 29, 2020 from 2.40% to 2.2%. On June 17, 2020, it cut the rate on its 14-day repo agreements from 2.55% to 2.35%.

China first expanded repo operations on Feb. 3, 2020. Through both the repo operations and its medium-term lending facility, the central bank injected approximately $650 billion of liquidity into the economy as of June 11, 2020 according to the IMF. The PBOC has also expanded re-lending and re-discounting facilities by $254 billion as of June 11, 2020, in order to increase lending, especially to micro, small, and medium sized firms and the agricultural sector.

On March 13, the PBOC lowered bank reserve requirements, freeing up about $79 billion to be lent out. Reserve requirements were cut again on May 25, 2020. The PBOC cut the reserve ratio for small and medium-sized banks…