The global impact of the COVID-19 pandemic on economic output and public finances in 2020 and beyond is projected to be massive. Fiscal policy can have a crucial role in mitigating the pandemic’s overall economic impact and promoting a quick recovery. It can help save lives and shield the most-affected segments of population.
Both advanced and developing countries have responded to the pandemic by implementing several fiscal measures. As of early April, their fiscal costs ranged between 1 percent and 34 percent of GDP— larger fiscal packages have been announced by advanced economies, such as Germany and Italy. These packages include revenue and expenditure measures as well as liquidity support to businesses (such as loans or loan guarantees). The International Monetary Fund (IMF) has estimated that the global cost of fiscal measures (including increased allocations for health) implemented so far is $8 trillion, or 9 percent of global GDP. The fiscal cost is rising as countries implement additional measures, including, for example, India, Japan and the US.