Coronavirus VS Global Economy

20 May 2020

Coronavirus VS Global Economy

The new coronavirus pandemic has forced governments to resort to unprecedented measures that involve, on the one hand, significant restrictions of economic activity, and, on the other hand, large-scale expenditures to support businesses and citizens. The authorities faced a difficult choice between two evils - to send the economies of their own countries into a recession or to risk the health of their people. Some states are taking similar measures, while others are finding their own unique and country-specific ways to deal with the crisis. Members of the international audit and consulting network FinExpertiza across the globe have analyzed the situation in their respective countries and summed up the supportive measures offered by the local governments.


Michael Hadjihannas
Managing Director, FinExpertiza Cyprus
Development Director for Europe, FinExpertiza Global

The pandemic definitely took most of us by surprise. Following the lockdown imposed on us, we spend most of our time in complete isolation. Most of our workforce is now working remotely, even though certain businesses in our island are still operating from their offices. Initially we did have a consumer rush, especially for necessity goods such as toilet paper, milk, water, bread, etc. and thankfully until now there was no shortage of these for goods.

Our economy is currently plunging into what could easily become one of the deepest but also shortest recessions in modern times. The impact of the pandemic on the economy is expected to take place primarily during the second quarter of the year, and then rebound in the second half of the year. However, there is the risk if not the likelihood of an uneven recovery, with significant setbacks along the way and some permanent damage that is not recouped.

The GDP is expected to contract by about -5% and -9.7% during 2020, and unemployment is estimated to rise to 9% compared to 7.1% the year before. The budget balance of the Government is projected to reach a deficit of about 4% of GDP in 2020. Regarding the medium-term outlook, as the uncertainty is currently very high, it would not be possible to provide estimations for years 2021 onwards.

The main policy objective of the government remains the safeguarding of macroeconomic stability in order to facilitate growth and job creation, and to preserve a fiscal policy geared towards high primary surpluses in order to facilitate the swift decline of debt-to-GDP ratio at a satisfactory pace.

The government provided guarantees for low-interest loans. Businesses and self-employed who suffered from measures to combat the COVID-19 will receive new loans of the amount of €1.75 billion. It also provides for subsidizing of part of the interest paid by natural persons, self-employed and businesses up to the amount of €250 million.

Also the Government guarantees will cover up to 70% of the loss that may arise from loans and the credit institutions will cover the remaining 30%, irrespective whether the loan is secured or not. Duration of loans is three months - six years, current accounts maximum duration one year.

The Ministry of Labour, Welfare and Social Insurance announced several support programs for coping with the effects of COVID-19. They provide of a special unemployment benefits for workers of enterprises that have completely or partially suspended work, as well as support measures for the self-employed.

In addition, there is a temporary suspension of VAT payments for tax periods ending February, March and April, 2020. It involves all companies, without imposing any charges or additional tax. It is noted that arrangements will be made so that the debts will be paid progressively until November 10, 2020 with the exception of companies that do not have liquidity problems such as pharmacies, supermarkets, etc.

A number of other measures are envisaged. Additional budget of €11 million for the implementation of actions to support tourism between June and September 2020, in cooperation with Airlines and Travel Organizers, as well as actions to enhance initiatives to attract tourists during the period October 2020 - March 2021.

Suspension of the increased contributions to the NHS (National Health System) scheduled for 1 April 2020 for three months, by employers, employees and state.

The following measures are envisaged to support the population:

      Suspension on loan installments, including interests, for credit facilities to banks and for all eligible borrowers who are experiencing difficulties as a result of the crisis, from 30th March until 31st December 2020.
      Allowance of €750 per month for students staying abroad.
      Plan for the repatriation of Cypriots.
      Suspension of evictions for two months.
      Universal reduction of the electricity tariff by 10% for a period of 3 months.


Friggo Kraaijeveld
Kraaijeveld Coppus Legal B.V.

The consequences of the pandemic affect people in the Netherlands in different ways: some people are in a panic, others are worried, while some persons see no reason for concern. Basically, the situation in the Netherlands is normal, most of the population is observing and not violating government safety precautions. Of course, there were some cases when, despite government reports of an uninterrupted supply of food, people emptied shelves in shops. But it was not for long, only a couple of days, after which, the shops are again full of products, and the situation is stable.

According to the Dutch economists, both HoReCa (hotel, restaurant, cafe) and construction are the industries hit the hardest in the coronavirus pandemic outbreak in 2020. It is considered that in comparison with 2019, these industries will experience a value-added decline by 4%. Other industries like agriculture, forestry and aquaculture will face a decrease by 3%. We believe that next year the situation will improve significantly, however it needs time to recover from the damage caused by the pandemic.

The Dutch government has introduced considerable measures to curb the spreading of the COVID-19 and the following measures are in place now:

The new Temporary Emergency Bridging Measure for Sustained Employment (Noodfonds Overbrugging Werkgelegenheid, NOW) will provide financial help for employers to help pay their employees' wages.

From 16 March 2020 to 1 April 2021, the small and medium-sized enterprises (SME) credit guarantee (BMKB) scheme will be extended to help SME that are affected by the coronavirus secure bank guarantees and bridge financing. The extended scheme is referred to as BMKB-C.

For agricultural entrepreneurs, the equivalent of the BMKB-C is the Credit Guarantee scheme for Agriculture (BL-C).

The Business loan guarantee scheme (GO) has been extended.

Self-employed professionals will be able to apply for an extra, temporary benefit for self-employed professionals (Tozo) to bridge the loss of income from 1 March onwards, in the municipality where they live.

Entrepreneurs who have a loan from microcredit provider Qredits do not have to repay their loan for a period of 6 months. During this period, the interest will be reduced to 2%. The government supports Qredits with 6 million euros.

The €4,000 Reimbursement for entrepreneurs in affected sectors scheme (TOGS) is now open for entrepreneurs in a number of specific sectors who have been affected by the coronavirus measures.

In my opinion these measures are appropriate and timely, all of them directed to mitigate the economic damage. That will support businesses and employment during the period when many businesses have a considerable income loss.


Maja Marić
Partner - CEO
FinExpertiza Serbia

One part of the citizens feels angry because some people do not take the situation seriously enough. Others are finding ways to help one another. Because of the pandemic, a curfew has been imposed from 5p.m on working days and from 1 p.m. on Saturday to 5 a.m. on Monday. There are shortages of certain foods and disinfectants.

One of the sectors most affected by the outbreak of the coronavirus epidemic is certainly tourism. This applies not only to the reduction of international travel, but also to domestic tourism as well as related catering activities: restaurants, clubs and cafes. Next up are the industries suffering from supply chain disruption. Quarantine measures that limit travel and transportation, but also normal business and production, have a direct impact on the industry.

The program of economic measures of the Serbian government to reduce the negative effects caused by the COVID-19 includes as part of the first package:

      Deferral of payment of payroll taxes and contributions to the private sector during a state of Emergency, with a subsequent repayment of liabilities incurred in instalments beginning at the earliest 2021;
      Delaying payment of income tax advance payments in the second quarter;
      Exempting donors (contributor) from the obligation to pay VAT.
      Moratorium on dividend payments by the end of the year, except for POEs;

The second set of measures relates to direct payments to enterprises, ensuring minimum wage payments in micro, small and medium-sized enterprises for three months. Large enterprises will receive money based on 50% of the minimum wage.

The third set of measures includes a program for granting loans for maintaining liquidity and working capital for entrepreneurs, micro, small and medium-sized economic entities, agricultural holdings and cooperatives. These loans will be secured by state guarantees. The total value of the programs envisaged by this measure is 264 billion dinars (around 2.2 billion euros).

The fourth package relates to the payment of direct assistance in the amount of 100 euros in dinars equivalent to all adult citizens of the Republic of Serbia.

I suppose the Government's proposed measures will help maintain employment during the state of emergency, as well as assist businesses that have difficulty in doing business during this crisis period.


Serhan Berker
Consultant - CPA
Itimat Bagımsız Denetim A.S.

A certain percentage of the population is very concerned, while others are not aware of the potential risks at all. The misinformation spreading through the social media is the worst thing that is happening in this pandemic. The physical distancing and isolation are the biggest problem. I assume that in future one of the main issues will be the psychological outcome and the effects of these measures on the human beings. At the beginning of the crisis, there was a big rush to buy certain products, but it has ceased now. There is a great demand on online shopping, which I think is working very well so far.

As of today, the economic impact of this crisis is strongly felt by business in our country, but the main issue is uncertainty. Nobody knows how long it will take and when the market will begin to recover. Almost every sector has been hit by this crisis. Many measures and regulations have been taken and are going to be taken by our government, but how they will be applied and whether they will be efficient is not known and clear. In my opinion, the governmental supportive measures are only designed as quick fixes so as to solve the problem for now, or at least to postpone it for up to 3-6 months. I fear that if those supportive measures prove insufficient, the new booming service we are going to provide to our clients will be bankruptcy certificate services.

Economic support measures in Turkey include:

      Limits of Credit guarantee fund raised from 25 billion liras to 50 billion.
      Short work allowance application conditions were eased till July 2020.
      2 million families with narrow income will receive 1.000 liras support.
      Minimum pension payment raised from 1.000 liras to 1.500 liras.
      Financial support for Artisans of 25.000 liras with Guarantee of Ministry of Treasury by Halkbank.
      In Disaster Regions, Electricity and Gas payments can be postponed up to 1 year.
      Support to employer for minimum wages which will be deducted from their social security premiums.
      Tenants at public premises with rent debts will have additional 3 months for payment.
      Non-payment of rents will not be accepted as the reason to terminate the contract or discharge order till 30 June 2020.
      Additional measures to ease social security premiums.
      The enterprises using investment incentives can still benefit from these incentives even if they postpone their payments.
      Several Government authorities will support, incentivize and finance every production for diagnosis and treatment of CoVid-19.
      Many tax filings, tax payments and reports to several public authorities are postponed between 3-6 months.
      Several payments to public authorities are postponed between 3-6 months.
      About 1.9 million artisans are considered under force majeure and their social security payments are postponed.

United Arab Emirates

Muhammad Nawaz
Senior Manager
Haroon Malik Accounting Services

Since March 2020 the impact of COVID-19 has become more apparent and widespread. Due to the swift measures implemented by the United Arab Emirates’ Government, the spread of the virus was closely controlled and its effects nullified.

The business in UAE has been hit very hard. The market has stagnated to a certain extent and due to the closure of offices which have been deemed non-essential by the government, the business activities have either completely stopped or have been reduced to the bare minimum. The following industries have been hit the hardest by this pandemic in UAE:

      Food Services

Keeping in mind that the United Arab Emirates has postponed the Expo 2020 to the new proposed date of 1st of October 2021, it seems that it will take at least 6 months for the economic situation to recover.

To support the economy, the Government of UAE has introduced a number of measures that have proved to be helpful for the businesses currently struggling. The total value of stimulus packages introduced by the Government of the UAE amounts to AED 126.5 billion (about $35 billion). In addition to this, there have also been administrative measures that will help businesses to manage this crisis. These include a suspension of six-month renewable work permit fees as well a reduction in labour and other charges to reduce costs for small business owners and accelerate large-scale infrastructural projects. These stimulus packages and other measures will most certainly help the current business climate. In addition, the UAE government is putting particular emphasis on large industries, creating effectively a trickle-down situation in the economic movement which will prevent the market from stagnating.

Since the UAE does not have a personal income tax, any taxation measures in relation to the population would be not applicable here. However, the UAE government has required private companies to provide its employees with annual leaves, should they decide to go to their home countries, as well as availing unpaid leaves. In addition, the UAE has legislation in place which prevents companies from laying off employees while they are on leave. It is our opinion that these measures, though not monetary in nature, will most certainly help individuals. This will also contain the spread of COVID-19.


Malik Haroon Ahmad
Managing Partner
Safasha Business Solutions

The number of COVID-19 cases in Pakistan is not that high compared to other countries, but people having Corona symptoms are facing unsatisfactory treatment. Moreover, other patients who are suffering from serious diseases are worried because most clinics are closed and hospitals are treating only emergency cases. Screening at airports is being done on every passenger. All kinds of public transport are suspended. Masks, gloves and sanitizers are distributed everywhere, including rural areas. A telephone helpline has been established for COVID-19 and other patients. Special quarantine centers are being built and special isolation wards are being established in the hospitals.

The government initially locked down the whole country, but later on an exemption was given to eight industries. Overall, business in the country is suffering a major slump, and it looks like a long-term situation. The stock exchange index has massively decreased. Certain business sectors, especially the textile, leather, steel, fan and furniture industries, have been affected due to a lack of labor presence in the factories, closure of business outlets, not having the public transport and logistics facilities. These industries have suffered a major setback because of unavailability of international logistics, as their services are not consecutively operating due to the lockdown around the world and inside the country. Import-export services are unavailable, which is causing cargo to be stored at the ports for an indefinite extent.

The government is taking economic measures to efficiently support business. Petrol and diesel prices have been cut down, for which the government has to bear the burden of 75 billion rupees ($472 million). A subsidy of 50 billion rupees ($314.47 million) for utility stores has been allocated. An amount of 200 billion rupees ($1.25 billion) is allocated for low-income groups, particularly laborers. Around 5 million people will be provided a monthly stipend of 12,000 rupees ($75) per month until further notice. Principle and mark-up of loans are deferred with the help of 100 billion rupees ($628.93 million) for the agricultural sector and SMEs.

Also, in order to support the population, monthly deposit dates of sales taxes and excise duties were extended. Compliance dates of tax notices and court hearings were extended. Retail sector POS integration date with Federal Board of Revenue (FBR) was extended. Sales tax in Punjab Province on services at the general rate of 16% was reduced to zero rate for construction businesses, contractors, property dealers, realtors, apartment house management, hotels, motels, guest houses, marriage halls and catering services, health and life insurance, information technology, beauty parlors, clinics, car dealers, laundries, clinics, etc. Other provincial governments are taking similar measures. Exceptional tax relief to the construction sector is provided. A kind of amnesty has been provided to the all people who want to donate funds to help the country throughout this scenario. For this, the government has assigned a special account in the National Bank of Pakistan.


Hafez Sharaf El-Din
Managing Partner
FinExpertiza Egypt

The spread of COVID-19 is impacting almost every aspect of the Egyptian life. With everyone staying at home and avoiding interactions to stop the spread of the virus, many people are affected emotionally, physically and economically. Egypt and especially Cairo is known to be a place that never sleeps, with everyone hustling in the streets at all times for various reasons. So for everyone to be required to stay at home it certainly is causing discomfort across the whole country.

Schools and universities have been suspended and other educational methods are being utilized to substitute classes and exams. Working mothers with children up to 12 years are offered paid leaves as well as the elderly and vulnerable staff. Employees are encouraged to work from home or take shifts in case their work needs physical presence. International air traffic in airports has been suspended and a curfew has been imposed in an attempt to stop new cases from spreading across.

Many pharmacies and supermarkets were not ready for a huge increase in demand and accordingly took some time to adjust and be able to provide. Those two sectors are specifically among the few that are able to thrive amidst the crisis as they able to make money from individuals, corporations, and the government. Many other businesses are rather experiencing a phase of stagnation as they no longer operate. This mainly includes the entertainment industry, sports facilities, tourism and air flights as well as various SMEs which are all seeing a huge decline in demand.

Additionally, Egypt has a wide sector of irregular labor who get paid on a day-to-day basis, depending on the available work. Those face the most difficulties as they still try to support their families with the little income they now make. In the long run it is expected that a lot of companies will be forced to permanently shut down if the government does not intervene and support them as needed. Poverty levels will possibly increase as unemployment hits. Other industries have not shown actual losses but might be impacted if things get worse during the upcoming months.

The Egyptian government has introduced important economic measures to support the different sectors. Firstly, an economic package of EGP 100 billion has been allocated to fight the outbreak. This is majorly meant to support the healthcare and food sectors as they face unusual challenges. The Central Bank of Egypt has also cut key interest rates by 3%. Credit obligations for loans to SMEs have been postponed and installments for mortgages, factoring and financial leases have been delayed by 6 months. For the tourism sector the government has granted tourism facilities two-year loans as well as a grace period of 6 months to pay salaries and suppliers obligations. The same is granted to the civil aviation sector in addition to bearing some of their financial burdens that have escalated with the current circumstances. Other grants are allocated for irregular employees affected by the crisis in addition to the establishment of an emergency fund to ensure they receive the needed support. On other matters across the country, individual taxpayers got an extension for submitting their tax returns, and are now allowed to submit them electronically. There has also been a drop of EGP 10 billion cases and disputes of debt default for loans of natural persons and an exemption of their interests. That is in addition to an exemption of capital gains taxes for foreigners, and postponement for residents till 2022. This is all meant to help the various affected sectors, and it is very reassuring to see the government speeding up to support everyone. However, it cannot yet be determined if those decisions are enough to fill all the gaps and make up for all the losses caused by COVID-19.


Nailya Musina
Audit-Varn / FinExpertiza Uzbekistan

In March, Uzbek authorities began to gradually introduce restrictive measures. The international traffic with other states was suspended and inside the country it was limited as well - public transport stopped operating, and traveling by car is possible only with special passes. Since the beginning of April, a self-isolation regime has been introduced in the country, any mass events have been banned, and a requirement for social distance was introduced. Most of the population complies with the requirements. People try not to leave their homes with no urgent need and refrain from interactions.

At the beginning of the pandemic there was a panic - citizens began to buy food and other goods for the future. However, on the whole, the situation with regard to store shelves and markets has not changed - there are enough products available. The tax service and the General Prosecutor's Office are trying to ensure that prices do not leap. Charity has increased tremendously: mahalla committees give food packages to low-income families, and even some private stores give bread free of charge.

The business sectors that suffered the most include production plants, air traffic, tourism, hotels, and the entertainment industry. Entrepreneurs suffer losses, but government benefits should help businesses survive quarantine without extremely negative consequences.

The government has taken a number of important economic measures to help businesses and people, including: tax deferment and suspension of penalties, credit holidays for individuals and legal entities, nullification of rates on import of food and medicine. In addition, it was decided to reduce personal income tax rates by 50% for individual entrepreneurs and water resources tax for farmers. Losses of local budgets will be reimbursed from the federal treasury. In addition, all tax reviews were suspended until the end of the year, tax penalties are no longer charged for businesses, and the “green channel” at customs was expanded for import of goods.

The President of Uzbekistan gave instructions to extend the number of those who receive social benefits by at least 10%. Parents and guardians of young children will receive temporary disability benefits and additional vacation leave. For the population, benefits have also been introduced regarding payment of utility bills. And access to television and the Internet during the pandemic will not be disabled for debts. The authorities also decided to extend the heating season until April 1, to avoid colds relapses.


Galina Rostokina
W.Jacobs-Audit / FinExpertiza Kyrgyzstan

An emergency regime has been introduced in Kyrgyzstan since March 22. Curfew was announced in three major cities, including the capital, Bishkek, and three districts of the country. The country borders are closed, air traffic is suspended, public transport is restricted and sanitary checkpoints have been set. All people arriving in Kyrgyzstan undergo express-testing for coronavirus.

All institutions and organizations are closed, except for life support facilities, banks, grocery stores and pharmacies. Additional jobs are offered in observational zones. Large-scale works are being carried out to disinfect all public places, as well as organizations with instances of coronavirus infections. Distance education has been organized for schoolchildren and students. Part of the able-bodied population was transferred to work remotely. However, most citizens are temporarily unemployed, which certainly negatively affects family budgets and the economic situation in the country in general.

The government has temporarily banned export of a number of goods: wheat and flour, rice, vegetable oil, pasta, sugar, chicken eggs, edible salt, animal feed, antibacterial agents and disinfectants. And it has also introduced regulation for food products and fuel and lubricant materials for 90 days.

The pandemic has the most severe impact on the tourism sector and the clothing industry, and a significant drop in demand can be seen in trade and services sector. Most foodservice outlets were closed; some of them continued to operate only for delivery. Among stores, only groceries are operating. Dordoy Bazaar - the country's largest market - is closed. Oil traders are speaking about an 80% drop in demand for fuel and lubricants.

The government announced that Kyrgyzstan does not have the opportunity to give money to enterprises and population or to cancel taxes. However, assistance will be provided - first of all, to the most affected types of business, or to those who will provide the greatest employment opportunities for the population or demonstrate high productivity. The two sources of aid are being considered: from the Russian-Kyrgyz Development Fund and from international donors. Negotiations were held with the European Bank for Reconstruction and Development regarding financial aid of up to $ 150 million, of which up to 50% are planned to be allocated on a grant basis. Negotiations are also being held regarding assistance from the World Bank, the Asian Development Bank and the Islamic Development Bank. As part of the government’s plan to support the economy, a number of important decisions have been made: deferment of taxes and social contributions, the deadlines for submitting a common tax return for individuals and individual entrepreneurs have been prolonged, as well as business reporting on taxes and social contributions. Reviews of businesses by supervisory authorities have been cancelled and field tax audits have been limited. In addition, it is planned to prolong and restructure loans to businesses, including small and medium-sized enterprises. It is recommended that utility services providers and telecom operators do not suspend their services, the Internet and communication for debts within three months. Low-income citizens are provided with grocery sets and essential goods. Charity organizations, entrepreneurs and individuals also support the population.


Prof. Dr. Necdet Saglam
Anadolu University
FinExpertiza Turkey

The schools, universities, hotels and tourism, restaurants sector, movie theatres and similar venues as well as sports events in our country have been mostly put on hold. The services sector will be affected the hardest. The public institutions and organizations were ordered to allow for alternating and flexible schedules and enforce remote working if possible. All restaurants and cafés are closed or giving take away service. There are ban on vehicles leaving or entering 31 big cities.

A 100 billion Turkish liras economic measures package was also announced by the government to address financial issues of companies and low-income households. With this package the government promised to raise the Credit Guarantee Fund (KGF) limit, postpone tax liabilities, SGK premium payments and credit debts of employers in sectors most affected by the crisis, and make a resource transfer of 2 billion liras to families in need, among other measures.

The government started a national solidarity campaign and in just three days, over a billion Turkish liras (nearly $149 million) was donated by over 300,000 people and institutions.

The plan was The Turkish economy will shrink by 1.4% in 2020 and grow by 0.8% in 2021. But it will be very difficult.

The social security premiums and VAT deductions have been suspended for six months across various sectors, including retail, malls, iron-steel, automotive, logistic and textile. Credit payments for firms who are facing cash flow disruptions due to coronavirus will be postponed for three months. The payments of craftspeople and artisans to state lender Halkbank will also be delayed for three months without interest.

In order to maintain capacity utilization rates, the government has decided to extend financial support to stocks for exporters and the country also doubled the credit guarantee fund's limit to 50 billion Turkish liras ($7.70 billion), up from 25 billion liras ($3.35 billion).

The lowest pension amount has also been increased to 1,500 Turkish liras ($231).

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