An IMF blog published on 5 March 2020 is concerned with fiscal policy responses to the outbreak of coronavirus.

The blog emphasises that the priority for governments is health spending for prevention and cure, and to ensure that health services are not overwhelmed. To put this into practice low-income countries will need grants or zero-interest loans and fast provision of concessional finance is essential to contain the health situation.

Individuals and small businesses may need to be shielded by government spending from the economic impact of the health crisis. Governments should be concerned to prevent bankruptcies and loss of livelihood for people as a result of the crisis.

Governments can spend money to detect and control the virus and provide basic services to the people and businesses affected This may involve allocating funds for local governments to spend or sending medical personnel to affected places.

Temporary cash flow relief could be provided to affected people and businesses. The relief could take the form of wage subsidies to affected people and firms; and transfers in cash or in kind could be provided for vulnerable social groups.

Tax relief can be given to people or businesses in affected regions and sectors that have cash flow problems resulting from the crisis. This might include income tax and VAT payment extensions to businesses in affected areas, simplified taxation or suspension of social security contributions.

Finance ministries, tax and customs administrations require a business continuity plan to ensure that taxpayers services continue to be provided, including electronically, even if human resources are depleted by the crisis.

In some countries an emergency budget may be required to implement the measures and plan for the fiscal cost. The budget announcements can be used to explain to the public how the measures are compatible with fiscal stability and sustainability. Some of these measures can occur through administrative means and others would require an emergency budget, which would also take stock of the overall fiscal cost.