Australia adds $38 billion in stimulus

MELBOURNE/SYDNEY: Australia’s government will spend additional A$66.4 billion ($38.50 billion) as part of a second stimulus package to shelter the economy from the financial impact of the coronavirus, Prime Minister Scott Morrison said yesterday, as states moved to impose major lockdowns.

The new stimulus will go to individuals in need and small and medium-sized businesses. Those businesses produce about a third of the country’s annual economic output and employ more than 40% of the workforce, according to government statistics. “We will be focusing on those in the front line, those who will be feeling the first blows of the economic impact of the coronavirus,” Morrison said in Canberra yesterday. “There will be more packages and more support.”

The package, which dwarfs the A$17.6 billion ($10.20 billion) in initial measures announced last week, came with a pledge by the government to enforce social distancing rules after many Australians appeared to disregard health warnings and flocked to pubs and beaches amid a warm autumn spell. After an initial relatively slow spread, the number of coronavirus infections in Australia has been rising quickly in recent days, climbing to 1,098 confirmed cases as of yesterday morning with seven recorded deaths linked to COVID-19. Morrison said that the government would help underwrite loans to small and medium-sized businesses and boost unemployment benefits as companies are forced to lay off staff.

Jobseekers will get extra money and people in financial stress will also be able access up to A$10,000 tax-free of their pension funds for this and next year, while some not-for-profits and small businesses will have access to cash grants to keep staff employed. Together with more than A$100 billion announced earlier in emergency banking measures to prevent a credit freeze and the initial stimulus package, Australia has now announced financial measures equalling about 10 percent of the country’s annual gross domestic product, the government said. “The degree of stimulus released in such a short period of time highlights the scale of the looming demand shock (due to both containment measures, as well as business and consumer confidence),” economists at the National Australia Bank said in a note. —Reuters

SYDNEY: A man walks past the Reserve Bank of Australia in the central Business District of Sydney. Australia’s central bank cut interest rates to record lows and moved to pump billions into the financial system in an emergency bid to pull the economy out of a pandemic-induced free-fall. —AFP