This note considers the impact of the Covid-19 pandemic in the Eastern Partner countries (Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova, and Ukraine). It analyses the economic and social impacts, as well as policy responses to contain the spread of the virus and help households and businesses weather the crisis. Finally, a menu of policy options is considered for supporting small and medium-sized enterprises in the short and medium terms, with a particular focus on digitalisation.

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This project is implemented with the financial support of the European Union within the EU4Business initiative. EU4Business is an EU initiative that helps SMEs in the six countries of the Eastern Partnership region to realise their full potential and boost economic growth

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Context

The impact of the Covid-19 crisis on public health in the six EU Eastern Partner (EaP) countries1 so far remains limited compared to Western Europe, with 840 reported fatalities in the region as of 12 May. Armenia, Azerbaijan and Georgia (because of their proximity to Iran) saw the region’s first cases of Covid-19 in late February. Swift containment measures and limited intra-regional mobility have so far helped limit the spread of the virus, and the number of recorded cases remains relatively low in the South Caucasus. As the epicentre of the pandemic shifted first to Italy and then to other West European states in early March, the Republic of Moldova and Ukraine started to record more cases and adopted containment measures similar to those of other European countries: closure of schools, limitations on international travel, and restrictions on public gatherings. Currently, Belarus is the only EaP country without comprehensive containment measures in place. Strict containment imposed in Georgia at the start of the outbreak has already led to promising initial results in flattening the curve of new infections. As long as the virus circulates and a vaccine is not available, however, the public health situation could rapidly change.

The economic impact of the crisis is already proving severe. The simultaneous shock on supply and demand has reduced economic activity in key European, North American and Asian markets more severely than during the Great Recession of 2008-09. The OECD estimates that the decline in the level of output is equivalent to a decline in annual GDP growth of up to 2 percentage points for each month that strict containment measures remain in place. Of course, the ultimate impact on annual GDP growth will depend not only on the magnitude and duration of national shutdowns, but also on the extent of reduced demand for goods and services in other parts of the economy, and, critically, the speed at which fiscal and monetary policy support takes effect. Nonetheless, it is clear that the crisis will weaken short-term growth prospects substantially. The economic impact on the EaP region is further exacerbated by the recent collapse in oil prices, which directly hits Azerbaijan and Belarus but also affects other EaP countries through its impact on trade and remittances, particularly Armenia and Georgia. The oil-price drop will likely push Russia into recession for the second time in five years, with the IMF predicting a 5.5% decline in real GDP.

Containment and social distancing measures, vital for slowing the spread of the pandemic, are having a particularly severe impact on small and medium enterprises (SMEs), as demand for services other than food retail has plummeted. EaP countries have implemented significant reforms in recent years to support their SMEs and build better institutional environments to enable their growth (for more information, see the SME Policy Index 2020: Eastern Partner countries). However, the current crisis will require the adoption of comprehensive support packages that encompass not only direct SME support through credit lines and loan guarantees, but also fiscal and social policy measures. Intensive support will also be needed in the medium to long-term, especially to help SMEs recover quickly from the crisis by supporting digitalisation, more flexible regulation and better access to finance. International organisations, including the European Union are helping the region respond to the crisis. The EU is already reallocating €140 million of funds to support the immediate responses and the use of existing funds of up to €700 million to mitigate the socio-economic consequences of the crisis. The European Commission has proposed a further €1.2 billion in macro-financial assistance for Ukraine, €150 million for Georgia, and €100 million for Moldova.

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Evolution of the pandemic and snapshot of healthcare systems in the EaP region

The current state of the Covid-19 pandemic

EaP countries reported their first Covid-19 cases in late February/early March 2020, shortly after the virus started to spread in the EU. Since then, and in line with the global trend, official numbers have increased sharply to 52 923 confirmed cases and 840 deaths as of 12 May (Figure 1 and 2). In absolute terms, Ukraine appears to be the most affected country in the region, although Moldova displays the highest rate of deaths on a per-capita basis (Figure 3). Overall, the EaP region is showing fewer cases and deaths compared to the hardest-hit EU countries, although the recent acceleration in Belarus and Ukraine suggests that the region may not yet be past the most acute phase of the epidemic.

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Figure 1. Total Covid-19 cases
Figure 1. Total Covid-19 cases

Note: The number of confirmed cases is likely to be underestimated due to limited testing.

Source: European Centre for Disease Prevention and Control

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Figure 2. Total Covid-19 deaths
Figure 2. Total Covid-19 deaths

Note: Challenges in the attribution of causes of death mean that the number of confirmed deaths may not be an accurate count of the true total.

Source: European Centre for Disease Prevention and Control

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Figure 3. Total COVID-19 deaths per million inhabitants (log scale)
Figure 3. Total COVID-19 deaths per million inhabitants (log scale)

Source: European Centre for Disease Prevention and Control

So far, healthcare systems in EaP countries have weathered through the pandemic…

EaP governments moved quickly to contain the epidemic2. Considering their proximity to Iran, an epidemiological hotspot, Armenia, Azerbaijan and Georgia swiftly introduced restrictions on travel and public gatherings, and closed schools. With the exception of Belarus, the spread of Covid-19 within the region prompted most EaP countries to mandate strict containment measures similar to the “lockdowns” adopted in many EU countries, and, in some cases, declare states of emergency. New restrictions have included closure of non-essential businesses, social distancing and self-quarantine, compulsory wearing of protective masks in public spaces, limitations on intercity and interregional transport, and penalties for violators.

EaP countries have so far managed to avoid the pressure on national health systems experienced by many of their European neighbours, keeping the number of patients requiring intensive care below the critical threshold of hospitals’ available capacity. In particular, all countries have taken steps to make their health infrastructures and workforce more flexible and increase their readiness to meet potential surges in demand as the epidemic evolves. The most frequent actions included i) repurposing hospitals so that patients can be treated in dedicated facilities to limit the spread of the infection, ii) redeploying intensive care unit specialists to hospitals with the highest demand, iii) re-training of medical and nursing personnel caring for Covid-19 patients, and iv) mobilising medical students in their final year of education.

While no EaP country has reported a lack of medical personnel (Figure 4), some (e.g. Armenia, Ukraine) have identified shortages of key resources needed to test and treat Covid-19 patients (laboratory testing reagents, ventilators, intensive care unit equipment, and personal protective equipment), which raises concerns about the ability to cope with the situation should the infection continue to spread rapidly.3

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Figure 4. Healthcare workforce in EaP and selected OECD countries (2018, or latest year available)
Figure 4. Healthcare workforce in EaP and selected OECD countries (2018, or latest year available)

Source: World Health Organization for EaP countries, OECD for OECD countries and EU average

…but healthcare in the region remains underfunded compared to OECD countries

As the epidemiological situation evolves, the delicate equilibrium described above may change, compounding shortcomings in the ability of EaP countries to provide universal access to quality healthcare. Per capita expenditure on healthcare in the region falls in the range of 400-1200 USD, much lower than the OECD average of 3 994 USD in 2018 (Figure 5). In addition, healthcare in the EaP region (with the exception of Belarus) is mostly financed by households through private out-of-pocket payments, which may limit access to healthcare. This stands in sharp contrast to the situation in most OECD countries, where the largest portion of healthcare costs are financed by public sources.

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Figure 5. Health expenditure in EaP countries, by source of financing (2017, or latest year available)
Figure 5. Health expenditure in EaP countries, by source of financing (2017, or latest year available)

Note: 2018 data for OECD

Source: World Bank – World Development Indicators, OECD.

The economic impact of the protracted Covid-19 “lockdowns” on access to healthcare in the EaP region will be twofold, with the risk of further exacerbate existing inequalities. A reduction in economic activity will hit public finances through lower tax revenues, which in turn may limit governments’ ability to maintain current levels of public expenditure on healthcare. Furthermore, a rise in unemployment and loss of business income will threaten the most vulnerable households, thus limiting the availability of private resources to cover the remaining share of healthcare costs.

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Economic and social impact

Most EaP governments have already implemented measures to mitigate the economic impact of Covid-19. While it is difficult to estimate the magnitude of the effect of the crisis on EaP economies and their SMEs, it is clear that this crisis will cause a sharp contraction in output, household spending and international trade. Taking into account the strong containment measures implemented by five of the six EaP countries, together with the disruption in global value chains and the structural characteristics of the economies, the IMF forecasts all EaP economies to contract in 2020. Ukraine is expected to experience the steepest decline (7% of GDP) followed by Belarus (5%), while Armenia’s economy is expected to contract by less than 1%. Both the IMF and EBRD predict a V-shaped recovery for the region, with all EaP countries expected to recover strongly in 2021. The EBRD forecasts over 5% GDP growth in 2021 for Armenia, Georgia, Moldova, and Ukraine and around 3% growth for Azerbaijan and Belarus. This section outlines the anticipated economic fallout from the crisis, with a view to informing related policy responses.

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Figure 6. Gross domestic product (y-o-y percent change)
Figure 6. Gross domestic product (y-o-y percent change)

Note: values for 2020 and 2021 are forecast

Source: IMF World Economic Outlook, April 2020

Financial market reactions

Financial markets are usually the first to react to economic uncertainties and are a good indicator of investor sentiment. Trends in government bond yields and local exchange rates indicate falling investor confidence in the region’s economies (Figure 7 and Table 1). All EaP countries except Azerbaijan have experienced significant currency depreciation (the Azerbaijani manat is subject to currency controls) and growing yields on government bonds, signalling heightened concern about the health of public finances in the EaP countries. On a more positive note, exchange rate volatility has decreased significantly, and exchanges rates were largely stable throughout April.

In recent years, the general government balances have been negative in most of the EaP countries (except Azerbaijan and Belarus), and this year, they are expected to become steeply negative across the region. Hard hit by the fall in oil prices, general government net borrowing is expected to reach 13% of GDP in Azerbaijan and will average 6% for the rest of the region, according to IMF estimates. Long-running current account deficits exacerbate the pressure on public finances. The economic impact was already reflected in March in shrinking reserves and foreign currency assets across the region. Azerbaijan reportedly spent over 2.7 billion USD4 to maintain the manat’s fixed exchange rate. In March, Belarus’s reserve assets declined by over 10%, Ukraine’s by 7.8%, Moldova’s by 2.5% and Georgia’s by 1.1%.

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Figure 7. EaP currency exchange rates in relation to USD
Figure 7. EaP currency exchange rates in relation to USD

Note: Value 1 represents exchange rate for 1 USD vs local currency on Jan 1, 2020. Increases in value denote currency depreciation vs USD.

Source: OANDA Currency Converter

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Table 1. EaP government bond yields

Issuer

Maturity

Yield to maturity (% p.a.)

Yield to maturity (% p.a.)

27.2.2020

27.03.2020

ARM

2025

3.40

7.15

AZE

2024

2.75

6.75

BLR

2030

6.00

7.20

GEO

2021

6.87

21.50

UKR

2027

6.00

9.50

Note: Yields on selected bonds denominated in USD; Moldova does not have outstanding bonds denominated in USD/ EUR.

Source: Bloomberg Markets

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Figure 8. Current account balance (% of GDP)
Figure 8. Current account balance (% of GDP)

Source: IMF World Economic Outlook, April 2020. Forecast values for 2020 and 2021.

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Figure 9. Government net lending/borrowing (% of GDP)
Figure 9. Government net lending/borrowing (% of GDP)

Source: IMF World Economic Outlook, April 2020. Forecast values for 2020 and 2021.

Potential impact of Covid-19 containment measures on output

The stringent containment measures to combat the spread of the virus will lead to significant short-term declines in output. One way to estimate the impact of containment measures on GDP is to examine output categories and identify the sectors likely to be most directly affected by such measures.

Several service sectors, such as those related to tourism and proximity services that require direct contact between customers and service providers, forgo virtually all of their revenues as a result of the restrictions on movement and the requirements of social distancing. Most retailers and restaurants are closed, and increases in their online and take-away sales will not compensate for the resultant massive drop in demand, particularly in places where internet penetration is lower and cyber-commerce less developed. Moreover, non-essential construction work is likely to be adversely affected by limited labour mobility and reductions in investment.

Google Mobility reports (for Belarus, Georgia, Moldova) and Yandex Mobility Index (excluding Ukraine) show how people’s movement has declined in all of the EaP countries. In Georgia and Moldova, the number of visits and time spent at grocery stores and pharmacies have declined by over 60% compared to normal, and visits to workplaces have halved. The Yandex Mobility Index highlights similar trends in Armenia and Azerbaijan. In Belarus, the slowdown is less dramatic, with about a 30% drop in the number of visits to grocery stores and a 20% drop in the number of visits and time spent at workplaces.

Altogether, the most-affected sectors account for 30-40% of total output in the EaP economies. Assuming a total or partial shutdown of their activity, Figure 10 shows the estimated cost of the containment measures relative to GDP, following the introduction of stringent containment measures. This is an estimate of the order of magnitude of the costs of containment measures, not a growth projection. The impact on annual GDP growth will ultimately depend not only on how long these measures remain in place but also on other factors, such as the speed or magnitude of policy responses, activity in other sectors of the economy, changes in the terms of trade, and any indirect/second-round effects of the drop in sectoral output. It also does not consider the role of sub-sectors that might not be negatively affected by the crisis and are prominent in some countries (e.g. gambling in Armenia). In addition, estimates for Belarus are included for comparison although the government has not yet introduced any comprehensive containment measures.

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Figure 10. The potential impact of containment measures on activity in EaP countries (% of GDP)
Figure 10. The potential impact of containment measures on activity in EaP countries (% of GDP)

Note: estimates assume full shutdowns in Art, entertainment and recreation, and other service activities; declines of one-half are assumed in construction, real estate activities and professional activities; declines of three-quarters are assumed in retail and wholesale, accommodation and food services. This follows the same methodology as OECD estimation of the containment measures’ impact on output in OECD countries: https://read.oecd-ilibrary.org/view/?ref=126_126496-evgsi2gmqj&title=Evaluating_the_initial_impact_of_COVID-19_containment_measures_on_economic_activity

Source: Authors’ calculations based on data from national statistical offices of the EaP countries.

Based on the assumption of complete or partial shutdowns in selected sectors, the immediate impact on any given economy for the duration of the shutdown is estimated to be between 20 and 30% of GDP depending on the structure of economy. For example, Georgia’s economy, which is mostly driven by the service sector, can be expected to contract by around 30%, while economies driven more by extractive (Azerbaijan) and manufacturing sectors (Ukraine) will be confronted with a smaller direct impact of containment measures. However, developments in external markets will add to the impact, particularly in Azerbaijan – the estimate above does not include the effects of the recent drop in oil prices.

Slowdown of global economic activity and its economic impact on EaP economies

The impact of the pandemic on international trade will be severe, given partial or complete border closures, restrictions on the movement of goods, labour and even capital, a drop in global demand and disrupted value chains. The contraction of trade and other economic activity in major markets will directly affect smaller economies on the periphery. All EaP economies (except Ukraine) are very trade-dependent (Figure 11), with small domestic markets and a high degree of exposure to macroeconomic trends in their main trading partners, the European Union and Russia. The experience of the 2009 economic crisis shows that a recession in the EU can result in an even sharper contraction in the EaP region (Figure 12). Therefore, while the IMF, for example, predicts a less severe recession in the EaP than in EU countries, the impact of spill-over effects is unpredictable and could amplify downside risks in the region. Moreover, FDI, which has been an important source of economic growth and production capacity building in the EaP in the last decade, is expected to decline by 30-40% in 2020-215, constraining the region’s post-crisis recovery.

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Figure 11. Trade openness of EaP countries
Exports + Imports as share of GDP, 2018
Figure 11. Trade openness of EaP countries

Source: World Bank, World Development Indicators

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Figure 12. GDP growth in the EU and EaP during the 2009 economic crisis
Figure 12. GDP growth in the EU and EaP during the 2009 economic crisis

Note: YoY change in %

Source: World Bank, World Development Indicators

Domestic demand and investment in Armenia, Georgia, Moldova and Ukraine are significantly supported by personal remittances from abroad, equivalent to more than 10% of GDP. The anticipated economic contraction in the EU, Russia and the USA will most likely result in increased unemployment in these economies, which in turn might lead to a surge in returning migrants and reduced inflows of personal remittances to the EaP region. Remittances account for over 10% of GDP in Armenia, Georgia, Moldova, and Ukraine. The decrease in remittances and personal incomes will result in lower tax revenues, as decreased consumption will cut VAT revenues, in particular. VAT accounts for 33% of all tax revenues in Armenia, 19% in Azerbaijan, 29% in Belarus, 42% in Georgia, 51% in Moldova, and 41% in Ukraine.

In addition, the Covid-19 crisis has also affected energy markets and has contributed to a sharp decrease in oil and gas prices, both due to an unprecedented drop in global demand and surging supply, mainly due to the price war between Russia and Saudi Arabia early in the year. This will have implications in particular for Azerbaijan where the extractives sector generates around 35% of GDP and over 90% of exports, and for Belarus, where the export of refined petroleum products amount to roughly 20% of GDP.

Social impact of the COVID-19 crisis

The combination of informality, high unemployment, low savings rates and reliance on remittances points to the vulnerability of large segments of society in the region to a prolonged economic downturn.

Over a quarter of workers in EaP countries work in the sectors most affected by lockdown measures (see Figure 10 above). However, the effect on employment in retail is to a certain extent mitigated by the decision to allow grocery stores and pharmacies to remain open. Overall, low-skilled workers are the most affected by containment measures, because working remotely is rarely an option. This means, inter alia, that confinement measures may have a regressive impact on income distribution. The share of low-skilled workers of total employment range from 6.8% in Georgia to 19.1% in Ukraine.

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Figure 13. Employment in sectors most affected by containment measures (% of total employment)
Figure 13. Employment in sectors most affected by containment measures (% of total employment)

Source: Authors’ calculations based on data from ILO’s LFS Household and Labour Survey (2018)

The prevalence of informal economic activity might exacerbate the socio-economic impact of the crisis and complicate efforts to mitigate it. Armenia, Georgia and Moldova have comparatively large informal sectors. The IMF estimates the size of the informal economies in the EaP region to range from around 30% of GDP in Belarus to 50% of GDP in Georgia, while International Labour Organisation estimates suggest that the informal share of total employment exceeds 20% across the region, rising above 50% in Armenia. In normal times, the informal economy can act as a hedge against downturns since the demand and supply for the informal sectors are usually relatively unaffected by cyclical downturns.

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Figure 14. Share of vulnerable workers in EaP (% of total employment)
Figure 14. Share of vulnerable workers in EaP (% of total employment)

Note: Vulnerable workers are defined as self-employed workers without employees and contributing family workers.

Source: World Bank Development Indicators

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Figure 15. Gross domestic savings (% of GDP)
Figure 15. Gross domestic savings (% of GDP)

Source: World Bank Development Indicators

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Figure 16. Unemployment (% of labour force)
Figure 16. Unemployment (% of labour force)

Forecast for 2020 and 2021

Source: IMF World Economic Outlook, April 2020.

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Figure 17. Net remittances received (% of GDP)
Figure 17. Net remittances received (% of GDP)

Source: World Bank, World Development Indicators

Informal firms tend to have low productivity and informal workers to be poorly paid, but the informal sector is often resilient precisely because it is less exposed to financial bubbles and other shocks to the formal economy. However, the current crisis is different, since lockdowns and border closures are particularly harmful to many sectors where informality is prevalent and teleworking is not an option: proximity services, cross-border trade and transport. Since informal workers typically have very low savings, they are less able to cushion the income losses imposed by confinement policies. In many cases, their living conditions (especially those of migrant workers) may make meaningful social distancing impossible anyway, raising the risk of infection. At the same time, informal labour often plays a large role in some essential sectors, like waste disposal, agriculture and freight. Paradoxically, this means that some informal workers may be exempt from confinement measures, which enables them to generate income but also increases their risk of infection. This makes challenges with access to healthcare particularly important.

Providing state support to households and firms that operate in the informal economy can be particularly difficult. While direct cash transfers to the entire workforce may help mitigate the social impact, they would constitute an unrealistically expensive measure for most EaP countries. However, extending some income support where possible should be a priority, as should the extension of access to healthcare services. For those who continue to work on the provision of masks, other measures to ensure health and safety is critical not only to the health of the workers themselves but also to those around them. Finally, there are some forms of tax relief that could help the informal sector: while informal workers and firms may not pay direct taxes or social charges, they often do pay utility fees, market taxes and fees, and taxes affecting the movement of remittances. This is something governments may want to bear in mind when considering the design of tax measures to support SMEs.

Quite apart from informality, some other employment patterns also point to an unusually high number of vulnerable workers in some EaP countries. Around half of those in Azerbaijan and Georgia are own-account workers (self-employed individuals without hired workers) (Figure 14). Many of them rely on seasonal work related to tourism, are severely affected by the containment measures, and have only limited access to traditional forms of income support. The situation in Armenia, Georgia and Ukraine is further exacerbated by high unemployment rates, which put pressure on local social security systems, especially when employment abroad or in the informal sector is no longer a viable option for the majority. In addition, low saving rates, particularly in Armenia, Georgia and Moldova, further undermine the ability of households and individuals to absorb the economic shock related to the pandemic (Figure 15).

Finally, the global economic recession will exacerbate the social situation of migrant workers in or from EaP countries. In total, roughly 16% of the populations of the EaP countries live abroad. Armenia (33% of population) and Moldova (28%) have the region’s largest emigrant populations. Many migrant workers are stranded in foreign countries without work and thus unable to support their families back home. In some cases they may find themselves obliged to return home, while in others they might be unable to leave their host countries. Border closures are particularly harmful to seasonal workers who usually travel abroad during spring to pursue employment related to the agricultural and tourism sectors of the destination countries. Returning migrants may also carry the risk of transmitting the virus from place to place.

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Helping households and businesses through the crisis

Along with public health measures, EaP countries have adopted policies to help ease the negative socio-economic impacts of the pandemic (see Annex A for an overview of containment measures). To help mitigate risk, governments have started providing financial support and stabilisation packages, expanding public borrowing, receiving help from international donors and raising money through the establishment of funds for donations. Measures taken have included providing liquidity to SMEs, as well as support for targeted sectors (the tourism sector in Georgia has received tax holidays and loan repayment assistance). Along with economic measures, the governments have been working on easing negative impacts of the pandemic through social policy implementation. These include providing support for vulnerable groups (including the elderly and underprivileged) in accessing necessary supplies, working on amendments to labour codes to protect employees, and launching information portals to raise awareness of the virus. This section outlines selected measures adopted by the EaP governments aimed at supporting their economies during the crisis.

Armenia

Economic impact

The emergency measures imposed during the pandemic have taken a toll on Armenia’s economy. The IMF expects GDP growth to decline from 7.6% in 2019 to -1.5% in 2020, before rebounding to 4.8% in 2021. Avanesyan6 (2020) estimates that the combination of travel and other restrictions abroad, which affect remittance income, and domestic containment policies could cost Armenia’s economy around USD 1.53 billion (or 11.2% of the 2019 GDP). Some of the sectors affected most severely include light industry and tourism, with the latter reportedly incurring losses of USD 134 million in Q1 2020.

Policy responses

In response to Covid-19, Armenia approved a package worth AMD 150 billion (approx. USD 313 million) to support households and businesses. Along with domestic resources, Armenia has received support through donations and international partners. Notably, the EU has provided EUR 92 million to help finance the purchase of medical equipment and train medical and laboratory staff, as well as for business and humanitarian assistance.

In supporting enterprises, measures have been introduced to mitigate liquidity risks through co-financing and refinancing loans, as well as interest rate subsidies. Loans have been provided to help pay for salaries, equipment, food imports and raw materials, as well as taxes, duties and utilities. The maximum amount of the financial package for single businesses has amounted to AMD 500 million (approx. USD 1 million). Farming cooperatives were provided with additional financial support and businesses with 2 to 50 employees received one-time grants to cover the salaries of every fifth employee. Further measures were introduced for SMEs in tourism, agriculture, food and manufacturing, allowing them to obtain loans with a six-month grace period and no interest during the first two years, though a 12% rate would be applied during the third year. By mid-April, loan applications worth USD 8.5 million were approved, while USD 2.5 million was disbursed in one-time grants.

Along with supporting businesses, Armenia has introduced social support measures, such as one-time payments worth AMD 68,000 (approx. USD 140) for citizens with limited income who lost their jobs between mid to late March. Further financial assistance was introduced for pregnant women and individuals working in the hospitality, tourism and retail sectors. The government has approved an additional assistance package targeting the environment, while working to create jobs. So far, the government has provided AMD 43.3 billion (USD 90 million) in social and economic assistance.

Reopening

While the state of emergency will remain in place until 14 May, the government has started re-opening the economy by allowing certain sectors to resume operations, including manufacturing and construction activities on 13 April. A week later, wholesale and retail trade, information and communication services, and professional and administrative activities were resumed. Schools and universities will not reopen until the next school year, although distance learning platforms will remain available. Moreover, the authorities announced that as of 4 May restrictions on the freedom of movement will be lifted, while outdoor restaurants and bars, parks, and salons will be allowed to reopen. As of mid-March, the government had restricted travel and public gatherings, closed educational establishments and introduced self-distancing measures, while only essential businesses (such as pharmacies and grocery stores) were allowed to operate.

Azerbaijan

Economic impact

Azerbaijan’s economy has been severely affected by both containment measures and the decline in global oil prices. The IMF expects GDP to contract by 2.2% in 2020 and the current account balance to swing from a surplus equivalent to 9.2% of GDP to a deficit of 8.2%. According to government officials, the economy is losing AZN 120-150 million (USD 70.7-88.4 million) per day due to the confinement measures. In addition, while the oil and natural gas sectors make up 38.3% of GDP, Azerbaijan is the only EaP country maintaining a fixed exchange rate (the manat is pegged to the USD), which has imposed considerable strains. The country has already spent USD 2.8 billion from the SOFAZ's (State Oil Fund of the Republic of Azerbaijan) projected revenues of the USD 7.3 billion, while its financial sector has revealed liquidity and financial sustainability challenges.

Policy responses

Azerbaijan has introduced a broad economic support package worth up to AZN 2.5 billion (USD 1.5 billion or 3% of GDP). While targeting sectors of the economy that were expected to be hit the hardest (including tourism), the government sought to cover tax breaks for businesses, support mortgage borrowers and transport companies, and assist with utility bill payments. Businesses were also to receive state guarantees for 60% of the loan amount and 50% interest rate subsidies for selected new loans, along with interest rate subsidies worth 10% of interest expenses for existing loans.

Azerbaijan also prepared amendments to the tax code and introduced temporary tax benefits and holidays to minimise negative effects on businesses. Measures have included eliminating land and property taxes, and reductions in profit tax and social security contributions. The government also sought to provide financial assistance for individual entrepreneurs, as well as for business owners, to help pay wages, through an online platform by transferring funds directly to their bank accounts. By April 27, almost 60,000 micro-entrepreneurs had received AZN 40.03 million (USD 23.5 million), while appeals for 19,000 entrepreneurs were approved to help pay salaries for 178,587 employees. In addition, the Small and Medium Business development Agency started holding online workshops for entrepreneurs facing economic hardship due to the pandemic as part of raising awareness and providing information regarding the available support measures.

Social support programmes have reportedly reached over 4.8 million citizens. Measures have included retaining jobs and wages for 1.6 million employees in the public and private sectors, and social security payments for 2 million individuals. The government also launched a lump-sum payment programme covering 600 000 low-income individuals, while further measures were adopted to provide unemployment insurance and food assistance.

Reopening

In combatting the spread of Covid-19, Azerbaijan imposed a “Special Quarantine” on 24 March, which has been extended until 31 May. Along with prohibiting large gatherings and restricting travel, stores, shopping centres and restaurants were shut and public events were cancelled or postponed. Moreover, those over the age of 65 were not allowed to leave their homes, and those permitted needed to alert the authorities before doing so. In late April, Azerbaijan started lifting some restrictions, allowing services to resume and salons and stores (except those located in shopping centres) to reopen. Restrictions on the movement of individuals remains in force, though the length of time that can be spent outside has been extended.

Belarus

Economic impact

Data for the first quarter show a 0.3% drop in GDP, year on year, driven by substantial contractions in wholesale trade (8.4%), manufacturing (5.8%), and freight transport (10.5%). The slowdown in economic activity has not yet been reflected in rising unemployment. The first quarter unemployment rate stood at 4.1%, slightly lower than in 2019 (4.3%). However, the number of terminations of employment contracts outpaced the number of new hires by over 9000. Arts, sports, entertainment and recreation were most affected, with over 1800 more layoffs than new hires. The data likely understate the impact on employment, since they exclude micro and small enterprises. BEROC (2020)7 estimates that up to 114,000 employees of micro- and small enterprises risk losing their jobs. However, the overall effect on employment is mitigated by the structure of the Belarusian labour market, where over half of all workers enjoy relatively secure employment in state-owned enterprises. Recent firm surveys show that 90% of SMEs do not have operating assets and can only survive up to two months under the conditions of reduced demand.

Border closures, especially with Russia, are expected to have a powerful impact on local businesses, as will the drop in oil prices, which will compound the challenges created by the gradual loss of the subsidy on oil imported from Russia as a result of tax changes in that country.

Policy responses

Regardless of their assessment of the public health risks of Covid-19 spreading in Belarus, the authorities are well aware that the country must absorb the economic shock of the crisis. At the end of April, the government estimated its overall support package, both direct and indirect, at a total amount of BYN 5 to 6 billion (USD 2 to 2.5 billion), i.e. 3-4% of annual GDP.

To support the economy in view of the pandemic, a decree adopted on 24 April introduced measures targeting the most affected sectors: it notably foresees payment holidays and instalments, rent payment holidays and the possibility for municipal authorities to reduce property taxes, and stricter control of retail and public catering outlets by the authorities. Temporary incapacity benefits will be provided to persons taking care of children, if the latter were in contact with a Covid-19 infected patient. Public procurement procedures have also been temporarily simplified. Belarus has also decreed that those unable to return from abroad or work under self-quarantine, are entitled to keep their jobs and are entitled to at least two-thirds of their salary.

Moreover, the National Bank has asked commercial banks to delay loan and interest payments for citizens as their incomes have been affected by Covid-19, and not to raise interest fees. It relaxed certain prudential requirements and, on 22 April, reduced the value of the capital conservation buffer to 2 percentage points and lowered the liquidity coverage ratio from 100% to 80%.

Regarding price increases, the initial resolution of the Council of Ministers preventing price rises for goods and services from exceeding 0.5% monthly was withdrawn. The Ministry of Antimonopoly Regulation and Trade passed a decree on 15 April, enabling the State to regulate prices for 26 essential products (mainly food and sanitary products) by limiting profitability and mark-ups on these items.

The UNDP launched a support mechanism to help the country. The authorities are also discussing financial support with international lenders, notably the IMF, the World Bank, the EBRD, the European Investment Bank, and the Development Bank of China, for an estimated total of USD 2 to 2.5 billion.

Although Belarus has not introduced any quarantine regime, the authorities have taken some containment measures in response to the pandemic, restricting international travels and setting self-isolation rules for citizens and foreigners tested positive to the virus, as well as for first- and second-level contacts. School holidays were extended by two weeks, but classes resumed on April 20. Further steps were taken by the city of Minsk. These provisions should be applied until further notice.

Georgia

Economic impact

The state of emergency measures and lockdown have contributed to its economic slowdown. In January and February 2020, GDP growth amounted to 3.7% year-on-year, with positive trends across wholesale and retail trade, real estate, accommodation and food services. However, considering the impact of the measures introduced due to Covid-19, the IMF estimates Georgia’s GDP to fall by 3.9% this year before a recovery of 3% next year. In March, Georgia’s exports fell by 5.9% and imports by 1.4% y-o-y.

Policy responses

The government has committed GEL 3.5 billion (approx. USD 1.1 billion) to help the economy weather the impact of the pandemic, with an additional USD 3 billion in support from international partners. The central bank has introduced measures to promote liquidity, while commercial banks have allowed borrowers to postpone loan repayments by up to three months and restructured loans for businesses and individuals struggling with loan repayments. Infrastructure projects will receive an extra GEL 300 million (USD 107 million) in investments by the end of the year. The volume of VAT returns in the private sector will be doubled to GEL 1.2 billion (USD 374.4 million) to supply firms with working capital. Moreover, businesses involved in the tourism sector have had their property and income tax payments deferred, while 80% of bank loan interests over six months have been subsidised for small hotels. Further measures have included utility bill and food price subsidies, and increased benefits for low-income families and vulnerable groups.

On 24 April, the government of Georgia presented a new anti-crisis package focusing on providing social support (GEL 1.04 billion), stimulating economic growth (GEL 2.11 billion) and strengthening the healthcare system (GEL 350 million) to fight the pandemic. Measures will include assisting employees who lost their jobs, while offering state subsidies for employers to retain jobs and lump-sum payments for the self-employed. Additional support will be provided for vulnerable groups and pensions will increase by no less than the inflation rate. Moreover, businesses will benefit from credit guarantee schemes, co-financing, and a micro-grant system, while further funds will be allocated to the agro-credit programme. Reclamation debts from 2012 onwards will be written off for individuals and entities, and irrigation tax in 2020 will be exempted. Further plans for private sector stimulus are under way, providing access to an additional USD 1.5 billion.

Reopening

Georgia introduced a state of emergency on 21 March, when significant social distancing measures were adopted, and it is expected to last until 22 May. Along with restricting the movement of people and modifying public services, educational establishments and shops (except for grocery stores and pharmacies) were closed, intercity transport was restricted, and a curfew was imposed. The government announced that the economy would gradually reopen in six stages starting on 27 April, with two week intervals between each stage. During the first two stages, restrictions will be lifted on the movement of vehicles, as well as construction and repair services. Over the following weeks, markets and shops will gradually reopen, followed by malls, restaurants and financial services. During the final stages, educational institutions, entertainment venues and hotels will reopen.

Republic of Moldova

Economic impact

The IMF expects GDP to contract by 3% in 2020, and the National Institute of Economic Research (INCE) projects a 4% contraction. Retail, real estate, and construction play a significant role in the Moldovan economy, making it one of the EaP economies most exposed to the economic effects of lockdown measures. External demand will be affected due to Moldova’s close trade links with EU countries, which are likely to result in reduced exports, remittances, and financial inflows. Moreover, public finances are facing additional pressures, considering the fall in tax and customs revenues and sharp increase in public spending to support the healthcare system and social assistance programmes.8

Policy responses

In order to finance a range of measures to tackle the impact of the pandemic, the government amended its 2020 budget law. The authorities announced that LEU 2.1 billion (approx. USD 120 million) would be allocated to support the economy and businesses, and LEU 1.06 billion (USD 59 million) to social insurance, including LEU 180 million (USD 10 million) for unemployment benefits.

To help entrepreneurs to overcome cash-flow problems, the following measures were adopted: suspension of the audit obligation of individual financial statements for 2019 for some enterprises (with the exception of public entities); postponement to 25 June of the deadline for payments of income tax of legal entities; introduction of a moratorium on all inspections until 1 June; reduction in VAT from 20 to 15% for the food and accommodation sector as of 1 May; increase of state budget allocations to the emergency fund by LEU 452 million (USD 25.2 million) and to a mortgage guarantee program. In case of loans contracted by economic agents to pay salaries or for operating assets, the state will cover bank interests up to three months payroll. Moreover, on April 23, a draft law was approved, providing for the implementation of an Interest Grant Program facilitating businesses’ access to credit until end 2020, and a VAT Refund Program of LEU 1 billion (USD 56 million). Up to LEI 100 million (approx. USD 5.6 million) will be allocated to support entrepreneurs: these funds will notably finance grants for women entrepreneurs, ranging from LEU 165,000 to LEU 1.6 million (respectively USD 9.2 thousand and 89 thousands), to purchase IT equipment. Specific support measures for the tourism and agricultural sectors are under discussion, for the latter are particularly affected by the pandemic.

The government will also assist businesses that have suspended their activities (fully or partially) by refunding personal income taxes and social security contributions up to 100%. Those that had to stop their operations due to decision of authorities will receive a subsidy amounting to 100% of their income tax, social security and health contributions, and other compulsory state payments. Persons who have worked for at least nine months at one enterprise and have lost their jobs will be paid from 60 to 80% of their final salary. Overall, the volume of the unemployment fund was increased roughly six-fold. Banks were also incentivised to delay payment deadlines and/or the amounts of due payments on loans until 30 June.

In order to ease liquidity conditions and enhance financial resilience, the National Bank of Moldova (NBM) cut the base rate applied to the main short-term monetary policy operations to 3.25% annually; lowered the required reserve ratio in local currency and non-convertible currency to 34% for the period 16 April – 15 May 2020; and increased the required reserves ratio in freely convertible currencies to 21%. As of 4 March, the interest rates on overnight loans and deposits was cut to 6.25% and to 0.25% annually. The NBM has declared readiness to intervene to counter excessive exchange rate volatility.

Reopening

The Republic of Moldova has declared state of emergency on March 17 for two months, restricting movement of people and asking public venues to halt their activities. As of 1 May, the government declared it did not intend on extending it after 15 May, the initial end date set. The National Commission on Emergency Situations has already started softening confinement measures, allowing citizens to access parks (in groups of three persons maximum) and several retail trade activities to resume from 27 April. Markets reopened on 11 May (except in Chișinău and Balti), as well as several public services of the Public Services Agency. Individual trainings in open public spaces have been authorized on April 21 for members of national teams. The 14-days quarantine regime implemented in several municipalities has been lifted in some of them.

Ukraine

Economic impact

The lockdown measures imposed during Covid-19 have significantly slowed economic activity in Ukraine. In March, turnover in passenger transport dropped by 16.3% compared to previous year, while industrial production shrank by 8.6% and manufacturing by 9.9%. However, the decreases in output largely reflect the poor performance of the sector over preceding months, as production figures in March were slightly higher than in February. The production of intermediate goods grew by 9.1% from February, and the production of consumer non-durables by 4.8%, but the level of output in March remained significantly lower than in the previous year. The effect of containment measures is most visible in the production of consumer durables, which dropped by 13.1% in March compared to February.

The effect of containment measures on industrial production is not yet fully reflected in production figures, but the notable decreases in electricity generation and demand reflect a significant slowdown. In April, the level of electricity generation has been more than 10% lower than in April of any of the preceding three years. Furthermore, surveys of business managers by the central bank reflect a pessimistic mood across all sectors of the economy. Over half of the surveyed managers in the second-half of April expected a decrease in turnover in the following four weeks, while 35% expected their revenues to stay on the same level. The economic slowdown has already caused a significant depreciation of the hryvnia in relation to the USD and euro and put pressure on Ukraine’s public finances. Ukraine was already facing large foreign debt repayments in 2020, and negotiations with the IMF stalled over issues including banking and land reform. Limited availability of social security benefits and low domestic savings provided further challenges for authorities to absorb exogenous shocks. On 30 March, officials projected a 4.8% drop in GDP due to the pandemic. In early May, Ukraine recorded a rise in unemployment as 156,000 new people were listed unemployed, a rise of 48% compared to the previous year. At the same time, the number of new vacancies decreased by 60%.

Policy responses

On 17 March, legislation was passed enabling businesses to adopt more flexible working hours. No penalties will be applied to tax law violations that are committed between 1 March and 31 May 2020, although this exemption will not apply to VAT or excise tax and rent. The deadline for filing annual income declarations has been extended for two months until 1 July 2020, with tax payable by 1 October 2020. In addition, the parliament has suspended the requirement to pay tax on commercial real estate and land; defined Covid-19 quarantine as a force-majeure for legal contracts; postponed the requirement to use registrars for settlement transactions; suspended tax inspections of companies; expanded the government programme of affordable bank loans at discounted interest rates for businesses; and suspended interest payments for taxpayers and social security contributors. Tenants have also been temporarily relieved from paying rent on property that is not used during the quarantine. Entrepreneurs who work independently were offered a temporary exemption from social security contributions in March and April, while fines for incomplete contributions and reporting have been suspended for the time being. Moreover, the National Bank of Ukraine has continued to intervene in the foreign exchange market to support the local currency, while reducing interest rates to 8%.

In addition, Ukraine has introduced policies to provide targeted support for small and medium-sized enterprises. State-owned PrivatBank (the country’s largest lender) announced a “credit holiday” for medium-sized businesses until the end of May. Credit institutions are also prohibited from raising interest rates on loans that have already been issued, while USD 1.3 billion will be available for small businesses through the government’s ‘5-7-9%’ initiative allowing SMEs to borrow up to USD 110,000 with no interest until 31 March 2021. During the quarantine, the initiative has been reformatted to help refinance existing loans and assist businesses in retaining their employees. The government is also looking to provide loan guarantees for SMEs and to increase support to pay wages. It has also signalled that a new programme will be launched to provide small and micro enterprises (with an annual turnover of under $10.8 million) with loans at 3% interest per annum for up to two years. SMEs that have been forced to suspend their activities during the quarantine can apply for a partial unemployment allowance programme, under which for each hour of lost work time, the company receives two-thirds of the salary rate (the aid must not exceed the minimum wage – UAH 4,723). Other elements include child assistance for individual entrepreneurs and cash benefits. Along with supporting businesses, the government has introduced social support measures, including subsidising utility bill payments for vulnerable groups, increasing pensions, introducing legal grounds to claim unemployment benefits, and offering mortgages at more affordable rates.

Reopening

On 12 March, Ukraine imposed a nationwide quarantine, which is expected to last until 22 May. While closing educational institutions, restaurants, recreational areas and entertainment venues, wearing a mask in public became mandatory and access to public transport became limited. However, on 8 April employees were exempt from self-isolation in selected sectors, including construction, postal and essential services, and government. Starting on 11 May, the government will allow the reopening of outdoor restaurants and recreational spaces, while gradually allowing salons, non-food stores, museums, notaries and other service providers to resume their activities.

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Digitalisation and the response to the crisis

The Covid-19 crisis provides strong incentives for countries to accelerate digitalisation, as the measures to contain the pandemic have prompted government and businesses to move more of their operations and services online. Governments can leverage digital technologies to improve the quality and accessibility of business services, streamline administrative procedures, and strengthen the delivery of social protection programmes. Businesses are also undertaking increasing efforts to maintain their operations by offering enhanced teleworking opportunities for their employees and exploring online-based business models.

Access to digital infrastructure and services in EaP countries

The development of digital services varies significantly across EaP countries (Figure 18). Internet penetration ranges from 52% of the population in Ukraine to 78% in Azerbaijan. Fixed broadband subscriptions are below the OECD average in all EaP countries except Belarus. The share of the population with active mobile-broadband subscriptions is particularly low in Ukraine, at just 23%.

Prices for fixed broadband and mobile cellular subscriptions across the EaP region are generally low compared to the OECD average, but a comparison in terms of percentage of GNI per capita highlights their lower affordability in some countries (Figure 19). In fact, a recent survey conducted by the World Bank found that in addition to lack of access to digital infrastructure, many households report high costs of digital devices and high access fees as impediments to digitalisation.9

All six countries participate in EU4Digital, an initiative that aims to extend the European Union’s Digital Single Market to the EaP region.

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Figure 18. Digital infrastructure, 2018
Figure 18. Digital infrastructure, 2018

Note: Data are expressed in units per 100 inhabitants.

Source: UNDESA, UN E-Government survey.

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Figure 19. ICT price basket, 2017 (% GNI per capita)
Figure 19. ICT price basket, 2017 (% GNI per capita)

Note: Data are expressed as percentage of GNI per capita.

Source: ITU, ICT Price Basket.

Policy measures to promote E-government in EaP countries

Digitalisation of public services can significantly improve the business environment, as time and costs of administrative procedures decrease, information can be disseminated more effectively and service delivery becomes more predictable. The removal of physical interactions also lessens opportunities for corruption, with integrated e-payment platforms allowing businesses to pay fees directly and avoid the risk of graft.

E-government services are available in all EaP countries, though the range and quality of services varies. All EaP countries have developed multi-year strategies and shorter-term action plans to promote digital services. The e-Government Development Index measures the readiness and capacity of national institutions to use ICTs to deliver public services. Figure 20 shows that Belarus is in the best position to leverage digitalisation for the delivery of public services, followed by Georgia, Moldova and Azerbaijan. The e-Participation Index measures the extent of online information availability, online public consultations, and citizens’ involvement in decision processes. Belarus and Moldova lead the way in terms of civic engagement and participatory governance through ICTs, as demonstrated by the high scores of the e-Participation Index in Figure 21. The low scores of Armenia and Georgia suggest a need to enhance citizens’ engagement in decision-making and service delivery through ICTs.

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Figure 20. E-Government Development Index, 2018
Figure 20. E-Government Development Index, 2018

Note: EGDI measures the willingness and capacity of a country to use ICT to deliver public services.

Source: UNDESA, e-Government Survey.

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Figure 21. E-Participation Index, 2018
Figure 21. E-Participation Index, 2018

Note: EPI measures extent of online information availability, of online public consultations, and of citizens involvement in decision processes. Source: UNDESA, e-Government Survey.

  • In Armenia, the range of e-government services includes online filing of tax returns and social security contributions. It is possible to apply online to receive benefits aimed at neutralizing the economic consequences of coronavirus. A series of training sessions titled “Developing business through digitalisation” have been introduced, aiming to support SMEs in their efforts to address the Covid-19 challenges. 

  • Azerbaijan has successfully built a well-designed e-government system in a relatively short period. In response to the Covid-19 crisis, the government set up a website to inform citizens about the containment measures, and to provide access to digital services such as online education, e-health, and entertainment. 

  • In Belarus, e-government services include tax and social security filing, pension and social contributions. It is developing an online platform on which every citizen will have a personal electronic account through which to access information and perform administrative procedures. 

  • In Georgia, the e-government platform serves as a one-stop shop for a wide range of services to support enterprises. GITA is planning to launch a hackathon open to all EaP countries. There are online platforms to co-ordinate the prevention and support activities during the Covid-19 crisis (e.g., a citizen-led platform where one can register as a volunteer for different types of assistance).

  • In Moldova, taxes and fees can be paid online, and there is a transparent public procurement e-system. The government stepped up its support to women’s entrepreneurship and digitalisation by offering grants for the purchase of technological equipment and machinery, software solutions and consulting.

  • In Ukraine, the government has launched an E-Governance action plan for 2018-2020 and established the Ministry for Digital Transformation in charge of designing and implementing the state policy on digitalisation. The government is regulating and monitoring emergency procurement via open contracting data on ProZorro, the public e-procurement system. Since March 2020, entrepreneurs can learn at online-events of the Business Information Support Centres (BISCs) and Merezha online platform.

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Policy considerations for SME support going forward

The sweeping economic impact of the crisis calls for comprehensive measures that encompass fiscal stimulus, monetary, tax, employment and education policies, and targeted measures that focus particularly on supporting micro, small and medium firms through the crisis. The health crisis will eventually pass, but the nature of the economic shock depends to a great extent on the policy response. It could be transitory if countries around the world are successful in limiting the rise in mass unemployment, bankruptcies and vulnerabilities in the financial sector so as to curtail the long-term effects of the crisis.

Broadly speaking, the measures adopted by EaP countries are aligned with those taken across the globe to mitigate the impact of the pandemic on SMEs, which across the OECD, represent the most common type of firm and the largest source of employment. The main exception to this generalisation perhaps concerns labour market policies. While many OECD countries have acted to provide greater flexibility and relief for companies and workers in the reduction of working hours, temporary lay-offs and sick-leave, such measures have been less prominent (though by no means absent) in the EaP region, apart from Ukraine. To some extent, this may reflect the higher incidence of informal employment in some EaP countries and the fact that SMEs in the region are de facto (if not always de jure) subject to less stringent regulation of labour relations. It may also reflect general concerns regarding the fiscal space and flexibility to more readily enable similar mechanisms.

Short-Term Support Measures

In the short term (here considered to be Q2 and Q3 2020), avoiding the failure of viable businesses is the critical priority. SME support needs to be channelled quickly and in a cost-effective way to provide liquidity to viable firms, particularly in sectors that are more acutely affected by the Covid-19 restrictions. These may include measures, such as direct grants and loan guarantees, as well as loan repayment deferrals and commitments to cover a portion of SME payrolls for a limited period to support the sector and mitigate the potential for broader lay-offs. In countries with available room for manoeuvre, governments are also employing fiscal tools, which can have a fairly immediate impact on working capital. A common mechanism is to delay or eliminate social security or tax contribution requirements during the crisis. As noted above, digitalisation of government services offers a way to mitigate the effects of the crisis. Effective e-government tools can play a vital role in allowing firms to identify and access relevant support quickly. For example, the United Kingdom has launched a dedicated information portal10, where firms are asked simple questions about their characteristics and shown all of the support measures for which they are eligible.

Credit Financing

The most common approach across the EaP region has been ensuring the availability of loans and short term financing to facilitate SMEs’ transition during this period. This is in line with what is being implemented across the OECD. Georgia’s enterprise support agency, Enterprise Georgia, has started a new programme to co-finance family-owned, small and medium-sized hotels in Georgia, which have been acutely affected by the crisis. Banks’ ability to provide credit is constrained by short-term deposits, but in the case of closed funds, the funds are committed for the long term and can help mobilise institutional investors to provide resources to companies as an additional source of credit at a time when many firms face liquidity constraints. The biggest challenge is for the funds to successfully recruit new investors at the time of financial uncertainty, but governments can play a facilitating role by setting up dedicated funds. In January 2020, for instance, Ukraine’s parliament approved the creation of the Entrepreneurship Development Fund to expand and facilitate lending for SMEs. As a result of the crisis, Ukraine is already looking to expand the programme to facilitate affordable loans at a discounted interest rate for businesses.

Grants

Some OECD countries have adopted targeted grants aimed at SMEs. For example, Australia is offering a grant of approximately USD 10 000 to firms with a turnover between USD 600 000 and 2.5 million. Grants can be particularly helpful to the most vulnerable firms and entrepreneurs who can be discouraged from seeking loan financing even at highly favourable rates and repayment plans because of fears of long-term financial insecurity and/or low margins.

Grants may be particularly important for start-ups and young firms. International evidence strongly suggests that such firms are the most vulnerable in a crisis and – perversely – that market selection often functions badly in response to a major shock. Well-performing young firms often fail where less productive older firms survive. During the great recession just over a decade ago, for example, in some OECD countries, the youngest firms and those with a lower level of financial exposure performed better and yet were less likely to survive.11 This reflects the fact that the latter are more likely to have long-established relationships with suppliers, banks and the public authorities and are therefore more likely to benefit from forbearance in respect of payments, regulatory compliance, etc. Policy-makers should take care to ensure that the design of support measures does not reinforce the biases that in any case arise from the existence of such “relational capital”.

EaP governments must balance between inclusive support measures that encompass a large number of firms and targeted measures that concentrate the support on the most struggling firms. Spreading out the support measures too widely risks diluting its effectiveness, while overly narrow eligibility criteria can make the access to support cumbersome and deter firms from seeking vital financial assistance. One way to balance between inclusivity and intensity is to target the support specifically at micro- and small enterprises. Austria has decided to distribute “hardship” grants to the self-employed and micro-firms, which are eligible for subsidies up to EUR 6,000 for three months per entity. The grants can also be targeted to firms in the worse affected areas of the country, as Romania has done. Additionally, sector-specific grants allow to target firms in the most affected sectors, e.g. tourism.

Credit Guarantees

Measures such as loan guarantees play a prominent role in governments’ policy responses because they represent a fast way to incentivise banks to accommodate the liquidity needs faced by firms during the Covid-19 crisis. Credit guarantees mitigate credit risks for the issuing banks, enabling easier access to finance for firms that could otherwise face rejection because of perceived risks or inability to provide sufficient collateral. To a certain extent, such schemes are already implemented in Azerbaijan and Georgia.

Credit guarantee schemes implemented by OECD countries usually cover between 70 and 90% of the loan value (e.g. France, Spain), and are provided through private banks. While such schemes have already proven useful and efficient, micro companies that do not have credit histories and face urgent shortages in working capital might not be able to access them, or the approval process might be too lengthy, jeopardising their commercial viability. To address this issue, some OECD countries have introduced schemes providing guarantees covering 100% of the loan. For example, in the United Kingdom, the government provides 100% guarantees on the loans up to £50 000 provided to micro companies. While such comprehensive guarantees can significantly expedite SME access to external financing, they might result in providing loans to non-viable companies. It is therefore recommended to set clear eligibility criteria and provide loans only to firms meeting basic solvency requirements (e.g., not in default at the time the Covid-19 crisis hit).

Where the banking system is used to access firms in need of support, through credit guarantees or other instruments, it will be critical to pay close attention to the incentives confronting the banks themselves. While it is too early to draw definitive conclusions based on the experiences of OECD countries, the early evidence from loan guarantee programmes designed to support small firms that maintain employment underscores the difficulty – and importance – of effective targeting. In particular, banks in the worst-affected areas may be less inclined than banks elsewhere to participate in such programmes – either because the risks in the most adversely affected places are perceived to be greater or because the banks themselves are weaker in such areas. Either way, support may end up flowing primarily to areas that need it least12. This will be a particularly important consideration in countries where the fragility of the banking sector may itself be an issue.

Prompt Working Capital Support and Tax Deferrals

Across the region, governments are also taking steps to provide working capital support, e.g. through fiscal measures such as, for example, Georgia’s four-month tax holiday for firms in the tourism sector or the deferral of tax payments currently being prepared by Moldova’s Emergency Situations Commission. Deferrals of corporate tax and social security contributions are also being introduced by OECD members like Turkey, Canada and Denmark. They offer the advantage of providing relatively quick support to SMEs through immediate deferrals and assistance that does not depend on applications or business risk assessments in the same way a loan or grant programme might. However, deferrals that focus on corporate income or profit taxes might have only a small impact on new or struggling firms . In addition, many governments have introduced measures such as short-time work, which not only help entrepreneurs to alleviate immediate payroll burdens but also help SME employees retain part of their salaries.

Medium-Term Support Measures

EaP governments will also need to consider additional medium- and long-term (here, considered to be Q4 of 2020 and beyond) support measures to strengthen SME resilience and recovery from the crisis.

Supporting a Sustainable Recovery and Long-Term Competitiveness

The eventual recovery is likely to be gradual and uneven. With the threats from climate change and environmental degradation looming, governments need to design policy responses to strengthen the long-term resilience of their economies and societies to future shocks. EaP governments could consider fiscal policy tools to increase competitiveness and long-term demand, while ensuring that stimulus measures are aligned with environmental priorities and social equity goals.

  • Boost investments in sustainable infrastructure: For example, in most EaP countries the levels of infrastructure investment are comparatively low. Globally, to maintain existing infrastructures and meet future needs, most countries should invest around 5-7% of GDP in infrastructure sectors. In the early 2010s, infrastructure investment appears to have fallen below these levels, except in Armenia and Azerbaijan with infrastructure investment just over 5% of GDP. Georgia was close to the 5% threshold, while Belarus, Moldova and Ukraine all fell below 3%13. Infrastructure investments would offer one example of addressing long-existing funding gaps, while supporting the medium-term demand and long-term competitiveness of the economy and needs for sustainable solutions in the face of the global environmental challenges. However, the risk of spending scarce resources on “white elephants” is real. In many instances, reforms to governance, project-selection and -approval processes and investment frameworks may help to ensure the most efficient selection and execution of infrastructure projects.

  • Strengthen SMEs’ contribution to the low-carbon transition: SMEs have the potential to be key drivers in the shift to a greener economy, and to be engines of competitiveness and innovation in the process. Policies to support SME greening can improve the efficiency of resource use, enable participation in green supply chains, and contribute to a cleaner environment and improved public health. Financial support measures such as loans, loan guarantees and tax abatements for SMEs can be made conditional on environmental improvements. Regulatory systems should be designed to provide incentives for better environmental performance, by encouraging firms to exceed environmental standards or to self-report issues. EaP governments should provide SMEs with the information they need to adopt green practices, develop new markets through green public procurement, and take measures to improve the business case for SME greening.

Enhancing Digitalisation

Digitalisation offers opportunities for EaP countries to improve public service delivery, increase access to online schooling and telemedicine, and provide SMEs with new ways to reach customers.

  • Promote affordable, inclusive, and safe access to digital infrastructure and technologies: well-developed digital infrastructure is necessary to minimise the costs of the pandemic and take advantage of the opportunities offered by digitalisation. Governments should explore ways to support the development of digital infrastructure in rural areas, whilst striving to increase their affordability and security. In Italy, the Ministry for Technology Innovation and Digitalisation launched the Digital Solidarity Platform to help citizens and enterprises deal with the disruptions caused by the containment measures. Services are delivered free of charge and range from support for teleworking and online schooling, to connectivity and entertainment.

  • Reduce administrative barriers by accelerating the implementation of e-government initiatives: the range and efficiency of e-government services could be expanded to meet needs of people and businesses in the short term and, in the long term, to enhance the transparency and efficiency of public administration. Starting from ensuring the coherence of a digital strategy, support for digitalisation should extend to all levels of government, including sub-national administrations in remote and rural areas. Databases run by public institutions should be integrated to ensure access to a comprehensive range of e-government services. In Greece, the Ministry of Digital Governance added a section on its main e-government portal dedicated specifically to the Covid-19 emergency to provide services and information for citizens in a single location.

  • Support SME digitalisation: governments can support the retraining of employees, encourage increased uptake of teleworking, foster the development of e-commerce and digital platforms to promote trade, and encourage the development of new and innovative business models that leverage digital technologies. Governments can help SMEs to adopt new working processes and speed up digitalisation by ensuring that firms are equipped with adequate IT connections, equipment and ICT skills. As part of the Emergency Economic Measures for Response to COVID-19, the government of Japan supports SMEs by offering subsidies for teleworking, the adoption of IT solutions and the development of e-commerce sales channels.

Continue Implementing Structural Reforms

While the Covid-19 crisis calls for targeted policy responses to weather its negative impact on SMEs, the EaP countries should also speed-up implementation of structural reforms to improve their business environment and promote entrepreneurship. In this respect, creating level-playing-field conditions for all enterprises is crucial and governments could direct their efforts towards promoting fair competition and strengthening the rule of law, as SMEs in the region face challenges when it comes to equal treatment vis-à-vis large companies and SOEs, and weak and lengthy contract enforcement procedures which impede access to justice for SMEs.

Building on solid progress achieved in the implementation of SME-friendly policies since 2016, the EaP countries should also continue improving institutional and regulatory framework for SMEs, further simplify administrative procedures, and ensure efficient insolvency systems for SMEs.14

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The Way Forward

Based on the measures being implemented across the region and in line with the approach currently being adopted by OECD member countries, EaP policy makers might wish to consider the following policy guidance from the OECD in response to Covid-19. The guidance is broad but these basic principles can form a useful framework for assessing potential measures:

  • Supporting SMEs: Supporting SMEs in response to Covid-19 requires fast and well co-ordinated support that combines financial measures, including from central banks; labour policy; tax policy; and the private sector. This is not a matter for “SME policy” narrowly construed: rather, it is a test for governments’ ability and willingness to apply the “think small” principle across all areas of economic and social policy, looking for ways to assess their impact on start-ups and SMEs.

  • Employment policy: Policies should aim both to protect workers from exposure to the disease at workplace, while at the same time ensuring workers’ access to income support. A number of countries have adopted legislation that allows struggling firms to cut down working hours, while Japan, for example, is financially supporting SMEs’ capacity for teleworking.

  • Tourism policy: Tourism is one of the worst-affected sectors of the economy during the crisis. The shock to the global tourism industry could amount to 45-70% of output depending on the severity of the pandemic. Many countries, including in the EaP region, are adopting targeted measures to support tourism industry in their countries.

  • Urban policyUrban policy: Cities around the world are playing a key role in implementing containment measures, Many have set up information portals and taken measures to support most vulnerable segments of the population during confinement measures. While most cities have limited resources for financial support, many are creating mechanisms to help citizens and entrepreneurs access the support that is available and to mobilise public-private co-operation to support recovery.

  • Education policy: From an economic perspective, prolonged school closures have the potential to cause significant damage to the development of human capital. Therefore, it is essential for countries to quickly adopt effective distance learning practices that ensure learning and collaboration.

  • Environmental policy: Support measures should not derail the efforts to tackle the ongoing environmental challenges by loosening environmental regulations during the crisis bearing in mind any potential effects of ambient quality standards on respiratory on overall health.

copy the linklink copied!Annex 1.A. Summary of containment measures

Armenia

On 16 March, the government imposed a state of emergency to help limit the spread of Covid-19, which has been extended until 14 May. Travel and public gatherings were restricted, schools were shut, and the authorities began to regulate the publication of information on medical and epidemiological topics. Although the borders were not closed, citizens were not permitted to leave the country and international travel was banned to/from countries with large numbers of cases. The government also designated a list of entities that could operate, and grocery stores announced separate hours for senior citizens. Self-distancing measures were also introduced, requiring individuals to leave their homes only in exceptional cases. Those violating these measures face fines and prison sentences. The government declared further restrictions on movement until mid-April, including shutting down public transport between and within municipalities, and passed a surveillance bill.

Azerbaijan

Following the first case of Covid-19, Azerbaijan closed educational institutions, quarantined those entering through Iran and imposed travel restrictions. However, measures soon became stricter, as the government introduced “Special Quarantine”. Gatherings of 10 or more people remain prohibited, large stores, shopping centres and restaurants are shut, and air and land borders have been closed. While individuals over the age of 65 may not leave their homes, those permitted must alert the authorities before doing so. Public events, including the Nowruz Celebrations and Grand Prix, have been cancelled or postponed, the exclave of Nakhchivan has been isolated, regional and long-distance transport remains suspended, and traffic restrictions are in force. The criminal code has been amended to impose penalties on those violating emergency measures. The government has gradually started lifting measures and special quarantine is expected to end on 31 May.

Belarus

Belarus has not yet restricted the movement of people or goods as per WHO recommendations, and the authorities have expressed doubts about school closures to prevent the spread of the virus and questioned the effectiveness of closing borders, while continuing to allow public events, including soccer games and the annual Victory Day parade. School holidays were extended by two weeks, but classes resumed on April 20. However, the Ministry of Health has started recommending social distancing measures and asking the elderly to self-isolate. In addition, new entrants in the country are systematically quarantined for 14 days. Citizens who tested positive for the virus have to self-isolate, as do first- and second-level contacts. Additional measures are undertaken by some segments of the public as many firms are switching to telework and some higher-education institutions have moved instruction on line. On 7 April, Minsk adopted a plan to curb the spread of the pandemic. The measures include a ban on mass events, requirements for some customer service workers to wear masks, and a ban on anyone with symptoms of cold to go to work.

Georgia

On 21 March, Georgia declared a state of emergency for a month. Significant social prevention measures were adopted, including restrictions on the movement of people and modification of public services. Schools and universities were closed, as well as all shops, except for supermarkets, pharmacies, petrol stations, post offices, and banks. Gatherings of over three people were banned and the government suspended public intercity transport, including busses and railway stations. The government also banned flights and closed borders with highly infected countries, leading to full border closure for foreign visitors, and quarantined those arriving in the country. However, essential economic activities, such as utility supply, food delivery and banking services may still be carried out in accordance with recommendations issued by national authorities. On 31 March, the government announced a nationwide curfew, forbidding individuals from leaving their homes between 21:00 and 06:00, and imposed further restrictions on movement. The state of emergency has been extended until 22 May, though the government began removing restrictions in six phases starting on 27 April.

Republic of Moldova

On 17 March, Moldova declared a state of emergency until 15 May. The country suspended organised activities, restricted travel and moved to online education. National events (such as Victory Day on 9 May) were postponed, and exams for primary schools and high schools cancelled. Moreover, movement in Chișinău has been restricted, as public transport is available only in the mornings and evenings. Moreover, public transport ceased between 1 and 3 May and 9 and 10 May in Chișinău and Balti. Since 25 March, the authorities have prohibited individuals over 63 from leaving their homes (except for exceptional circumstances) and barred gatherings in public places. The army has been mobilised to enforce these measures. Retail shops, markets, restaurants, fitness centres, concert halls, theatres, cinemas and museums should halt their activities until 15 May. Employees of public institutions (with some exceptions, notably medical, public order and education staff) were sent on vacation until 30 April. Some municipalities were placed in quarantine for 14 days. However, the National Commission has started to lift some restrictions, allowing several retail trade activities (excluding shopping centres) to resume and citizens to go to parks from 27 April.

Ukraine

On 12 March, Ukraine imposed a three-week nationwide quarantine and shut down educational institutions and public events with over 200 people. Later, the government closed all cafes, restaurants, gyms, shopping malls and entertainment venues, though grocery stores, pharmacies, banks, post offices and petrol stations remain open. Gatherings and intercity transport were restricted, and metro services were shut until further notice. Many firms started switching to telework, and some higher-education institutions and schools have moved to online instruction. On 25 March, the quarantine was extended until 24 April. Moreover, non-citizens were banned from entering the country and Ukrainians were prohibited from leaving the country for tourist travel. On 27 March, regulations became stricter as the Ministry of Internal Affairs banned all air or rail travel, though citizens crossing the border on foot or by car could still re-enter the country. On 30 March, the government announced that it would oblige all new arrivals in Ukraine to undergo a 14-day medical quarantine with thorough medical supervision.

On 3 April, the Prime Minister announced the introduction of new measures, including a ban on being in public areas without wearing a mask and on walking in groups of more than two. The government also imposed a ban on visiting parks, squares, recreation areas, forest parks and coastal zones, except for the purposes of walking pets (individually). Quarantine measures are expected to continue until 11 May after which most of the restrictions will be relaxed, though since 8 April individuals in selected sectors have been allowed to return to work.

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Annex Table 1. Overview of containment measures

Measures

Armenia

Azerbaijan

Belarus

Georgia

Moldova

Ukraine

Social distancing

Lockdown: people allowed to leave their homes only in exceptional cases

Inter-regional transport halted

State of emergency has been extended until 14 May.

Lockdown; curfew to be launched

Ban on public gatherings of more than 10 people

People aged over 65 required to stay home

Special quarantine is expected to last until 31 May.

No restrictions to movement of people. Sports and other public events continue.

Social distancing recommended, some companies and universities made teleworking arrangements

Self-isolation mandatory for new entrants to the country, infected individuals, and first- and second-level contacts

The city of Minsk adopted further measures on April 7, including ban on some mass events.

Lockdown with curfew (9pm-6am)

Ban on public gatherings of more than 3 people (except for grocery stores and pharmacies, where maintaining a distance of two meters is mandatory)

Travel on any kind on public transport is forbidden. Light vehicles (including taxis) are allowed, only if there are no more than three persons in an automobile.

State of emergency foreseen until 22 May.

Lockdown

Ban on public gatherings of more than 3 people

People aged over 63 required to stay home

Public transport limited to commuting hours, banned in Chișinău and Balti from 1 to 3 May

14-days quarantine in some municipalities.

Several retail trade activities allowed to resume on April 27. Most activities expected to resume after 15 May (end of the state of emergency).

Ban on public gatherings of more than 2 people

Intercity transport restricted.

People aged over 60 required to stay home.

Wearing facial masks required in public areas.

Quarantine measures are expected to last until 22 May.

Closure of businesses and infrastructures

Closure of education institutions

Separate opening hours at grocery stores for senior citizens

Closure of education institutions, stores, shopping centres, restaurant and cafes (except for home deliveries)

Education and other public institutions remain open. School holidays were extended by two weeks, but classes resumed on April 20.

Closure of education institutions and shops (except for grocery stores, pharmacies, petrol stations, post offices, activity allowed in essential economic spheres

Closure of shops, restaurants, fitness centres, concert halls, theatres, cinemas and museums

Some self-managed public units declared on vacation until 30 April

Closure of schools, cafes, restaurants, gyms, shopping malls and entertainment venues.

Farmers’ markets may partially operate under certain conditions, and grocery stores sell online and deliver.

Intercity and public transport remain restricted, metro has been shut.

Schools, universities and businesses have made teleworking arrangements

Trials in courts are postponed until the end of quarantine.

copy the linklink copied!Annex 1.B. Summary of social and economic measures implemented in the EaP countries

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Socioeconomic measures

Armenia

Azerbaijan

Belarus

Georgia

Moldova

Ukraine

State support package

AMD 150 billion (USD 305 million) economic package announced.

USD 1.5 billion support package.

BYN 5 to 6 billion (USD 2 to 2.5 billion) overall support package announced

GEL 3.5 billion (approx. USD 1.1 billion) support package announced in April 2020, with additional funds from international partners.

LEU 2.1 billion (approx. USD 120 million) announced to support the economy and businesses

LEU 1.06 billion (USD 59 million) announced for social insurance, including LEU 180 million (USD 10 million) for unemployment benefits

LEU 1.4 billion (USD 78 million) announced for healthcare measures

UAH 65 billion (USD 2.4 billion), with additional sums directed for medical support and pension fund.

Financial support measures

Loan readjustments, co-financing, refinancing and interest rate subsidies for enterprises (max 500 million AMD per firm), with additional measures for SMEs.

Support for businesses with loan repayments by reducing interest rate by 10% and providing guarantees worth 60% of the loan amount

The National Bank asked commercial banks to delay loan and interest payments for citizens and not to raise interest fees

Some prudential requirements were relaxed

Liquidity coverage ratio lowered to 80%

Capital conservation buffer to 2%

Financial support under discussion with international lenders.

Commercial banks will accept loan repayments with a postponement of three months.

Central bank interventions to maintain the stability of the local currency, along with measures to lower capital and liquidity requirements.

Increase of state budget allocations to the state emergency fund by LEU 452 million (USD 25 million) and to a mortgage guarantee program

Decreased VAT for the food & accommodation sector

VAT Refund Program of LEU 1 billion (USD 56 million)

Ukraine has passed land market and bank laws to unlock USD 8 billion IMF funding. EU provided EUR 500 million, World Bank loaned up to USD 1 million, and EBRD plans to provide further assistance.

Central bank interventions to support the hryvnia and lowering of interest rate to 8% (compared to 18% during the spring of 2019).

Business support policies

Government working towards measures to support companies that do not cut employment through grants for each 5th retained employee.

Support package for agro-food companies under preparation.

Deadlines for paying taxes and filing declarations have been extended.

Additional measures are being finalised.

Decree passed on April 24 notably foreseeing payment holidays and instalments, and rent payment holidays.

The volume of VAT returns will be doubled to GEL 1.2 billion to supply companies with working capital.

Companies in the tourism industry will benefit from tax, and a four-month personal income tax and property relief.

Enterprise Georgia launched a programme to co-finance family owned, small and medium-sized hotels. Additional support is provided for those producing medical, hygienic and food products.

Further measures, include micro-grants, the allocation of GEL 500 million (USD 160 million) in loans and VAT refunds to support businesses. Subsidies will be introduced for entrepreneurs for maintaining jobs.

For enterprises that suspended their work, the government will help pay salaries by refunding up to 100% of personal income taxes, social and medical contributions.

Delaying deadlines for taxes and social contributions

For loans contracted to pay salaries or for operating assets, the state will cover bank interests up to three months payroll

Interest Grant Program aimed at facilitating businesses’ access to credit

LEU 100 million (approx. USD 5.6 million) support for entrepreneurs (including grants for women entrepreneurs)

Legislation passed to allow businesses to implement more flexible working hours

Suspension of property tax payments for businesses

Entrepreneurs offered temporary relief from obligation to pay social security contributions.

Credit institutions may not raise interest rates on loans already issued.

USD 1.3 billion will be made available for SMEs through a new government initiative.

Social support measures

Discussions to reform labour legislation to workers with children at home.

Programmes to assist vulnerable groups with food supplies.

New measures to assist the unemployed and pregnant women in hardship and paying for utility bills.

Discussions underway to delay rent payments for shopkeepers.

Price regulation by the State for some essential products (food and sanitary items)

Temporary unemployment benefits for persons taking care of children, if the latter were in contact with a Covid-19 infected patient

Children living and working in the streets transferred to safe spaces.

The government will cover exchange rate risks for importers for selected products, and utility bills will be covered for most citizens until May.

Anti-crisis package to provide financial assistance to those who lost their jobs or are on unpaid leave because of coronavirus (about USD 144.4 million), with further assistance for vulnerable groups and self-employed, along with healthcare funding.

One time cash assistance (of approximately 600 USD) to healthcare workers who work directly with the virus.

One time allowance of LEU 16,000 to some categories of public sector employees who contracted the virus

People who are not usually eligible for unemployment benefits now have access to a grant worth of minimum salary.

Minimum income guaranteed for families with low revenues increased to LEU 1,300 during state of emergency

Subsidies provided for vulnerable groups in covering utility bills

Mortgage payments postponed

Price controls imposed

Unemployment and social security assistance provided

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at http://www.oecd.org/termsandconditions

Notes

← 1. Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova and Ukraine

← 2. Detailed information on EaP countries’ containment efforts is presented in Annex 1.

← 3. WHO, Covid-19 Health System Response Monitor - www.covid19healthsystem.org

← 4. The assets of Azerbaijan’s State Oil Fund amount to USD 41.3 billion, and the assets of the central bank to USD 18.9 billion. See "Fitch Revises Outlook on Azerbaijan to Negative; Affirms at 'BB+", Fitch Ratings, 10 April, www.fitchratings.com/research/sovereigns/fitch-revises-outlook-on-azerbaijan-to-negative-affirms-at-bb-10-04-2020; "Recent Figures", State Oil Fund of the Republic of Azerbaijan, 1 April, www.oilfund.az/en/report-and-statistics/recent-figures; "Azerbaijani bank assets show slight decrease in Q1 2020", MENAFN, 1 May, https://menafn.com/1100101506/Azerbaijani-bank-assets-show-slight-decrease-in-Q1-2020.

← 6. “Assessment of the economic impact of restrictive government policies (lockdowns) to combat coronavirus”, Russian-Armenian University, 4 April, http://inecbus.rau.am/rus/11/1226

← 7. “Measures to support SMEs in Belarus during pandemic and global recession”, BEROC, May 4, http://www.beroc.by/webroot/delivery/files/PP_SME_Support.pdf

← 12. João Granja, Christos Makridis, Constantine Yannelis, and Eric Zwick (2020), “Did the Paycheck Protection Programme Hit the Target”, NBER Working Paper 27095, May, https://www.nber.org/papers/w27095.ack.

← 13. “Hitting the Trillion Mark: A Look at How Much Countries Are Spending on Infrastructure”, World Bank Policy Research Working Paper 8730

← 14. OECD et al. (2020), SME Policy Index: Eastern Partner Countries 2020: Assessing the Implementation of the Small Business Act for Europe, oe.cd/smepiEaP

Disclaimer

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

© OECD 2020

The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at http://www.oecd.org/termsandconditions.