Malta has invested in the largest financial package in terms of support measures covering families, business and job support since the onset of the coronavirus pandemic worldwide.
This outstanding achievement for the nation resulted from a wide-ranging analysis of rescue packages enacted by individual nations and international institutions carried out by Professor Ceyhun Elgin, an Economics Professor at Columbia University, who tracked, with colleagues around the world, responses in 166 countries.
By his calculations, Malta’s response has been the most significant world-wide, with a spending package calculated at around 22% of Malta’s economy, higher than the likes of 14% of GDP in the US, 11% in Australia, 8.4% in Canada, 5% in the UK.
IMF data published earlier in April, estimated that more than 4.5 trillion dollars in emergency measures was allocated by the different countries, a number which will surely have grown since then.
The study quoted by the BBC looks at some of the typical support measures, noting that European countries have preferred to opt for government pledges to guarantee new loans provided to businesses hurt by the shutdowns, a move meant to keep banks lending and avoid bankruptcies.
Some countries have preferred to opt for direct cash payments to citizens, meaning that people actually get money they can spend directly in their pockets. The latter was more common in North America and Asia. Canada handed $1,400 per month for up to four months to those who have lost income due to the pandemic while all US citizens earning under $99,000 – and that’s the large majority of households, will receive up to $1,200 (£964) per adult. South Korea, Japan, Hong Kong and Singapore have all announced direct cash handouts.
Malta’s main assistance programmes consist of loan guarantees to support businesses, as well as wage support measures covering up to 800 euro a month, for a full week for the hardest-hit industries and economic sector and for one to two days for those with a lower degree of impact. Many European nations adopted this approach, with the study identifying the Dutch model as among the most generous, with Government pledging to cover 90% of wage costs for eligible companies, with France a close second at 84%. The UK is covering 80% of salaries, up to £2,500 per employee per month, for at least three months, while Canada’s Government committed to cover 75% of wages for up to three months.
Prof Elgin noted that countries with a healthy financial position or otherwise which investors consider as secure – such as Japan and the United States were in a better position to provide new spending and actually benefiting from lower borrowing costs. The Maltese Government has regularly remarked how Malta was able to secure such a rescue package thanks to the surplus generated in the previous four years. The country – together with its 26 fellow Members, was also able to tap into EU funds for such measures.
The research, however, does come with a strong warning attached, with Elgin insisting that size does not necessarily mean effectiveness. All the different contents in these packages, they might have different multiplier effects, creating different outcomes,” explained Elgin.
The Maltese Government has also confirmed, last week, that the wage support measures will be extended for April and May, and will continue to apply irrespective if businesses are allowed to re-open or not. While most businesses have welcomed the measures, a number of companies have reached out to their respective trade bodies to lobby Government to widen the scope of the wage support measures.
Read more via BBC