VANUATU GOVERNMENT FINANCIAL AND ECONOMIC STIMULUS – COVID-19
The global spread of COVID-19 pandemic presents a potentially catastrophic outlook for both public health and economic output. Health is paramount and is being addressed by the Ministry of Health-led response supported by the framework of the cluster system. The dual nature of the situation demands not only a robust health response but also a package of Government stimulus (combining both fiscal and monetary measures) to protect the lives and livelihoods of Vanuatu’s citizens and residents.
The major economic risks for Vanuatu – with the economies of her major trading partners effectively ‘locked down’ and with movement of people across international borders almost all stopped – are unemployment and a total fallout in economic output (GDP). Although reliable figures are not available, there is already evidence in Vanuatu of job losses and businesses closing down/restricting opening hours. Further, the rate of deterioration has accelerated greatly over the recent weeks to date. The Macroeconomic Committee (MEC) of officials from the Ministry of Finance and Economic Management (MFEM), the Prime Minister’s Office (PMO) and the Reserve Bank of Vanuatu (RBV) has updated its economic growth projections downgrading the projection for 2020 from 3.8% growth to 1.9% growth. While 1.9% growth represents the official GDP forecast, MEC expects that there would be no growth under a second, more severe COVID-19 scenario that would see the current situation of largely closed borders extended to the end of the year. Under this scenario, a reduction of GDP of 6.1% is forecast.
With acknowledgement to the risk of a severe economic downturn resulting in severe hardship for the people of Vanuatu, and noting the Government’s strong cash balances and the likely prospect of securing significant levels of donor assistance, there is an overwhelming case for a major Government stimulus package. Thus, this package should provide a tangible benefit and restore economic confidence for business owners, their employees and consumers.
Employment Stabilization Payment
As part of the stimulus package, the Government through the Department of Finance and Treasury (DoFT) will be reimbursing employers a part of the wages they pay to their workers. This payment will be made in arrears for the four months from March to June 2020. Employers who have been affected by COVID-19 and wish to apply for this are encouraged to download the form below and follow the instructions outlined therein to make their submission. Please note that the determination of an employer and their employees’ eligibility for this payment is ultimately at the discretion of DoFT.
Frequently ask Questions & Answers
Small & Medium Enterprise Grant
OTHER ECONOMIC STIMULUS PACKAGE
Tution Fee Subsidy