VANUATU GOVERNMENT FINANCIAL AND ECONOMIC STIMULUS SECOND ROLLOUT – COVID-19

Background information about the Stimulus Package

SUPPORTING WORKERS, BUSINESSES  AND COMMUNITIES

The first Economic Stimulus Policy was developed in March 2020, just after the borders were closed and as the effect of the COVID-19 pandemic was taking hold of Vanuatu’s economy, with the aim of supporting businesses in, and suppliers of, the tourism industry, for five months.

Unfortunately, the economic situation caused by COVID-19 has continued, with more difficult access to export markets, a fall in foreign investment, a large reduction in tourism earning, and lower employment, meaning less money flowing around the economy.

These negative impacts brought by the reduction in terms of trade, employment, turnover, and tourists build on top of each other, with each one affecting business confidence, creating leakages to the economy, and steadily making the situation worse.

VNPF data shows that the number of contributing members has fallen since March 2020, suggesting that employment has dropped.

Data collected by Department of Customs and Inland Revenue (DCIR) shows that businesses’ turnover has also dropped following the COVID-19 border closures, with VAT return data indicating that total turnover was 16.6% less in April to December 2020 compared with the same period in 2019.

Some businesses faced more hardships in 2020 than others, with 27.0% of businesses experiencing a drop in turnover of more than 30%.

Small businesses have been particularly affected. Based on available data, half of small businesses (66 out of 123) that were VAT registered (i.e. those that paid VAT in 2019 and 2020 despite being below the VT 4 million turnover threshold for compulsory VAT registration) contracted by at least 30%.

Given the ongoing economic situation, the Vanuatu Chamber of Commerce and Industry (VCCI) reports that the main issue facing businesses is the challenges they faced in cash flow to sustain business operations.

Ministry of Finance and Economic Management  Gross Domestic Product (GDP)  estimates for 2020 also show a decline in production, with a decline of 2.6% in real GDP.

Despite this, RBV reporting indicates significant excess liquidity in the banking system. This means that banks have available loanable funds in excess of their required reserves, which they are not lending out as credit (loans).

The Government has already put in motion a range of programs to help stimulate the economy, ranging from infrastructure projects to agricultural subsidy schemes.

Together, these programs are designed to help a wide range of actors across the economy, including households, the tourism industry, agriculture, businesses in commerce/trade, and cross-sector beneficiaries.

While these targeted programs are expected to contribute to economic stimulus, there may still be businesses and workers in distress that are not reached by these programs.

Based on this recognition the government has made a Council of Ministers (COM)  decision number 120, on May 18, 2021 to approve a second Policy Stimulus.

Bislama version

Objectives of the Second Policy Stimulus

The purpose of the second policy stimulus is to address:

  • cash flow issues faced by distressed businesses
  • decline in both employment and actual take-home wages (leading to economic hardships faced by workers and their families)
  • decline in production. 

The government has approved three Programs under the Second Stimulus package:

  • Small Business Grant
  • Wage Subsidy Scheme
  • Special Covid-19 Banking Facility 

This facility is aimed at supporting businesses to stabilise their balance sheets while they remain in business, which has the potential to run for as long as five years.

Total allocations to the three schemes are as follows:

Small Business Grant Scheme : 700,000,000

Wage Subsidy Scheme: 560,000,000

Special Covid-19 Banking Facility: 900,000,000

The Ministry of Finance and Economic Management will be accepting Applications from 19th July 2021 until 30th September 2021.

The Department of Finance and Treasury will be sending out weekly reports to the relevant stakeholders on the status of each application.

Business can check the status of their applications with VCCI, Land Transport Authority, Handicraft Association and DoFT Website

Bank Accounts that are submitted MUST be Active – Bring your bank cards with account details with you when you go to each of the stakeholders to fill your forms.

All queries should be directed to the stakeholders – if unsure the stakeholders will revert your query to the Department of Finance

For Small Business Grant (SBG) Scheme enquiries email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 26049.

For  Wage Subsidy Scheme (WSS)  enquiries can be forwarded to This email address is being protected from spambots. You need JavaScript enabled to view it.   Or call  26049.

Outstanding Small and Medium Enterprise Grant Applications from 2020

There still exists a substantial amount of Small and Medium Enterprises (SMEs) Grant applications that are yet to receive their payments.


Pivotal to the verification process of applications are business license data from all licencing authorities (DCIR, the 6 Provincial Governments and the Municipalities). Assistance was sought from the DCIR, the Department of Local Authorities to acquire data for all business licenses issued between the 1st of January 2019 and the 31st of March 2020, consistent with the eligibility criteria set for the SME grants.


Despite lengthy dialogues with all authorities concerned, MFEM discovered that provincial authorities have failed to maintain proper and accurate records of business licenses paid in their jurisdictions. The data requested from all authorities were submitted very late, with many discrepancies. One particular province never submitted any data at all. Many business licenses received as part of applications were either inexistent in their records provided, or existed as duplicates with at least one other entity.


Given the above findings, MFEM decided to put on hold all payments to applicants that were identified to have issues with their business licenses and to further consult the authorities to provide the correct information. Unfortunately MFEM’s efforts to have the licencing authorities fix these issues was unsuccessful. Provinces claim such an exercise would be too tedious, if not impossible.


Despite the issues with provincial records, most outstanding SME grant applicants have provided a copy of a business license certificate along with their application forms.


To address this backlog prior to implementing the Vanuatu Second Policy Stimulus, MFEM proposes that all SME Grant applications, where a license from a provincial authority was provided as supporting documentation, be eligible to receive payment as long as it meets the following criteria:

               • The license was issued between 01/01/19 and 31/03/20.
               • The license bears the:


               i. Provincial Government’s stamp and/or letterhead
               ii. licensee’s name
               iii. signature and/or name of the representative officer of the licensing authority
               iv. Business license number must be clearly displayed