International Monetary Fund (IMF) on Tuesday urged governments in the Middle East to offer temporary tax relief and cash transfers to mitigate the impact of coronavirus on the public and economies.
Jihad Azour, director for the Middle East and Central Asia Department at the IMF advised governments in the Middle East and Central Asia that attempts to stimulate economies will not work at this time and the effort would rather eliminate the limited fiscal space that is available to them.
He advised that economic policy responses should be directed at preventing the pandemic-a temporary health crisis-from developing into a protracted economic recession with lasting welfare losses to the society through increased unemployment and bankruptcies.
"However, the uncertainty about the nature and duration of the shocks has complicated the policy response. Where policy space is available, governments can achieve this goal using a mix of timely and targeted policies on hard-hit sectors and populations, including temporary tax relief and cash transfers," he said in a note on Tuesday.
The advisory is on the similar lines of measures announced by the US over the last few days. The US Treasury Secretary Steven Mnuchin announced a one-time $3,000 payment for families on Sunday as part of the stimulus package.
"When the immediate crisis from the coronavirus has begun to dissipate, consideration could be given to more conventional fiscal measures to support the economy, such as restarting infrastructure spending, although fiscal space has been significantly eroded over the last decade. Given the nature of the current slowdown, trying to stimulate the economy at this time is unlikely to be successful and would risk eliminating the limited fiscal space that is still available," it said in a note on Tuesday.
In the Middle East, there are around 30,000 confirmed cases of the coronavirus with the majority of them in Iran.
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