As the novel coronavirus disease (COVID-19) pandemic spread around the world, Asian Development Bank (ADB) economists began tracking how countries are responding. To better understand how ADB’s developing member countries (DMCs) are weathering the crisis, ADB's Economic Research and Regional Cooperation Department (ERCD) launched the ADB COVID-19 Policy Database. The database contains information on the measures that all 68 ADB members have implemented to combat the pandemic.
What types of information have you gathered?
We have classified the measures taken by governments using two lenses. First is through the operational lens, which tracks how a given measure “works” its way through the financial system into the economy. A measure can “work” as any of three possible ways, which are liquidity support, credit support, or income support.
Second is through the lens of financial statement effects, that is, whether or not the measure creates more debt or more income, for example, net worth or equity, ceteris paribus, for the recipients.
The combination of the two dimensions results in five types of government measures: (1) actions to support normal functioning of money markets; (2) encouraging private credit creation; (3) direct long-term lending to households, businesses, and local governments; (4) equity claims on the private sector; and (5) direct support to income or revenue of households, businesses, and local governments.
We have three additional measures that effectively double count from an accounting perspective. These are: (6) reallocating previously budgeted spending; (7) central bank purchases of national government bonds or direct lending to government; and (8) international assistance.
What are some of the interesting trends or findings you see in the data?
The very rich information we have gathered up until 20 April already permits a good understanding of what ADB’s 48 DMCs have so far done. Several interesting points stand out:
The total estimated amount of the packages to combat COVID-19 by ADB’s DMCs is $1.8 trillion. The regional distribution is as follows: 80.9% East Asia; 13.1% Southeast Asia; 4.2% South Asia; 1.7% Central and West Asia; and 0.1% Pacific. Nine out of the 46 DMCs have so far provided no specific amounts, though some of them have non-monetary packages. These are the Federated States of Micronesia, Georgia, Kiribati, Nepal, Niue, Solomon Islands, Tajikistan, Turkmenistan, and Uzbekistan.
The People’s Republic of China (PRC) has provided the largest package—$1.3 trillion— followed by the Republic of Korea at $109 billion, and Thailand at $70 billion. As a share of gross domestic product (GDP), the largest packages are those of Kazakhstan, Thailand, and Singapore slightly above 10%. The largest package per capita is that of Singapore at $7,500. On the other hand, the smallest packages (also as a percentage of GDP), are from countries in the Pacific, Myanmar, and the Lao People’s Democratic Republic. In per capita terms, these nations’ packages are also small, as well as those of India, Pakistan, and Bangladesh, which are all below $100.
43.42% of the DMCs’ $1.8 trillion package was dedicated to direct income support (measure 5). This is followed by support to the normal functioning of money markets (measure 1), with 16.83% allocation. About 30% of the total had no clear assignment to a specific measure. Direct income support is also the largest measure in all five ADB regions. In the case of Central and West Asia, the percentage is as high as 80.5% of the region’s package.
The DMCs’ total package represents 7.81% of their combined GDP. By region, this share is 6.3% of East Asia’s combined GDP; 1% of Southeast Asia’s; 0.3% of South Asia’s; 0.1% of Central and West Asia’s; and 0.01% of the Pacific’s. Direct income support represents 3.39% of their combined GDP. These two shares are much higher for ADB’s non-DMC members: the total package represents 27.71% of these nations’ combined GDP, and direct income represents 8.08% of their GDP. This means that DMCs are using fiscal measures much less than the non-DMCs (3.39% vs. 8.08%).
Check out the full database.
Learn more about key findings.
How is all this being paid for?
The liabilities of numerous central banks are “funding” government deficits (measure 7) in different forms. For example, the central banks of the Philippines, the United Kingdom (UK), and Indonesia have engaged in direct central bank lending/primary market purchases, while those of the United States, the Republic of Korea, Thailand, Papua New Guinea, Canada, Sweden, and the UK, implemented quantitative easing. Japan and Australia have set explicit bond rate targets or aimed at controlling the yield curve; while India has sold bills and bought bonds.
Do you see a relationship between the number of COVID-19 cases in a country and their response package?
Preliminary analysis indicates that both the package per capita and the package as a percentage of GDP are statistically unrelated to the number of COVID-19 cases and the number of deaths. Package per capita and the package as a percentage of GDP are likewise unrelated to the difference in growth forecast for 2020 between the before-the-crisis figures and the April figures. Both variables are, however, statistically related to income per capita: a 1% increase in GDP per capita leads to a 1.5% increase in the package per capita; and to a 0.5% increase in the share of package in GDP. Rich countries are spending disproportionately more.
How can this database help inform countries’ future planning?
Moving forward, our analysis and reflection of what countries have done lead us to think that there are five key areas for DMCs’ policymakers to consider for the medium and long-term recovery: (1) building resilience to the next crisis; (2) thinking seriously about the future: the country’s development and growth model; (3) having courage to design an active fiscal policy strategy; and (4) not thinking that central banks are independent institutions with enough information to run the economy.
Development of the database was led by Jesus Felipe, Advisor; Gemma Estrada, Economics Officer; Susan Torres, Publications Officer; and Mary Ann Magadia, Associate Operations Analyst. The objective is to enhance the effectiveness of ADB’s assistance and to identity policy options for economic recovery.