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This policy tracker summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic. The tracker includes 197 economies. Last updated on July 2, 2021.
Background. Afghanistan reported its first COVID-19 case on February 24, 2020. As the infection spread, the government tightened containment measures, including introducing screening at ports of entry, quarantine for infected people, and closure of public places for gathering. It imposed countrywide lockdown in late March 2020, which was subsequently extended twice. Afghanistan experienced a relatively moderate second wave of infections during November-December 2020 with infections declining since early 2021. Schools reopened on February 28, and universities resumed in person instruction in early March 2021.
Afghanistan is currently going through a severe third wave of infections, with the number of cases and deaths topping the peaks of the first wave a year ago. Almost a third of the individuals tested recently had the infection. In response, the authorities have closed schools until further notice and are trying to speed up vaccinations. In consultation with the neighboring countries, they have also halted the movement of people across borders while keeping them open to trade and cargo transit.
The authorities aim to vaccinate 60 percent of the population. Essential workers and groups prioritized by the National Technical Committee based on their vulnerability to COVID-19 will be vaccinated first. Inoculations using 500,000 doses of the AstraZeneca vaccine donated by India started in February. The COVAX facility aims to provide vaccines covering 20 percent of the population, with the first shipments of 468,000 doses delivered in early March. Vaccination of another 28 percent of population is expected to be funded by World Bank and ADB grants. That said, less than one percent of the population has been fully vaccinated so far, and Afghanistan is facing a vaccine shortage after a large shipment has been delayed significantly. In response, China donated 700,000 doses, and the U.S. is delivering 3 million doses of the single-dose Johnson & Johnson COVID vaccine this week. In addition to the vaccine shortage, the inoculation campaign is also facing administrative challenges and vaccine hesitancy in rural areas.
The pandemic and containment measures introduced at the onset of the pandemic disrupted domestic activity and trade. Border closures and panic-buying led to a temporary spike in prices of foodstuffs in April 2020, which has abated with the re-opening of borders in early June. Income and job losses in the formal and informal sectors pushed thousands of Afghan families into poverty, threatening to reverse social development gains of the past decade. Oxfam estimates that the number of people on the brink of famine in Afghanistan has risen to 3.5 million in 2020 from 2.5 million in September 2019.
The government initially used contingency funds for emergency pandemic response, including for urgent health needs, such as establishing testing labs; setting up special wards to boost hospitalization and care capacity; and procuring critical medical supplies.
In April-June 2020, the government provided free bread to the poor in Kabul, later extended to other cities. In May, it waived electricity bills of less than Af 1,000 (US$13) for a family residence in Kabul for two months and paid utility bills of the past two months for 50 percent of households in Kabul. The decision benefited more than 1.5 million Kabul residents.
The authorities rolled out about 0.8 percent of GDP social assistance under the World Bank-funded REACH program in 2020, with the remaining 0.6 percent of GDP continuing in 2021. The program targets Afghan households with incomes of $2 per day or lower (twice the national poverty line), with households in rural areas receiving an equivalent of $50 in essential food staples and hygiene products, while those in urban areas a combination of cash and in-kind equivalent to $100, in two tranches. .
Recognizing that taxpayers were facing liquidity strains, the government extended the tax filing deadline for the first quarter of 2020 by 45 days. No further extensions have been provided. In late 2020, the government offered to waive tax and customs payment penalties if taxpayers clear their due taxes before the end of the first quarter 2021.
DAB phased out emergency pandemic measures in July 2020. It ended the freeze on loan classifications and recommenced the enforcement of all prudential requirements in August with flexible application of penalties and prudential triggers in recognition of persisting risks. The emergency measures for the nonbank sector were also allowed to expire in July 2020.
DAB remains focused on achieving price stability in the context of a flexible exchange rate regime. With domestic demand subdued the Afghani has remained broadly stable against the US$. DAB has engaged money-service providers, who play a systemic role in financial intermediation, to ensure uninterrupted services.
Background. Albania was mildly affected in the first wave of the pandemic in the spring of 2020. Due to its proximity and close links to Italy, Albania adopted some of the toughest lockdown measures in Europe in March 2020 as soon as it detected the first confirmed COVID-19 case. The government proclaimed a state of natural catastrophe which enabled it to use extended powers for its three months duration until it ended on June 23, 2020.
Reopening the economy and additional containment efforts. Albania removed all domestic restrictions in the summer of 2020 and re-opened its borders. As the second, more aggressive wave hit the country in the fall, some restrictions domestic restrictions were reintroduced (night curfew, ban on assembly of more than 10 people), but the authorities stopped short of a full lockdown. The epidemiological situation has improved consistently since spring, placing the country in good position to relax restrictions further in the summer. Albania imposes no quarantine or testing requirements to visitors from abroad.
The government adopted two support packages in 2020 for people and businesses affected by the COVID-19 pandemic of a combined size of Lek 45 billion (2.8 percent of GDP) consisting of budget spending, sovereign guarantees and tax deferrals. The first package adopted on March 19, 2020 through a normative act had support measures of Lek 23bn (1.4 percent of GDP) through a combination of spending reallocations, spending increases and sovereign guarantees to support affected businesses. The key measures are: (i) additional funding for health sector in the amount of Lek 2.5 billion (ii) Lek 6.5bn for the support of small businesses/self-employed that are forced to close activities due to the COVID-19 pandemic by paying them minimum salaries (up to two in the case of family businesses with unpaid family members), doubling of the unemployment benefits and social assistance layouts. (iii) Lek 2bn of defense spending reallocated toward humanitarian relief for the most vulnerable which were not used, (iv) Lek 11bn (0.6 percent of GDP) sovereign guarantee fund for companies to access overdrafts in the banking system to pay wages for their employees for up to 3 months with an interest rate capped at 2.85 percent for a maturity of up to 2 years. The government will bear the interest costs. The second package adopted on April 15 2020, includes (i) Lek 7bn (0.4 percent of GDP) fund to pay for a one-off transfer of Lk40,000 to employees of small businesses affected by the pandemic not covered in the first package, employees of large businesses laid off due to the pandemic, and employees in the tourism sector; (ii) a sovereign guarantee of Lek 15 billion (0.9 percent of GDP) to provide loans for working capital for all private companies that were tax-compliant and solvent before the pandemic. The government will guarantee 60 percent of the loans, and interest are capped at 5 percent. As of November 3, almost 98 percent of the overall budgeted direct support measures had been paid out while the take up for the first guarantee scheme was 59 percent and for the second scheme 42 percent. A third smaller support package was adopted on August 13, providing an additional minimum wage to public transport workers who resumed work one month later than the rest. The measure costing Lk135m is accommodated within the existing transport budget.
The government has also adopted tax deferral measures allowing all large companies (except banks, telecommunication, public enterprises and other essential businesses) to defer payment of profit tax for the second and third quarter of 2020 in 2021. Tourism, active processing and call centers can defer payments for the rest of 2020 to 2021. Small businesses with turnover below Lk14m will not pay profit tax for the remainder of 2021.
The 2021 budget The 2021 budget adopted by parliament on Nov 16th, allocated Lk14.2bn (0.8 percent of GDP) in COVID-19 related spending. These include Lk7.2bn for COVID-19 treatment, Lk4.5bn for wage increases for doctors and nurses, and Lk2.5bn for a temporary increase in the payments for social assistance (until June 2021) and unemployment benefits. In successive budget amendments in March and April the government allocated additional Lk3bn to the purchase of Covid 19 vaccines. This brings the total of Covid-related spending in the 2021 budget to Lk17.2bn (1 percent of GDP).
On March 25, the Bank of Albania cut its key policy rate the weekly repo, by 50 basis points to a new historic minimum of 0.5 percent. The Governor announced that the banking sector is liquid and well capitalized, and the central bank stands ready to provide unlimited liquidity for as long as needed. This policy was further extended until at least the third quarter of 2021.
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