Editor’s Note: While there are no COVID-19 cases in the Federated States of Micronesia, the Marshall Islands or Palau, those countries have nevertheless been hit by the economic fallout of closed borders and severely reduced economic activity.
The International Monetary Fund policy tracker – from which the following information was taken – summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic. The tracker includes 196 economies and can be found at www.imf.org. It was last updated June 12.
NOTE: The tracker focuses on discretionary actions and might not fully reflect the policies taken by countries in response to COVID-19, such as automatic insurance mechanisms and existing social safety nets which differ across countries in their breadth and scope. The information included is not meant for comparison across members as responses vary depending on the nature of the shock and country-specific circumstances. Adding up the different measures—tax and spending, loans and guarantees, monetary instruments, and foreign exchange operations—might not provide an accurate estimate of the aggregate policy support. The tracker includes information that is publicly available or provided by the authorities to country teams and does not represent views of the IMF on the measures listed.
More detailed coverage of government actions and allocations and external grants for the FSM, the Marshalls and Palau can be found in a variety of stories on the Marianas Business Journal site at www.mbjguam.com.
The Federated States of Micronesia
Background. As of June 11, there are no confirmed COVID-19 cases in the Federated States of Micronesia, but the country’s health system has limited capacity for handling an outbreak (see U.S. Department of State travel advisory for the FSM). The FSM implemented a public health emergency on January 31, and recently extended it to July 31.
The national and state governments have introduced travel restrictions; banning or requiring 14-day self-quarantine in a COVID-19-free area prior to entry into the FSM; and restricting residents from traveling abroad. The state of Chuuk closed schools.
Key Policy Responses as of June 11:
To address the emergency caused by COVID-19, the national government has prepared a U.S. $20 million (or about 5% of GDP) COVID-19 Response Framework, in order to develop quarantine and isolation facilities across the nation, provide mandatory infection control training for all first responders, and increase testing capacity and ventilators for each island state in the FSM. On April 22, the government approved the economic stimulus package of U.S. $15 million (about 3.8% of GDP). The package includes measures to support affected businesses, including wage subsidies, debt relief, as well as social security tax and other tax rebates.
The Marshall Islands
Background. As of May 21, no COVID-19 case had been confirmed in the Marshall Islands. The government responded with swift precautionary measures early on. Travel restrictions from affected countries have been imposed since Jan. 24. Entry of all international travelers by commercial flight has been suspended since March 8.
To ensure food and other supplies, container vessels and fuel tankers have been exempted from entry restrictions, but with strict safety requirements including prohibition of human contacts and a minimum of 14 days between departure from ten restricted countries and arrival in RMI. Fisheries, port-related activities, and the hotel and tourism sectors are experiencing significant losses.
Reopening of the economy. To ensure continuity of transshipment services, a limited number of carrier vessels and purse seiners can enter RMI for transshipment, after spending 14 days at sea and only after clearance by corresponding agencies.
Key Policy Responses as of May 21
The government has formulated a Coronavirus Disease Preparedness and Response Plan and is preparing preventive measures amounting to about U.S. $7 million (3.1% of GDP), including construction of quarantine and isolation units, purchases of medical equipment, installment of washing stations, and funding for overtime of health workers. Tax revenues for March declined by 25% year-on-year and risks to revenues from fishing license fees are significant.
The authorities are currently working with multilateral and bilateral development partners in search of financial support.
While there have been no confirmed cases of COVID-19 in Palau as of June 4, the authorities have adopted early prevention and containment measures. These include temporary bans on domestic and international air and sea travel, screening at ports of entry, school closures, and restrictions on public events.
Key Policy Responses as of June 4
The government is taking actions to support the health sector and the economy. The OEK or parliament is appropriating an additional $916,808 (0.3% of GDP) to the Hospital Trust Fund to help with prevention and preparation for COVID-19. The OEK is also authorizing additional funding (up to $6 million or 2.1% of GDP) to help maintain government services in the face of declining tourism revenue.
Monetary and macro-financial
The National Development Bank of Palau announced plans to provide financial relief to affected business and households, including interest-only payments, term extension, loan consolidation, and temporary payment deferral. Some private banks have introduced loan deferral and forbearance programs for three months.