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Measures taken by International Governments


Monetary Response

Fiscal Response


The PBC provided monetary policy support and acted to safeguard financial stability. Key measures include: (i) liquidity injection into the banking system, including RMB 3 trillion in the first half of February, (ii) expansion of re-lending and re-discounting facilities by RMB 800 billion to support manufacturers of medical supplies and daily necessities (RMB 300 billion) as well as micro-, small- and medium-sized firms (RMB 300 billion) and the agricultural sector (RMB 100 billion) at low interest rates, (iii) reduction of the 7-day and 14-day reverse repo rates as well as the 1-year medium-term lending facility rate by 10 bps, (iv) targeted RRR cuts by 50-100 bps for banks that meet inclusive financing criteria which benefit smaller firms and an additional 100 bps for eligible joint-stock banks to support private SMEs, and (v) policy banks’ credit extension to micro- and small enterprises (RMB 350 billion).


The government provided measured forbearance to provide financial relief to affected households, corporates, and regions facing repayment difficulties. Key measures include (i) delay of loan payments and other credit support measures for eligible SMEs and households, (ii) tolerance for higher NPLs for loans by epidemic-hit sectors and SMEs, (iii) flexibility in the implementation of the asset management reform, and (iv) easing of housing policies by local governments.



The exchange rate has been allowed to adjust flexibly. A ceiling on cross-border financing under the macroprudential assessment framework was raised by 25 percent for banks, non-banks and enterprises.

An estimated RMB 1.3 trillion (or 1.2 percent of GDP) of fiscal measures have been approved and are being implemented. Key measures include: (i) Increased spending on epidemic prevention and control. (ii) Production of medical equipment. (iii) Accelerated disbursement of unemployment insurance. (iv) Tax relief and waived social security contributions. The overall fiscal expansion is expected to be significantly higher, reflecting the effect of already announced additional measures—including higher infrastructure investment and improvements of the national public health emergency management system—and automatic stabilizers.


150 bps cuts in interest rates, which are now near 0%. QE at $750 billion and extended to "infinity" if needed. Asset purchases to include corporate bonds and comercial paper.  Lowered cost of discount window lending. Reduced existing cost of swap lines with major central banks and extended the maturity of FX operations; broadened U.S. dollar swap lines to more central banks. The facilities are: (i) Commercial Paper Funding Facility to facilitate the issuance of commercial paper by companies and municipal issuers; (ii) Primary Dealer Credit Facility  to provide financing to primary dealers collateralized by a wide range of investment grade securities; (iii) Money Market Mutual Fund Liquidity Facility to provide loans to depository institutions to purchase assets from prime money market funds (covering highly rated asset backed commercial paper and municipal debt); (iv) Primary Market Corporate Credit Facility to purchase new bonds and loans from companies (PMCCF); (v) Secondary Market Corporate Credit Facility to provide liquidity for already-issued corporate bonds; (vi) Term Asset-Backed Securities Loan Facility (TALF) to support the issuance of asset-backed securities backed by student, auto, credit card, and small business loans. Regulatory agencies indicated their support for banking organizations that use their capital and liquidity buffers to lend and undertake other actions to provide support to households and businesses. Fannie Mae / Freddie Mac have indicated 60-day suspension of foreclosures / evictions and a plan to reduce/suspend mortgage payments for up to 12 months for those affected by Covid-19.


US$8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act and US$104 billion Families First Coronavirus Response Act which together provide 0.5 percent GDP for health care, sick leave, small business loans, and international assistance. Agreement has been reached on a US$2 trillion (around 10% GDP) The Coronavirus Aid, Relief, and Economic Security Act provides for transfers to households (a $1200 check for every American), extended unemployment insurance, food assistance, incentives for firms to maintain employees on payroll, loans and grants for businesses, funding for hospitals and health care infrastructure, transfers to state and local governments, and deferral of payroll tax obligations. Federal student loan obligations have been suspended for 60 days and tax filing deadlines have been delayed.


Tax and spending measures include: (i) additional funding for the NHS and other public services (£5 billion); (ii) measures to support businesses (£27 billion), including property tax holidays, direct grants for small firms in the most-affected sectors, and compensation for sick pay leave; and (iii) strengthening the social safety net to support vulnerable people (by nearly £7 billion) by increasing payments under the Universal Credit scheme as well as expanding other benefits. The government is also launching with the British Business Bank the Coronavirus Business Interruption Loan Scheme to support SMEs; deferring VAT payments for the next quarter until the end of the financial year; and will pay 80 percent of the salary of furloughed employees (to a maximum of £2,500 per employee per month) for an initial period of 3 months.

Key measures include: (i) reducing Bank Rate by 65 basis points to 0.1 percent; (ii) expanding the central bank’s holding of UK government bonds and non-financial corporate bonds by £200 billion; (iii) introducing a new Term Funding Scheme to reinforce the transmission of the rate cut, with additional incentives for lending to the real economy, and especially SMEs; (iv) launching the joint HM Treasury—Bank of England Covid Corporate Financing Facility which, together with the Coronavirus Business Loans Interruption Scheme, makes £330bn of loans and guarantees available to businesses (15 percent of GDP); (v) (v) activating a Contingent Term Repo Facility to complement the Bank’s existing sterling liquidity facilities; (vi) together with central banks from Canada, Japan, Euro Area, U.S., and Switzerland, further enhancing the provision of liquidity via the standing US dollar liquidity swap line arrangements; and (vii) reducing the UK countercyclical buffer rate to 0 percent from a pre-existing path toward 2 percent by December 2020, with guidance that it will remain there for at least 12 months. The Prudential Regulatory Authority (PRA) set out supervisory expectation that banks should not increase dividends or other distributions, such as bonuses, in response to policy actions.

GERMANY (and FRANCE for monetary response)

The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) providing temporarily additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) starting between June 2020 and June 2021. Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020, an expanded range of eligible assets under the corporate sector purchase program (CSPP), and relaxation of collateral standards for Eurosystem refinancing operations (MROs, LTROs, TLTROs).


The ECB Banking Supervision allowed significant institutions to operate temporarily below the Pillar 2 Guidance, the capital conservation buffer, and the liquidity coverage ratio (LCR). In addition, new rules on the composition of capital to meet Pillar 2 Requirement (P2R) were front-loaded to release additional capital. The ECB considers that the appropriate release of the countercyclical buffer by the national macroprudential authorities will enhance its capital relief measures. The ECB Banking Supervision further decided to exercise – on a temporary basis – flexibility in the classification requirements and expectations on loss provisioning for non-performing loans (NPLs) that are covered by public guarantees and Covid-19 related public moratoria; and recommended that banks avoid pro-cyclical assumptions for the determination of loss provisions. Furthermore, the ECB recommends that banks opt for the IFRS9 transitional rules.


In addition to measures at the euro area level: (i) release of the countercyclical capital buffer for banks from 0.25 percent to zero; (ii) additional €100 billion to refinance expanded short-term liquidity provision to companies through the public development bank KfW, in partnership with commercial banks; and (iii) following the structure of the former Financial Stabilization Fund, €100 billion is allocated within the WSF to directly acquire equity of larger affected companies and strengthen their capital position.

Key spending and tax measures totaling €156 billion (4.5 percent of GDP) include: (i) spending on healthcare equipment, hospital capacity and R&D (vaccine), (ii) expanded access to short-term work (“Kurzarbeit”) subsidy to preserve jobs and workers’ incomes, expanded childcare benefits for low-income parents and easier access to basic income support for the self-employed, (iii) €50 billion in grants to small business owners and self-employed persons severely affected by the Covid-19 outbreak in addition to interest-free tax deferrals until year-end. At the same time, through the newly created economic stabilization fund (WSF) and the public development bank KfW, the government is expanding the volume and access to public loan guarantees for firms of different sizes, with an allocation of at least €822 billion (24 percent of GDP)



An amending budget law introduced a fiscal package of €45 billion (about 2 percent of GDP including liquidity support measures) and €300 billion (about 13 percent of GDP) of state guarantees for bank loans to companies. Key immediate fiscal support measures include (i) streamlining and boosting health insurance for the sick or their caregivers; (ii) increasing spending on health supplies; (iii) liquidity support through postponements of social security and tax payments for companies; (iv) support for wages of workers under the reduced-hour scheme; (v) direct financial support for affected SMEs and independent workers; and (vi) postponement of rent and utility payments for affected SMEs.


Source: IMF