Where is all the money coming from?

Businesses and economies around the world will take a severe hit from the costs and effects of the Covid-19 coronavirus.

New Zealand has already announced $12.1 in spending to prop things up. It equates to about 4% of our GDP.

That amount is likely to grow substantially, and will add to borrowings. But that’s only small change in the international finance pond.

Across the Tasman: What Australia’s $189bn coronavirus economic rescue package means for you

The government has announced a second major economic rescue package worth $66bn, on top of an initial $17.6bn package and more than $100bn in emergency banking measures to prevent against a credit freeze.

Framed as a “safety” package, the second wave of stimulus ramps up support for small business and also includes a major boost to welfare recipients and for people who lose work as a result of the Covid-19 pandemic.

In total, the government has now committed economic support worth $189bn – almost 10% of GDP – and has also flagged more packages as the crisis unfolds.

UK Government: Support for those affected by COVID-19

On 17 March, the Chancellor announced an unprecedented package of government-backed and guaranteed loans to support businesses, making available an initial £330 billion of guarantees – equivalent to 15% of GDP.

This was on top of a series of measures announced at Budget 2020, the government announced £30 billion of additional support for public services, individuals and businesses experiencing financial difficulties because of COVID-19, including a new £5 billion COVID-19 Response Fund, to provide any extra resources needed by the NHS and other public services to tackle the virus.

Just announced in the US: Senate, White House reach $2 trillion stimulus deal to blunt coronavirus fallout

Senate leaders and the Trump administration reached agreement early Wednesday on a $2 trillion stimulus package to rescue the economy from the coronavirus assault, setting the stage for swift passage of the massive legislation through both chambers of Congress.

National Post: Trump and his children banned from applying to US$2 trillion stimulus plan

Together with Fed intervention, the proposed legislation amounted to a $6 trillion stimulus, according to White House economic adviser Larry Kudlow, or about 30 per cent of annual GDP.

The package will likely more than double a U.S budget deficit that was already set to hit $1 trillion this year before the outbreak. It also may not be the last infusion of government spending in response to the spread of the virus.

The US has had growing deficits and growing debt since the GDP in 2008:

As of February 2020, federal debt held by the public is 17.23 trillion and intragovernmental holdings were $6.02 trillion, for a total national debt of $25.3 trillion

 

At the end of 2018, debt held by the public was approximately 76.4% of GDP and approximately 29% of the debt held by the public was owned by foreigners. The United States has the largest external debt in the world.

https://en.wikipedia.org/wiki/National_debt_of_the_United_States

When the US package was announced the country was heralded as ‘the greatest country in then world’, as they tend to do. That may refer to the greatest debt in the world. That’s one thing trump has been biggest and best at, growing debt.

There’s some big numbers here, and this is just four countries.

Where will all this support package money come from? Are loans already secured?