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costly virus Government to announce further Covid-19 economic measures

closed cafe

Closed: a cafe in Chur, eastern Switzerland on March 16.

(Keystone / Gian Ehrenzeller)

The government has discussed its next steps to ease the impact of the coronavirus pandemic and has decided to suspend debt collection procedures until April 4.

The debt measure will come into force at 7 am on Thursday, March 19, and run until midnight on April 4, the government announcedexternal link. During this period, no debt proceedings can be launched.

The move comes as businesses and independent workers struggle to come to terms with the government-imposed closure of bars, restaurants, non-essential shops, and entertainment, cultural and sporting venues.

It follows last Friday’s announcement by Economics Minister Guy Parmelin of a CHF10 billion ($10.5 billion) emergency fund that would be put in place to try to ease the devastating impact that the Covid-19 shutdown is having on workers and the economy.

Further measures were also discussed by the government on Wednesday, as the country enters the second day of a virtual lockdown, but these will likely only be announced after another session on Friday, according to the government spokesman.

It’s not clear if these coming announcements will include a hike in the amount of emergency funding, or if they will rather focus on the modalities of allocating the initial CHF10 billion.

Earlier on Wednesday, two economics professors from the Federal Institute of Technology ETH Zurich, Hans Gersbach und Jan-Egbert Sturm, recommended the creation of a national fund of CHF100 billion to stave off an impending wave of bankruptcies.

Businesses could use such a fund to ensure liquidity and avoid lay-offs, the professors said, before later paying back “a good part” of what they received when the economic situation stabilises.

They also recognized that Switzerland’s so-called Debt Brake, which puts limits on the amount of debt the country can rack up, would have to be put aside; but, the ETH professors say, the financial situation is currently favourable enough to allow for this.

Brief recession

Also on Wednesday, the Crédit Suisse bank downgraded its 2020 economic outlook for the country, but perhaps not to the extent that many might have expected.

Due to the coronavirus outbreak and the resulting public disruption and economic uncertainty, the bank’s economists revised their expectation of a 1% increase in GDP this year to a 0.5% downturn. This would be followed by a 2% growth in 2021, they reckoned.

However, this “brief recession” is based on the expectation that the Covid-19 crisis will last until mid-May and then recede; naturally, the bank said, if the pandemic is to persist longer, then the economic consequences will be greater.


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