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New Zealand Unveils NZ$12.1 Bln Stimulus Package To Cushion Covid-19 Impact

newzealand march17 lt

The New Zealand government launched a NZ$12.1 billion stimulus to cushion the impact of the covid-19 on the economic activity.

The package worth 4 percent of GDP is larger than that implemented during the global financial crisis and one of the largest response packages in the world on a per capita basis, Finance Minister Grant Robertson said Tuesday.

The minister said a recession in New Zealand is now almost certain. The package will cushion the blow caused by the coronavirus on the economy. He said the ultimate recovery package will be announced in the budget.

"Given the size and speed of the economic shock we are facing, we recognise the immediate need to support businesses and workers to cushion the economic impact on households and firms," Robertson added.

As part of stimulus, a wage subsidy scheme was launched that assures payment of NZ$585 per week for full-time employee and NZ$350 per week for part time employee. Eligible firms will receive a lump sum payment with a cap of NZ$150,000.

Today's package also implements a number of tax changes to help increase businesses' cash flows and stimulate investment.

The package also comprises a NZ$25 across the board permanent increase to main benefits, from April 1, 2020 and doubling of the amount paid in 2020 through the Winter Energy Payment.

For health services, an additional NZ$500 million is allocated to support 'Go hard, Go early, Contain COVID-19' strategy.

"Today's announcement is the first tranche of our response," Prime Minister Jacinda Ardern said.

"Our immediate goal is to support people and businesses as we weather the impact of COVID-19. We must then ready the economy to recover," said Ardern.

At an emergency meeting on Monday, the central bank had reduced its key interest rate sharply to 0.25 percent and assured that the rate will remain at this level for at least next 12 months.

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