The Taiwanese government has made available an additional $1.33bn, on top of the previous $2bn (T$60bn) package, to stimulate the island’s economy.
The new aid package follows a warning by the central bank that the coronavirus epidemic will have a longer and stronger impact than it had previously anticipated.
Previous estimates were that the virus will affect growth only in the first quarter. However, central bank governor Yang Chin-long told parliament last week that covid-19 was likely to extend into the first six months of the year.
Banks will use the funds by continuing to offer loans to small businesses.
Taiwan’s economy ministry also continue to give people “coupons” to spend in places such as department stores and the island’s night markets, normally a big draw for tourists, to encourage domestic consumption.
The government had previously proposed T$14.23bn for the transport and tourism industries, including subsidies for hard-hit tour agencies, and tax cuts for tour bus drivers.
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“Banks must help the whole society”
Banks are responsible for helping not just customers but the whole of society, said Joseph Huang, chief executive of Taiwan lender E.Sun.
“In times of stress and distress, financial institutions should leverage capital and resources, and use them to stabilize society by injecting liquidity into the market,” Huang said.
The industry should provide “assistance to companies in the greatest need,” he added. “It’s time for banks to make a positive impact.”
Taiwan, whose largest trading partner is China, has cut its estimates for the 2020 economic growth to 2.37%, as the global pandemic continues to threaten its export-dependent economy.
“The likelihood of a full-blown financial crisis is low”
Given the uncertainty of the coronavirus situation, it will not become clear until the end of June whether Taiwan can maintain 2% economic growth this year, the central bank governor said.
Lockdowns imposed in China and other countries to contain the virus have severely curtailed Taiwan’s exports and imports.
Despite these headwinds, Taiwan’s economic fundamentals remain strong, said President Tsai Ing-wen. The central bank governor also reassured the market that the likelihood of a full-blown financial crisis is low.