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Treasury action awaited on virus

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The National Treasury building in Nairobi. FILE PHOTO | NMG

Calls are mounting for the National Treasury to create a stimulus package to support companies and the business sector in the wake of coronavirus-induced slowdown.

The ideal package would seek to enhance liquidity and reduce the impact of potential economic disruption. Kenya, which has four confirmed cases of the virus has so far banned entry of travellers from any virus-hit country and encouraged employers to allow staff to work from home.

“The government should adopt a fiscal stimulus package for all businesses and special stimulus for business sectors likely to be heavily affected by the Covid-19 crisis,” said law firm Bowmans Kenya in a research note.

The stimulus package may include a temporary reduction of corporate taxes, zero-rating of essential supplies, coordinated customs reduction, reduction or scrapping of excise duties and taxes on the flow of money, payroll tax cuts to stave off layoffs and enable businesses to improve employee benefits during the crisis.

Already many businesses including airlines, malls, hotel chains and some manufacturers are reporting low businesses as customers keep away from travel or establishments.

“The Government should adopt a monetary stimulus to ensure that businesses will have available and affordable credit access to keep operating and pay their employees,” said Bowmans.

It cited a temporary and statutory moratorium on debt and mortgage payments, increased overnight lending to banks and reduction of interest rates by the Central Bank.

It also called for the government to set up an emergency business fund to empower local suppliers.

Treasury Secretary Ukur Yattani did not respond to our queries on the calls.

Several countries have already announced similar packages which seek to reduce the cost of doing business and shield businesses from collapse, especially in the sectors of tourism, retail, external trade and logistics services which have been the hardest hit by headwinds arising from the Covid-19 outbreak.

The Central Bank of the UAE, recently launched a Dh100 billion (Sh2.8 trillion) comprehensive targeted economic support scheme for retail and corporate customers affected by Covid-19.