International Corporate

Finance Project

Analysing and assessing the implications

of the economic impact of COVID-19
and consequent economic responses for
Belgium

Prepared by-
Group 25
Puneet Garg 19P101

A. Effect of COVID-19 on various industries in Belgium:

1. Automotive Manufacturing
2. Oil and Gas

3. Hotels and Motels

4. Online Retail

Overall Impact on GDP

GDP by volume, initial path and actual scenario
 For 2020 as a whole, gross domestic product (GDP) is forecast to contract by 8%, with a
quarterly decline of around 4% in Q1 and 15% in Q2, followed by a strong recovery in the
second half of the year, which would, nevertheless, be insufficient to make up for the initial
loss. Sustaining this recovery would boost growth in 2021 (+8.6%).

B. Effect of COVID-19 on following measures:

 Stock Market

 Foreign Exchange Market

Price of 1 Euro in USD

 Derivatives market

C. Macroeconomic Measures Undertaken

1. Monetary Policy Decisions
 The interest rate on the main refinancing operations and the interest rates on the marginal
lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50%
respectively.
 Net purchases under the asset purchase programme (APP) will continue at a monthly pace of
€20 billion, together with the purchases under the additional €120 billion temporary envelope
until the end of the year.

 The payment of income taxes related to AY 2019 and established as from 12 March 2020 is
automatically extended by 2 months.
 VAT-taxable persons that file quarterly or monthly VAT returns are not required to pay the
“December advance deposit”
 The envelope for the pandemic emergency purchase programme (PEPP) will be increased by
€600 billion to a total of €1,350 billion. In response to the pandemic-related downward
revision to inflation over the projection horizon, the PEPP expansion will further ease the
general monetary policy stance.
 The maturing principal payments from securities purchased under the PEPP will be reinvested
until at least the end of 2022. In any case, the future roll-off of the PEPP portfolio will be
managed to avoid interference with the appropriate monetary stance.
 Businesses can also ask for other support from the tax authorities regarding their tax debts.
This support includes: 

 A payment plan;
 An exemption from late payment interest;
 A waiver of fines for non-payment.

2. Fiscal and Other measures

 A one-off premium for some sectors (horeca, travel, retail, etc.) which are affected by the
emergency measures and are forced to close.
 A premium for small businesses of which the activities have been considerably reduced
because of the corona measures.
 The postponement of the payment deadline for road taxes and immovable withholding tax.
 The abolition of the regional City Tax for the first semester of 2020.
 Government guarantees on bank loans for 20 million EUR.
 The accelerated treatment of grants of expansion support for certain sectors (horeca, tourism,
culture and events).