EaP CSF COVID-19 Briefing Paper: lessening the economic impact of the COVID-19 crisis

Francesca Nista, Tania Marocchi, Vera Rihackova Pachta, Billie Bell

The COVID-19 pandemic has led most governments to impose restrictive measures. As a result, economies in the Eastern Partnership have been hit hard. Even though actions to mitigate the economic impact have been taken by governments, such as tax relief, unemployment benefits and income support, their effects will be felt only in the medium and long term. The efforts of civil society to support vulnerable categories like low-wage workers, women and SMEs are essential in the immediate response to the crisis.

Armenia‘s GDP is foreseen to shrink by up to 1.5% this year. Particularly the tourism sector felt the negative consequences of the crisis. Measures taken by the Armenian government include subsidies for SMEs with positive credit, loans targeting SMEs and  one-time job support grants to SMEs with 2 to 50 employees. For Azerbaijan, the GDP is expected to fall by 2.2% in 2020. The country has been additionally affected by the drop in oil prices. Actions aimed at mitigating the econmic consequences comprised tax benefits for SMEs, lump sum cash payments to unemployed citizens and a ban on dismissing employees during the crisis.

Belarus has been more lenient in imposing restrictions compared to the other EaP countries. Still, the government has adopted a programme to support the most affected economic sectors like manufacturing, retail, fitness centers, beauty salons, hairdressers, restaurants and more. However, only a very small number of businesses have actually used these support measures. Moreover, given that no state of emergency has been declared, the conditions for loan payments of businesses cannot be eased. The country’s GDP is predicted to fall by 4% this year.

Similarly to Belarus, Georgia‘s GDP is also expected to drop by 4%. The government has adopted a support package and provided monthly cash assistance to vulnerable groups and low-wage workers. However, there is a high likelihood that people who were self-employed like babysitters, street vendros and private teachers, will remain without financial support because of the lack of proof of their lost income.

The GDP of Moldova is expected to fall by 3% in 2020. The authorities have issued support packages to the economy and businesses. Moreover, a programme for business digitalisation, which supports the digital transformation of SMEs, has been launched by the Ministry of Economy. Lastly, Ukraine‘s GDP could decline by 7% this year, marking the highest potential drop in the EaP. A number of support programmes aimed at SMEs have been implemented by the government. Furthermore, a detailed quarantine exit strategy has been developed with the help of civil society. Still, there is a lack of social dialogue with public authorities in other areas.

The briefing paper has gathered a number of conclusions based on the concerns and needs of civil society organisations from the Eastern Partnership:

  • Both the international community and national governments need to pay special attention on economically vulnerable categories like SMEs, low-wage workers and women workers
  • The EU should continue with targeted support to local civil society in its role of monitoring governments´actions
  • Next to larger grants, the EU should also provide small grants that would help a greater number of small organisations
  • Additional funding should be allocated in support of economic recovery measures focusing on vulnerable working categories and SMEs
  • Economic assistance should be more inclusive of vulnerable categories and more gender-sensitive in its approach

This paper has been elaborated in the framework of the Eastern Partnership Civil Society Forum #PrepareEaP4Health campaign and aims to illustrate the context in which civil society is addressing the challenges brought about by the COVID-19 public health crisis. It is based on the author’s desk research, and collective input from EaP CSF member organisations, provided through an online consultation conducted between 25 March and 3 April 2020. A total of 84 responses from all six EaP countries and EU member states took part in the survey: 25 from Armenia, 13 from Azerbaijan, 5 from Belarus, 10 from Georgia, 6 from Moldova, 17 from Ukraine, and 8 from EU member states. The survey was designed to identify the major needs and concerns of civil society.