* Australia says impossible to do economic forecasting
* Australian banks defer loan repayments for 6 months
* Australia set to unveil next stimulus package
* Cruise passengers told to self-isolate after four positive tests (Updates number of coronavirus cases from cruise ship)
By Colin Packham and Swati Pandey
SYDNEY, March 20 (Reuters) - Australia on Friday delayed its federal budget by five months to October saying the coronavirus pandemic made it impossible to make sensible economic forecasts, as it prepared to dramatically expand its stimulus spending to avoid recession.
The country's banks said separately they would defer loan repayments for small businesses impacted by coronavirus for six months at a cost to their bottom lines of A$8 billion ($4.7 billion), amid fears of massive job losses.
"The idea that you can actually put together any sort of forecast around the economy at this time is simply not sensible," said Treasurer Josh Frydenberg, who welcomed the banks' move as a "game changer".
The country of 25 million people has seen only seven deaths from the flu-like virus but its case numbers have jumped to almost 800 in recent days, with New South Wales state reporting its biggest daily rise of 75 on Friday.
About 2,700 passengers from the Ruby Princess cruise ship
that disembarked in Sydney on Thursday were ordered to self-isolate after three guests and one employee tested positive for the COVID-19 disease.
"Our big concern, the very big concern, is that those people came off the cruise with no knowledge of COVID actually being on their ship," said Brad Hazzard, the health minister of New South Wales state of which Sydney is the capital.
The federal government is stepping up limits on movement including a ban on all foreign arrivals announced on Thursday. The island state of Tasmania said it would also require all travellers from the mainland to self-isolate for 14 days.
In a move presaging a possible shut-down of entertainment venues, Prime Minister Scott Morrison said on Friday indoor venues such as bars and restaurants would be required to maintain a density of no more than one person per four square metres (43 sq f) of floor space, effective immediately.
Visits to remote indigenous communities would be restricted to protect vulnerable populations, but schools would remain open in the "national interest", he added.
"At the end of the day, you don't stop this virus, but you can defeat it by slowing it down. And that is how we save lives," Morrison told reporters in Canberra.
MORE STIMULUS
Fears of a surge in unemployment mounted on Thursday when flagship carrier Qantas Airways Ltd QAN.AX told most of its 30,000 employees to take leave, as the virus ravaged the global aviation and tourism industries.
Australian Banking Association Chief Executive Anna Bligh said small businesses employed about five million people in the country, and loan relief was vital if they are to "keep their doors open".
The loan relief came as the government signalled it would announce further stimulus spending on the weekend.
The size of the package is still be determined, but Australian media reported it could be worth around 3%-4% of Australia's A$2 trillion economy, or up to A$80 billion.
Treasurer Frydenberg only last week announced stimulus spending worth A$17.6 billion to stop the country slipping into its first recession in nearly 30 years, with support for the health sector, small businesses and apprentices, among others. declined to comment on the size of the next package, but told the Australian Broadcasting Corporation it was "about cushioning the blow for those Australians who may find themselves out of work".
The stimulus expected over the weekend will complement a A$100 billion package unveiled by the Reserve Bank of Australia and the government on Thursday. central bank bought A$5 billion ($2.9 billion) in local government bonds on Friday, in the first round of its unlimited quantitative easing programme as it looks to cushion the economic shock from the coronavirus pandemic.
In a separate statement, the government said it would buy A$15 billion of residential mortgage-backed securities and other asset backed securities over the next 12 months.
($1 = 1.7221 Australian dollars)