The government said this was a preventive measure despite Palau being coronavirus -free.
The move was also seen as a response to the public outcry following the Ministry of Education's previous announcement that schools would be open amid the COVID-19 pandemic.
However President Tommy Remengesau Junior did not advocate for a restricted movement order of government employees.
He said government offices would remain open and employees would still need to go to work except when sick.
"Let me emphasise again a very important thing, these are no coronavirus case in Palau, number two, we must continue as a government to do our responsibility and provide our services, and number three, the most important thing is not to quarantine the thousands of people that are healthy but make sure that one person with the flu doesn't come to work and run the risk of infecting the others," Mr Remengesau said.
He urged the public to stay home if they are feeling sick.
Otherwise the president said healthy people should continue to work even in the private sector, urging the people not to panic.
Mr Remengesau said older people were at greater risk and those with underlying health conditions but the rest he said will most likely recover from coronavirus.
"But for the rest of us, this is just like a flu, if you are healthy and the virus comes to you, you will survive it," he added.
However all government-sponsored events, workshops and official overseas travel has been postponed indefinitely.
Meanwhile Vice President Raynold Oilouch, who is also the chairman of the National Emergency Committee, also discouraged mass gatherings of more than 50 people.
On Tuesday the Minister of Health certified COVID-19 as an "unavoidable emergency,"
"This certification does not mean that the virus has entered Palau, that the virus is out of control, or it is "unavoidable" to get the virus.
Rather, the purpose of the certification is to put the government on alert and to enable the Ministry of Health to access the Hospital Trust Fund, opening up another source of funds to help with prevention and preparation," the president said in a statement.
Congress has appropriated an additional nearly one million US dollars to the Hospital Trust Fund. It is also authorising up to six million in reserve funding to help maintain government services in the face of declining tourism revenue.
In a meeting with the Belau Tourism Association, the president also vowed to help businesses hit hard with the tourism decline as a result of the threats of coronavirus, promising tax cuts, extended time and payment schedule to pay taxes.
According to several hotels in Palau, the occupancy rate has been reduced to less than 25 percent. Working hours for employees have also been reduced.
The impact of the coronavirus fell hard on the February arrivals, registering a 42 percent drop compared to the same month in 2019.
According to the latest Palau Visitors Arrivals statistics, for the month of February 2020 visitor arrivals to Palau totalled 5,613 representing a decrease of 4,162 compared to February 2019 with 9,776 visitor arrivals.
Although Palau was not closing its airport and seaports, flights from Guam will be reduced to once a week starting on 26 March.
Flights from Manila will stop until 3 May.