As several countries begin to slowly resume, or at least commence the conversation about restarting some normal pre-COVID-19 activities, it is ironic that the province in China—where many believe to be the source of the virus—has lifted its stay-at-home measures. In fact, since April 7, residents in Wuhan, China who are COVID-19 free have been able to venture outside.
Other countries may be following suit soon. Denmark has re-opened its schools, 16 states in the USA have unveiled plans to lift its coronavirus restrictions soon and T&T has appointed a committee to chart the way forward.
But, what will be the new normal?
How can activities resume without losing the gains the state has made in suppressing the spread?
“Well this is a challenge that many countries around the World are now facing.”
Professor of virology at the St Augustine campus of the University of the West Indies Dr Christopher Oura believes above all, decisions must be made very slowly and this country needs to know and be confident that the level of the virus’ circulation is low.
But, in conjunction with caution, Dr Oura believes business must resume as soon as it possibly can. A resumption of school is something he believes could be a safe place to start.
“People are saying now the risk of opening back schools might be quite low because young people don’t tend to get the virus or transmit it easily.”
However, the virologist believes the reopening of bars and restaurants should happen a bit later and social distancing may become part of our culture for some time.
With respect to reopening the borders, Dr Oura believes a risk assessment must be done on a country by country basis and more importantly stringent testing must be done at the ports of entry.
“Technology is improving, there’s rapid tests coming in, there’s antibody tests coming in, there’s also testing and tracing in new rapid tracing apps so if people are infected we should be able to trace contact but it needs to be a phased approach.
“We’re not going to get rid of it until there’s a vaccine.”
And while countries are grappling with the contagious virus, simultaneously economic experts are calling this the worst economic fallout in recorded history.
Economist Dr Vaalmikki Arjoon says right now the measures implemented by Government such as the Salary Relief Grant is aimed at survival over stimulus.
He’s also worried about rising unemployment. The UWI lecturer anticipates unemployment to rise to as high as 25 per cent if stay at home measures remain in place. But he does have a suggestion to Government on how they can ensure people get most of their salary and keep their job. But it will involve government paying at least half of it.
“Here’s where the State pays a portion of the wages perhaps maybe 50 or 60 per cent of the wages for employees working in small- and medium-size companies and the employer pays the rest even if it’s 90 per cent of their regular wage.”
Dr Arjoon believes businesses that were struggling pre COVID-19 due to a downturn in the economy will not automatically bounce back once stay at home measures are relaxed. But he said Government can ease the transition into full operation.
“So the State has to start offering some tax deferrals and even tax cuts even if it means less revenue for the State, they may also want to consider dropping the corporation tax to SME’s to about 20 per cent, they may also want to consider removing tariffs on things that businesses need.”
The economist said something as simple as allowing a small business to pay the residential rate for electricity over the commercial rate can go a long way.
These things will cost money.
Dr Arjoon said in the last four fiscal years the country’s debt has risen to $31 billion while the economy has declined in the last six years by 9.7 per cent. More borrowing is in the offing but Dr Arjoon has an unconventional source of lending.
“Extraordinary times call for extraordinary measures, the state should start considering what is called a liquidity swap line, with the US Federal Reserve. This is non-debt financing measure. It will help us to access more USD financing. It is not going to expose us to any currency risk. It involves exchanging TT$ for US$ with the Federal Reserve.
So let’s say we want about US$ 1 billion and let’s say the exchange rate is 1 to 7, then that money will be re exchanged at a later rate using the same rate as the initial transaction. It is not a loan, simply a currency swap and we will not incur any interest.”
This country is not alone in its economic struggles. Other Caribbean nations would have seen their tourist arrivals drop to zero. But while this country is not very dependent on tourism, at the same time oil prices have hit a record low and natural gas is a finite resource. So what avenues are there to generate revenue?
David Rosenblatt, the regional economic adviser of the International Development Bank, has a possible revenue stream.
“You do have some manufacturing base and more so than a number of other countries in the region so through stronger trade links with your neighbouring countries you can start gradually developing a strong manufacturing base, that would require developing a really agile investment environment for either foreign direct investment or for national investors to build the new businesses.”
Rosenblatt said each country’s situation will be unique and their policies need to be guided by their rate of infection. But he believes islands dependent on tourism won’t be able to change overnight. He said given that so many people are embracing the digital platforms maybe large corporations would like to set up remote work locations in scenic Caribbean destinations. Rosenblatt said the first step is getting the virus under control and that itself is a marketing tool.
“Imagine being a COVID-free destination.”