The New Today

Commentary

Government must change course now or risk enduring damage to the economy

With the recent spate of travel restrictions introduced by source market countries to limit international travel and a worsening pandemic, hopes of an early economic recovery driven by tourism have all but diminished.

This would require astute thinking, an urgency in planning by policymakers and government’s willingness to adopt policy shifts that can help reverse the situation.

Government needs to change course and come up with new strategies to mitigate against the resulting economic fallout. This would require astute thinking, an urgency in planning by policymakers, and government’s willingness to adopt policy shifts that can help to reverse the situation.

Canada is the most recent source market country to introduce travel restrictions by banning all travel to the Caribbean by its citizens and requiring mandatory PCR testing at airports on top of the pre-boarding test already in place. Travelers would have to stay in a government approved quarantine hotel for three days to await test results.

The United States and England had already gone ahead and announced changes requiring a negative PCR test by all passengers, including nationals, before boarding a flight to enter their borders. These travel restrictions will cause further harm to an already battered tourism industry.

As source market countries introduce travel restrictions the flow of tourists to the island will come to a trickle. Many hotels will close when bookings dry up and other businesses that depend on tourism will suffer.

Unemployment will rise as workers are sent home. Government revenues will further decline and expenditure fall off resulting in a drop in aggregate demand. Government’s gamble on short term tourism, considered high risk during a pandemic, has failed miserably.

The time is now right for a change in policy direction to prevent long-lasting damage to the economy. With the pandemic raging like wild fire in source markets countries, the vaccination drive riddled with logistical and other problems and increasing rate of mutations of the virus, the short to medium term prospects for short term tourism does not look good.

Government should now focus on areas that do not depend on international travel.

The emphasis should be on the local economy through expansion of capital works programs, agriculture and educational services in the short term while creating the enabling conditions for emergence of sectors like digital transformation, technology and alternative energy in the medium to long term.

Government should use some of the money in the transformational fund to provide counterpart financing for the Public Sector Investment Program (PSIP).

Immediate steps ought to be taken to improve implementation rate of capital projects in the PSIP by strengthening relevant line ministries project management capabilities.

A program of small capital works to build secondary roads, retaining walls, drains, repair government buildings, build toilets and bathrooms for vulnerable households, and other social infrastructure type projects to put people to work and provide them with a source of income.

Resources should be given to farmers to help them boost production. Expansion of the farm labour program is critical for ramping up crop production.

Government must also consider concessions on fuel for fisher folks to encourage them to fish more and keep down the price of fish enabling those who otherwise would not be able to afford higher prices a constant source of protein in their diet.

The pandemic highlights the importance of local food production to feed citizens and keep the lid on prices. Support should be given to the fishing industry to assist in identifying export markets for fish.

Efforts to change course and mitigate against the negative effects of a pandemic induced economic contraction will come to naught if the virus spread is not brought under control. Government would need to maintain the downward trajectory of the epidemiological situation and prevent the new strains from gaining a foothold within the population.

In order to further protect the population and limit the economic downturn, government should consider going around the Covax arrangement and partner with St. George’s University (SGU) to get about eighty thousand doses of the Oxford-AstraZeneca vaccine that is better suited to third world situations not requiring super cold refrigeration.

This would allow the island to vaccinate seventy percent of its population, including students, faculty and expatriate staff who have not already been vaccinated in their home country, to achieve herd immunity.

Related:  This is not the time to become complacent

This effort would allow for return of some level of normalcy, cause SGU to restart in-person teaching and revive twenty percent of the economy.

Without a doubt this would be a shot in the arm for farmers, supermarkets, restaurants, apartment and car rentals, and other businesses that provide services to SGU students.

Both Nawasa and Grenlec would benefit in a big way, since SGU is one of their biggest customer. Commercial banks who are providing moratoriums on loans and interest payments to customers will welcome the opportunity to get a significant share of their loan portfolio active again. The ripple effect will be huge for the economy.

Although the vaccine is not the panacea for Covid-19, it doesn’t protect you from getting infected and spreading the virus. Once vaccinated you will be protected from getting really sick and dying from coronavirus.

If seventy percent of the population is vaccinated, in short order, a level of herd immunity will be achieved to allow for some level of normality in society.

Going forward, obtaining a suitable vaccine and vaccinating over seventy percent of the population must be a key element of any strategy to prevent long-lasting economic damage and facilitate a return to economic recovery.

Government should not wait on Covax, if there are undue delays or the doses to be provided are not sufficient to vaccinate over seventy percent of the population in a short space of time.

They should take immediate steps to get the vaccine working in partnership with SGU and local companies that purchase pharmaceuticals on the island. The island of Barbados is considering that approach as well.

After ‘betting the house’ on short term tourism and observing what has happened to the sector, government must now change course and pursue a strategy that focuses on investment in capital works, agriculture, return of SGU students and vaccinations.

This would allow for return to some degree of normalcy that would lay the foundation for economic recovery.

Government would then be in a position to consider initiatives to mitigate the social and economic fallout from the pandemic. Some of these efforts could include legislative or legal support for interest forgiveness on mortgages, other long term loans, and land taxes for 2020.

Working with traditional development partners to offset mounting learning losses in the education sector, particularly among vulnerable students.

Government must strive to provide, with the same amount of commitment, financial and social assistance to nationals as it does for hotels and foreign investors.

Any attempt to provide additional income support to tourism must not be limited to a few large hotels but the entire industry including smaller properties, targeted strictly at ordinary hotel workers not senior management and executive staff.

It was said in parliament that last year funds intended for income support to ordinary workers went to senior management staff.

If government allow this to happen this time around that would be wicked and ridiculous. The trade unions should be placed on alert and monitor the situation. Government must stop favouring larger hotels owned by foreigners over lowly paid Grenadian workers.

If big hotels are to be given further assistance then apartment rentals to SGU students should be given relief on property taxes and interest payments on loans for 2020 and 2021, and cruise ship workers and other workers laid off because of the pandemic ought to receive assistance as well.

Government must stop treating Grenadian workers with contempt, this is utterly disgusted. For the strategy to be successful in turning around economic fortunes and limiting long term economic damage, government must ensure new strains of coronavirus do not infiltrate the island’s borders and the current epidemiological situation remains on a downward trajectory.

Government should prioritise acquisition of vaccines and strengthen public health protocols to prevent resurgence of the virus much less community spread that would trigger an islandwide lockdown. In order for this not to happen, government must change course now and avoid going down the path of its neighbours.

Special Correspondent