COVID-19 recession calls for economic remodeling

Aug 20, 2020 Letters

Dear Editor,

Over the last few months, I have written extensively on the state of Guyana’s economy vis-a-vis the election crisis, COVID-19 pandemic, and economic mismanagement. Our approach to these three issues was disastrous to say the least from March 2, 2020. Luckily, we have managed to overcome one of them (the election crisis), but overcoming the other two is not going to be easy, and how we approach them matters greatly.

Shutting the economy down and waiting out the pandemic is not a strategy; neither is continuing with business as usual or pretending that the pandemic doesn’t exist. The top priority must be to protect lives. Saving the economy is the second priority. So what exactly are states to do? How should they approach these matters? What options are there for lawmakers?

Lawmakers have a historic opportunity to soften the recession landing by remodeling the economy. Remodeling simply means “changing the way we do things”. Starting with the public sector, government has the opportunity to bring public services online, digitize the government, increase efficiency, cut cost, create jobs and keep the economic engine running, albeit less than full throttle.

Here are some practical steps that the government can embark on to immediately commence remodeling;

(1) create a temporary retraining and jobs programme – people who have lost their jobs can be employed by the government. To do what? To start digitizing government services. For example, all birth records should be digitized so people can order birth certificates online; digitize agencies data and profile for all government entities to put them online, etc.

(2) create a temporary cash assistance programme – to put monies in the hands of families, especially poor families, that have lost their jobs and without income to feed their families. Yes, give them the cash wherever it is possible and make sense, if not then give the food stuff. There is a greater economic impact by giving families the cash instead of goods and services during this period.

(3) adopt strict COVID-19 guidelines to allow government services and private sector business especially small groceries and other essentials businesses, to stay open and operate at some level (50% or 60%) of capacity. This would ensure some amount of economic activities and prevent the economy from coming to a grinding halt.

(4) the night economy – this is one of those policies we (Guyana and the Caribbean) have not been considering and making full use of. Economies can no longer operate on an 8am-4pm schedule. Density of economic activities and pedestrian traffic are not friends in this pandemic. We must make use of the night economy and shift those activities that are better suited for those hours. This will lower the density and spread activities over the day instead of cutting activities.

(5) budget policy reorientation – use the national budget process to realign spending to not only deal with the immediate impact of COVID-19 but to remodel the economy. Key sectors that were starved of funding such as agriculture must see an injection of funding. But the ICT sector is also critical. Broadband for every household, reliable electricity for every household, adequate and reliable mobile connectivity for every community should be top priorities.

(6) economic stimulus – yes, despite their limitations, fiscal and monetary stimulus initiatives are key to remodeling our economy during this pandemic and setting a foundation for long term prosperity. Key infrastructure projects can be undertaken or move up the priority ladder. Ensuring a sizable fund to help the private sector weather the storm is vital for economic survival and remodeling.

These are some smart policy ideas that are making their rounds in the international policy arena, both at the national and local economy levels. They are solid policy advices and the extent to which we can adopt these and other creative policies to remodel our economy will determine how we come out at the end of this crisis, and more importantly used the crisis to jolt us into the future.

Yours truly,

Dhanraj Singh