Wed | Aug 12, 2020

Densil A. Williams | Yes to reopening, no to fearmongering

Published:Thursday | July 9, 2020 | 12:00 AM
Densil Williams
A resident of Tivoli Gardens has her temperature checked by a Ministry of Heath personnel in the community recently.
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As Jamaica prepares to open its borders to international travellers, there is a strong debate between the health camp and economic camp about the speed with which the Jamaican economy is being reopened. The Medical Association of Jamaica sent out a strongly worded statement on June 5, expressing grave concerns about the lack of testing for tourists that will come to Jamaica. Similarly, other non-governmental organisations and civil society groups also expressed deep concerns about reopening the economy without testing tourists who come to our shores.

The sentiments are so strong, to the point where critics drew the ire of Prime Minister Holness, who claimed that those who are criticising the reopening of the economy are pretending that they have more love for the people than he does. He indicated that he walks the inner-city communities and sees the pain and suffering of the people and, if the economy should be “shut down” for longer, it would make conditions worse for those vulnerable persons.

Frankly, there is no need for a tension between health and economics. Both are critical to the survival of the nation and its people. Extreme positions cannot work at this time. What is needed is a balance between health protocols and economic management. For, it cannot be that we become overly concerned about the health issues and ignore the economic issues, which are equally important if we are to restore a society that will be able to provide basic healthcare, security and educational services for its citizens.

Put differently, there is a symbiotic relationship between health and the economy. That is, one cannot survive without the other. The discourse, therefore, should be centred on practical solutions to ensure that both can work in harmony. What we cannot have is one camp driving fear into people, so that they can side with that camp over the other. We should not say that opening up our borders will lead to massive infection and, possibly, mass death from COVID-19. Similarly, we should not say keeping borders closed will lead to people dying of hunger and starvation. It is these kinds of fearmongering which drive people to make irrational decisions and cause tensions in both camps. That is a reckless way to approach the debate.

What we need are realistic and sensible projections on both the health and economic sides. We need realistic projections about infection, which takes into consideration our local context. We cannot just use variables captured in standard models from North America and Europe. Our experience has been different from those countries. We need to know why. Health professionals and researchers should provide stronger explanations for this.

Similarly, we need realistic projections on possible gross domestic product loss, the time to recovery, job losses, impact on the debt, impact on the foreign exchange rate, among other things. We should stay away from the alarmist projections that the economy will totally collapse if we do not reopen now. For, while there is clearly tremendous economic dislocations that will take place, there are still some basic economic activities that will happen despite the COVID-19 pandemic. Therefore, what needs to be done is for economic players to scale-up those activities (e.g., manufacturing, food distribution, etc) so that more persons can benefit, while we put plans in place to gradually open other sectors in the economy, bearing in mind the need for health protocols.

ECONOMIC IMPACT IS REAL

Jamaica is in no position to close off its economy from the rest of the world. It is a small, open economy, which means that the majority of its economic activities depend on interaction with the global economy. So, to close our borders means that Jamaica will not be able to gain the kinds of consumer spending and investments that will be needed to drive aggregate demand in the local economy. For, its per capita income is so low that if we were to depend solely on local persons to spend to stimulate the Jamaican economy, it would not lead to the kind of economic expansion that will be able to provide a decent standard of living for all, and especially the most vulnerable.

It is not surprising, therefore, that having the economy ‘locked down’ for over 10 weeks, the last quarter of fiscal 2019-20 showed GDP figures having a whopping negative 1.7 per cent contraction. Further, the projection is that for the first quarter of fiscal 2020-21, the economy will see an alarming 12-14 per cent contraction. We cannot scoff at these figures. This will translate into big job losses, revenue loss for the public purse, and an inability to finance critical sectors in the economy, such as healthcare, education and national security.

Unfortunately, Jamaica does not have a huge stock of reserves that it can draw on in order to fund the dislocations from COVID-19 until the global situation normalises. A close reading of Jamaica’s fiscal position over the last three decades shows that there have been less than a handful of years that it was able to run fiscal surpluses. It last ran fiscal surpluses in 2017-18 and 2018-19, which amounts to roughly $32 billion. The revenue loss from the COVID-19 pandemic up to May 2020 was estimated at over $81 billion. That is almost three times the surplus over the last two fiscal years. Clearly, with this kind of impact, there is no resources to do anything extra if the economy does not get back on track, fast.

THE RECOVERY PLAN

The debate should not be whether or not we open the economy so soon. Instead, it should be on the road map that will guide the opening of the economy. Discussions about Government bowing to powerful interest is completely irrelevant. What we need are credible plans to show how we are balancing the health protocols – practically, not theoretically – and the need to have more persons interacting in the economic space.

If, for example, the State does not have the capacity and resources to carry out testing on all visitors, one way it could supplement this is to privatise the testing and ask visitors to pay a COVID-19 cess to cover the cost, and do rapid testing which can give results in a few hours. If the visitor has a positive result, then the necessary protocols chip in. This at least will provide some peace of mind to the hotel workers, who will have to interact with guests about whom they would not have known their CVOID-19 status. Part of the worry for most persons is the unknown status of the guests they will be dealing with. Allaying that fear will go a far way in getting persons to accept the return of guests to the tourism sector.

The recovery plan for the reopening of the economy must be a balancing act between the healthcare outcomes and economic outcomes. It must not, and should not be an either/or scenario. It has to be an ‘and’ scenario. If not health and economy, we will have short-lived outcomes for both the economy and healthcare.

Densil A. Williams is professor of international business at The University of the West Indies. He may be contacted at densilw@yahoo.com.