The novel coronavirus is a black swan type of event, one that no one could have and would have predicted at the end of 2019. On New Year’s Eve 2019, if you had told me that 3 months into next year, most of the major economies would have been shut down, causing oil prices to head into a tailspin and iconic businesses to go into bankruptcy, I would have called it nonsense.
However, here we are in 2020, and what was once the mysterious Wuhan Virus is now the pandemic known as the novel coronavirus or COVID-19. The best option we have to fight the virus is the epidemiological world’s equivalent of blunt force trauma – social distancing.
While social distancing is necessary, it wreaks havoc on an economy because it hits at the demand for goods and services. Businesses facing this pandemic need to adapt in order to survive. However, because of how extremely rare and devastating an event like the coronavirus is, businesses also need coordinated policy responses such as social safety nets, fiscal spending, and even deficit spending. Government also needs to assist with ensuring that there is excess liquidity in the banking sector; these are all hallmarks of policy response in the past financial crisis.
So far, we have seen a number of initiatives taken by the Guyana Revenue Authority, the Ministry of Finance, and more recently, the Small Business Bureau, in addition to the coordination provided by the Civil Defence Commission. However, given the magnitude of the crisis, we will need larger policy interventions to save the economy. Sectors such as the tourism and hospitality sector cannot survive on the removal of VAT on their electric bills only. These sectors have been shuttered since the closure of the country’s international airports, and upon reopening, they are likely going to be operating on far less capacity than previously accustomed to.
If we don’t act soon, the economy is going to worsen. Businesses are suffering dwindling cash flows and laid off employees and unemployed persons are experiencing hunger and obviously reducing their spending, thereby resulting in another round of body blows to the economy.
There are a number of examples of coordinated policy interventions in the CARICOM region, in the ACP region and in the Americas. It is not hard to find examples of what is working, but the window of opportunity to reduce unemployment and slow down job losses is closing and we must act now.
Finally, I noticed an article by the Minster of Business in the Sunday Chronicle where the Minister talked about the pandemic being an opportunity for businesses to modernise. The Minister is right, but businesses cannot modernise without a modern payment system. In order to truly harness the power of e-commerce, we need modern payment legislation. At present, stores must be equipped with a POS (point-of-sale) machine from each bank in order to accept credit cards and debit cards. We have been promised the “Switch” which allows one bank’s POS terminal to accept another’s card, for years now, but that has not materialised. While the rest of the world has transitioned to contactless payment and electronic transfers, Guyana is still struggling with technology from the 90’s and early 00’s. I hope this pandemic can cause that to change.
Nicholas Deygoo is the President of the Georgetown Chamber of Commerce and Industry
