Timing is of the essence

By Usvatte-aratchi

Much has been written and more spoken on the nature of the crises that we face. Our society and our government have been fighting a battle on two fronts. On the one front, we are embattled against economic forces that have been gathering strength over a decade or more. On the other front, there are the invading forces of a relentless epidemic that has struck us, not without warning. These two forces against us are coordinated by our need that fighting on one front requires us to isolate ourselves and to refrain from moving about and assembling together to undertake economic activity. At the same time as isolation helps prevent infection, it prevents the generation of incomes by destroying livelihoods. All of us have seen have seen government amassing forces from time to time on one front or the other. Though delayed, government is quite right to press on with the campaign to vaccinate all persons, prioritizing the more vulnerable. There is a good prospect that in four months or so, when some 80 percent of the adult population will have been vaccinated, we can begin to move about and assemble, with precautions, to undertake most normal activities, above all begin to teach in person in both schools and universities. Yet, it is over optimistic to expect that international economic transactions will come back to normal, so soon, so easily. International travel on which depends tourism may not revive until 2024, if that. For tourists to come back, for workers to move to workplaces overseas and to re-establish supply chains will depend on what happens in other countries, most of which are themselves in turmoil and volatility of one kind or another, not least disasters coming from our abuse of the environment. We can do little about any of these.

At the same time as we press on with vaccine, it is essential we pursue policies that will help us overcome the international economic crises that we are engulfed in. The effort to do so is bedevilled by ideological prejudices cultivated in our minds over long periods of time. It is time to forget them and work with solutions that will get us out of these crises, without creating barriers to progress in the long run, in which, as Keynes sagely remarked, all of us will be dead (and our progeny will live). The key to the way out of those crises is the supply of a large sum of foreign exchange both for strengthening the balance of international payments as well as domestic budgetary support.

Nobody is under any obligation to pull us out of this misery. Any party that comes forward will expect that it will be rewarded for their effort, return what they lent us together with an appropriate interest payment. This is no Shylock demanding his pound of flesh. As we are a sovereign state, the lender will need our undertaking that we will be able and willing to pay back the capital with interest within a period that will be agreed upon. That is where conditions (conditionalities) matter. No matter who provides us succour that entity will impose conditions which provide a reasonable assurance that in the minimum, the capital and interest will be paid as agreed upon. It may transpire that the lender may impose other conditions. (This is roughly analogous to protection under chapter 11 bankruptcy in US.) Amounts lent, rates of interest, the schedules of repayment can be quantitively assessed. It is other conditions, if any, that are difficult of assessment. There is the even more difficult task of factoring in our ideological and other prejudices.

However difficult these questions are to answer, timing is of the essence. The sooner people can lead normal lives, the better. Further delay will not only aggravate the problems but also bring the government and the country into disrepute to hurt us in the medium term. It would be wise of the the government to act without any further delay.