The COVID-19 fall-out: Mahendra Chaudhry

  • 1st May 2020
  • 2020
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In the past 2 months or so world and media attention has been dominated by reports on the spread of the COVID-19 virus and efforts to contain it, almost to the exclusion of other news. It is time, however, for at least us in Fiji, to start planning for the long term socio-economic impact of the crisis on the nation. In short: how will our people emerge from this crisis once it is over?

It is obvious that there will be no return to the status quo as it existed
in February 2020 – which in itself was a cause for worry.     

To date we have not seen any blueprint from the government to deal with the aftermath of this crisis which has had a devastating impact on both businesses and  workers, alike.

As we have stated in the past, the COVID-19 crisis hit us at a time when the economy was already in deep distress. Government finances were in a precarious state with a ballooning debt burden and a sharp drop in revenue. Exports were down, tourism was performing below par and the primary sector remained subdued.  Ordinary families were struggling to survive amid low wages and increasing cost of living, particularly the price of basic food and essential consumer items. Unemployment and poverty levels were mounting.

Businesses and workers hit hard

 Against such a troubled backdrop, the COVID-19 crisis dealt a stunning blow to business activity in the country.  Tourism which accounts for close to 45% of the GDP, is in cold storage with little hope of any thawing before the next six months. Even that is being too hopeful. Some 43,000 workers directly dependent on Tourism  for their livelihood are now without jobs or are forced to work part-time for much lesser pay.

The business and commercial sectors have been hit equally hard with severely dampened consumer activity, restricted mainly to buying essentials. Major retail outlets have either sent staff on leave, or put them on reduced working hours with drastic pay cuts.

Some have exploited the crisis to retrench their workforce or close down unprofitable operations. We are reliably informed that one major outlet has laid off 500 of its 900 employees, another has put staff on a two day on, four day off roster with accompanying pay cuts. Another major operator has enforced a 40% pay cut. And so on…

Job losses and pay cuts have been enormous. Yet very little relief has been offered by the cash-strapped government. Workers have been told to withdraw funds of up to $1000 from their FNPF accounts to cope with the crisis.

Government’s timid response

The so-called COVID-19 stimulus Budget tabled in March, failed to provide the impetus needed to revive the economy. Instead of pushing more money into the system to stimulate growth, government slashed the Budget by a further $302 million. It brought total Budget cuts in one short year (2019-2020) to $1.1billion –  proof of the serious liquidity problem the government is facing.

How can it stimulate the economy and provide adequate relief by cutting down expenditure?  End result: people have been left to virtually fend for themselves.

FNPF data shows that to date it has received 65,800 applications for fund withdrawal – equivalent to some 25% of its total membership. Of this 36,500 applications were processed with a payout of $25 million. Top up by government so far has only been $3m. The rest of the money ($22m) has come out of members’ funds. This is pathetic and shows that the government does not really care. Its assistance is merely tokenism.

The one-off FNPF withdrawals, however, will not last long. What happens afterwards? Are we braced for the widespread poverty and starvation that may follow?

Similarly relief measures announced to assist business operators are of rather dubious value. In theory, government has arranged a $60m facility through the Reserve Bank of Fiji to local banks at a low interest rate of 1% to assist small and medium sized businesses affected by the crisis. Economy Minister Sayed-Khaiyum hoped this would help reduce interest rates and stimulate activity.

In practice, this is not happening. The Banks have enough liquidity, so they are not keen to utilize the RBF facility. Instead, they are using their own funds to finance struggling businesses at the maximum rate of 5% – some are being charged as much as 6-7%, depending on the risks involved. Besides, the paper work and time involved in accessing the RBF facility is prohibitive. Individual Banks have to forward all requests to the RBF which makes the final decision, we are informed.

Cyclone victims overlooked

As far as we know, no relief has been announced for farmers who suffered crop losses devastated by Category 4-TC Harold. FLP had called for cash grants for affected farmers, both sugar cane and those engaged in cash crop farming, but so far government has not announced any relief measures.

Meanwhile, Agriculture Minister is going around handing out packets of assorted vegetable seeds – this is hardly the answer to the real hardship faced by the agricultural sector.

Government’s recent announcement of duty free entry of cyclone-relief supplies to victims of TC Harold, doesn’t look too promising either. People need relief in cash, not paper concessions, to rebuild their extensively damaged or destroyed homes.

The three disasters – economic recession, the COVID-19 crisis and TC Harold- combined have wreaked severe hardship across the nation – employers, employees, farmers and villagers alike.

Urgent action needed

 Failure to take swift action to counteract the crisis may result in untold poverty and social distress among our people, including a high rate of bankruptcies and collapsed businesses in the near future.

There is an urgent need for tangible and easily- accessed assistance to be provided to all those who are suffering.

We need a comprehensive national plan and stimulus package across all sectors, and a major relief initiative, to stimulate and revitalize the national economy and save jobs. The COVID-19 Response Budget of the Fiji First Government is hardly the answer to this momentous challenge.

Meantime, FLP thanks the medical personnel, members of the security forces and all others who have worked tirelessly, in the face of extreme danger to their own health, to contain the spread of the pandemic in Fiji.