Putting Our Economic Crisis in its Proper Perspective

Governments all over the world, including Fiji, do a lot of balancing acts as they weigh their social responsibility on one hand and economic reality on the other.

There has been a lot of debate on the state of the economy and whether the relief assistance our Government is giving is enough.

COVID-19 is unprecedented. Its impact will not be a short term fix.

Economists are predicting that recovery will be a slow process.

The negative impact of COVID-19 for many countries mean that borrowing will become a core part of the recovery.

How much they should borrow to have a meaningful benefit for the people and whether they can afford to service the debt are included in the discussion.

Taking all these factors into considerations, some governments take the plunge to lift the country from the hole it’s trapped in because of COVID-19.

Debt usually regarded as a tool of government policy and national development during normal times is now seen by some as a necessary resource to help people directly affected through loss of jobs and business. But others see it as evil because it will hamstrung the country for it has to pay the debt back over a period of time even after the government that had signed it has long gone.

Soon the Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum will announce the National Budget.

There is no doubt that it will be dominated by the COVID-19 crisis and how it will weather the storm and cushion the economic blow. This crisis has now become a component of our economic policy just like climate change.

As signs of the way the Government is thinking, a concessional finance support package will be made available from June 7 for Micro, Small and Medium Enterprises (MSME).

This is not a grant.

It comprises loans of 0.5 per cent to 1.5 per cent interest rate per annum for these businesses with repayments to start after a one-year grace period.

This is as low as it can get and obviously designed to help the busineses survive the crisis. These MSMEs are important for the economy.

They keep its wheels turning, providing jobs and livelihoods to many.

This crisis will have casualties. That’s a common reality. The Government initiatives will help many people, but they can’t solve all the problems.

That’s where public-private partnership comes in to help plug the gap.

We are seeing that happen in several areas. If we persevere we will all get there in the end.