Time for a rational reopening of the St Lucian economy

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Adrian Augier is a Development Economist and a former Executive Director of the St Lucia Chamber of Commerce

Subsequent to the article Enough is Enough by Dr Stephen King published June 10, 2020, that prominently captivated a response by John Peters on social media caption – Dr Stephen King: It is not the constitution– Dr Adrian Augier has chive on “reopening the economy” – I endorse this message Enough is Enough: Time for a rational reopening.

We have languished too long in a wilderness of uncertainty. We have all lost enough. It is time for a rational reopening.

Dr Adrian Augier

If parliamentarians and health authorities are to be taken at face value, Saint Lucia has successfully contained the COVID-19 threat. The evidence supports their claim: zero deaths, no community spread, no presenting cases, not a single person in ICU, and one late case satisfactorily resolved. Generous commendations, therefore, to our health authorities and front-liners, and applause to policy-makers for heeding their advice and bowing to their lead.

Going forward, it may help to remember that our greatest fear was not the virus itself, but the likelihood of mass contagion, and the inability of our health system to cope. So, it was undoubtedly right to close borders, repatriate, sanitize, distance, isolate, and quarantine. The threat was contained, and the remarkable result is that there was not then, nor is there now, a health crisis in Saint Lucia.

Unfortunately, we also shut down the economy. In so doing, we created an economic crisis: man-made, poorly managed, and unnecessarily prolonged. The unprecedented loss of revenue, income, jobs, savings, investment, and growth needs to be openly recognized and rapidly redressed. This we must do immediately to salvage what is left of the 2020 economy, and to avoid the same mistakes in the advent of subsequent waves.

Some lessons scream at us. Shutting down the food supply chain, created undue panic and artificial shortages. This was followed by an expensive and inefficient food distribution scheme, tainted by partisan patronage and cronyism. It was a public relations disaster, especially for those who are still hungry, and for those who have not been paid. The high cost of that misadventure is yet to be settled. Next time, we should leave supermarkets open, eliminate the overspending and frenzied crowding, and try instead a system of easily convertible food vouchers. These would go to the most vulnerable, based on some valid need assessment. However imperfect, that would be far less costly and far more effective. It would also empower people to feed themselves, in their own homes, and help the economy turn over, despite temporary cash shortfalls.

By contrast, the income support system which followed offered mostly false hope and tardy delivery to a fraction of those in need. So far, the National Insurance Corporation (NIC) payouts have been processed only up to April, and the majority of applicants are still waiting for handouts, with no dependable word on what will happen in the months to follow. Yet another case of too little, too late. However one spins that story, the eventual cost will be paid in foregone benefits to bonafide NIC subscribers.

Instead of facilitating layoffs, a payroll support strategy could have incentivized employers to retain workers. This would have shared the burden of support among employer, employee, and state, keeping businesses and workers viable, while also preserving NIC and PAYE contributions. The obvious long-term remedy is to evolve the NIC into a mandatory, fully-fledged national savings vehicle. One where contributors are able to monitor their accumulated portfolios of pension, unemployment, and other benefits.

In related news, strategies such as tax credits, are of very little value in a cash crisis when sales and profitability have dried up across lead sectors. Businesses are facing acute losses and inevitable layoffs, not worrying about taxable income. In such circumstances, they do not need a wave of unprecedented legislation introducing inexplicable licenses, registrations, levies, fees, and penalties. These only confound citizens and further traumatize business.

This is confirmed by the consternation which erupted between June 02 and June 03, provoking two independent senators to request deferment of the offensive matters. As a result, much of the legislation scheduled for consideration of the Upper House on June 04, had to be pulled back, including two government guarantees exceeding EC$65 million, which inexplicably turned out to be loans.

The combined effect of these initiatives, hastily conceived and hastily imposed, is a growing sense of disquiet in our country, at a time when our people are both vulnerable and volatile. This summation has been offered many times before, but apparently, to no avail.

And so, Saint Lucia remains under a dubious state of emergency which gives the government power to restrict, seize, detain, confiscate, distribute, and otherwise move against persons, property, assets, goods, and services without due process. In other words, the state of emergency, reluctantly sanctioned by parliament, makes legal what is normally illegal.

Moreover, it evades financial regulation of government expenditure, opening public and private purses to massive corruption. So sweet is that elixir, it has been thrice prescribed, and the latest extension is set to endure until September 2020. All this, in an environment where there is no health emergency or other pretext which might justify the restriction of civil liberties.

That specter of irrational power is already creating tension between the populace and the police, at a time when the prime minister has hinted that elections may be at hand. If peaceful politicking is to proceed, we need to deescalate tensions now and establish some sense of order in our country.

Current attempts to dilute but maintain the state of emergency leave everybody looking foolish, especially well-intentioned police who must negotiate peace with citizens and power with politicians. Even a naked emperor can see, there is no crisis. There is no emergency. If we want to welcome visitors to peaceful shores, we must end the State of Emergency (SOE) now. If just cause arises in the months ahead, a new emergency can be declared within hours by the Governor-General. That’s exactly how it was done the first time.

The delayed reopening of the domestic economy has already cost us dearly in terms of lost jobs, foregone income, depleted savings, reduced revenue, higher debt, and future growth. Clearly, we do not need to add civil unrest to that list. So, it must disturb us that several popular gatherings have been fraught or frustrated by the police presence, with escalations of rhetoric and acrimony on all sides. This environment is not compatible with any reopening of the tourism sector. A case in point, French travel authorities will not contemplate business with Saint Lucia while the state of emergency persists.

Back on the health side, several false starts have cost us the advantage of being first to market. The protocol which requires passengers to be policed before boarding flights to Saint Lucia was always unrealistic and must be abandoned. No external entity has shown willingness to perform that function, least of all the airlines. Moreover, the International Air Transport Association (IATA) has confirmed that airlines cannot become involved in checking passengers for COVID-19. This means that inbound flights, from high-risk areas like New York and Miami, will inevitably include some persons who are infected.

That risk must now be suffered with backs to the wall and necks to the ground. We have squandered our resistance. Those of us who might prefer to keep borders closed and country safe have been robbed of that option by the economic spiral gathering speed and panic. Had we handled this in true partnership with the people, using modes of information, education, consultation, and community mobilization, we would not be here, fiddling while home burns.

While we dally in domestic disquiet, Antigua and Barbuda opened up on June 4, with a practical test-and-isolate regime for arriving passengers. Jamaica has also deployed its reopening strategy, including an online pre-flight authorization which screens for high-risk passengers. Maybe we can adopt such models, already up and running, and move more rapidly to engage our international travel partners who are still waiting for our clear signal.

If we are to salvage what is left of the summer and fall traffic, it must also be recognized that a new head tax on visitors will not fly at this time. It is the wrong signal in a skittish market, and we don’t have the leverage to pull that off. Such a tax may be feasible next fiscal year, but not now, when Caribbean tourism is trying to reboot and grab the urgent attention of major players.

Truth is, the tourism sector and related businesses have been stalled by a series of complex protocols, many of which are impractical and costly to implement. While their intentions are noble, authorities must now also be practical. Keeping a hotel closed is almost as expensive as keeping it open at low occupancies. Volume is necessary. Cash is critical. Credit is tight. If local operators are to crank up, reboot, and rehire, we need rigorous but realistic health regimes that are implementable by large and small properties, attractions, restaurants, bars, and most other players who form part of our holistic tourism product. We need both airlift and load factors to recover. Opening a few large hotels will not achieve this.

We must also know by now that the quarantine vacation concept is not gaining any traction in the market. And here at home, any notion of enclave tourism drags up uncomfortable memories for those with a sense of history. Meanwhile, tourism officials are overwhelmed by all the drafting. The solution must be to empower sectors to prepare their own submissions for government discussion and approval. Better yet, to stage joint drafting sessions, using global industry standards and international best practice to cut the endless back and forth. Here too, we can revise rather than reinvent.

Monitoring complex protocols will stretch ministries to their max. If capacity is not quickly expanded, they risk becoming the biggest boulders in the road to recovery. Logically, it is time to make sectors self-policing. Many operators are already contractually bound to external travel partners, who for legal and commercial reasons, insist that health protocols be in effect. A sensible strategy would be to engage with representative organizations on matters of monitoring and enforcement, in order to accelerate the process of re-opening.

In the meantime, American Airlines has changed its resumption date from June 4 – July 7. Other airlines will soon pull back again if no modification to protocols ensues. This is a daunting prospect, given that the St Lucia Hotel and Tourism Association (SLHTA) estimates losses of EC$1.6 million in February and March, suffered by local tours, sites, attractions, vendors, handlers, and other businesses dependent on cruise traffic. Similarly, the current focus on airports and large hotels is too simplistic. It ignores a spectrum of players in between.

For example, destination management companies (DMCs) are the glue of the industry as they manage on-island logistics for nearly 75 percent of the sector. They are the eyes and ears of virtually every international tour operator and travel agent sending visitors to Saint Lucia. They also drive high-end business to non-traditional suppliers at a time when conventional routes and resources remain compromised. To delay their inclusion is to leave the baking powder out of the cake mix. It will not rise.

By way of further warning, a Chamber of Commerce survey of April 2020, indicates that 55 percent of businesses do not expect to survive beyond 3 to 4 months. Counting from March, that time has come. Reserves of money and patience are at their lowest. We need some serious light at the end of this tunnel. If we stay on our current path, the economic fallout will be closer to 50 percent of GDP, well beyond the 18 percent predicted earlier. This is consistent with the Chamber’s survey showing that 69 percent of respondents expect business to decline by 50 percent or more.

In related news, Coconut Bay Hotel, one of the largest employers in the south of the island, made over 400 employees redundant on Wednesday, June 10. The move was announced in a frank and forthright letter reflecting dire uncertainty, and by extension, the absence of a coherent strategy for saving the sector. This demise has sent ripples through the wider economy, followed by additional layoffs and redundancies at The Body Holiday, and Marigot Beach Club and Dive Resort. No doubt, more will follow.

Rising joblessness means increasing pressure on banks, credit unions, insurance companies, and other financial intermediaries already exposed on loans to government. Prudential guidelines are being stretched. Loans, mortgages, and consumer credit are coming under siege. While we are at it, borrowers should also be aware that there is little forgiveness in the promised moratoria from commercial banks. In most cases, it is merely a camouflaged deferment, with interest accumulating quietly in the fine print, increasing indebtedness of lenders, and piling up future income for banks.

Given a looming liquidity crunch, the government 2020/2021 budget, with its half-billion-dollar chasm, should be withdrawn forthwith and replaced with a smaller, sensible, interim budget to take the country to December 2020 or general elections, whichever comes first. A budget fiscally realistic and responsible, and which prioritizes brains and bodies over steel, bricks, and mortar.

The International Monetary Fund (IMF) would probably agree that the current budget, tabled and waiting for debate, is wholly divorced from the economic realities facing us now. A renewed emphasis on fiscal prudence and social and economic recovery would better serve the economy and democracy. The government’s persistent emphasis on large infrastructural projects is more than suspect. It is quite simply wrong.

In summary, zero risk is seldom an option. But we could have occupied that sweet spot between acceptable risk and sensible governance. That choice has now flown. The domestic economy has been closed too long, well passed any health-related justification. The same applies to the state of emergency. It needs to end now.

We must maintain vigilance in the form of practical protocols applied broadly to all sectors and subsectors. Companies have not seen business for months. They need time and traffic to recover. We cannot now ask them to suffer increased costs of licensing and recertifying, especially when there is no sign of manpower to enforce, monitor or measure.

We have languished too long in a wilderness of uncertainty. We have all lost enough. It is time for a rational reopening.

Adrian Augier is a Development Economist and a former Executive Director of the St Lucia Chamber of Commerce. He holds degrees in Economics and Political Science, and an MA in Development Finance and Planning. He has worked with the World Bank and consulted for regional governments and international development agencies. He is Saint Lucia’s 2010 Entrepreneur of the Year, and an award-winning poet and producer. He is also Saint Lucia’s first Caribbean Laureate of Arts and Letters and has been awarded an honorary doctorate by the University of the West Indies for his contribution to regional development and culture.

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