Go big and fast

By Kevin-James Fenech

Kevin is the founder and owner of JOB Search - jobsearch.mt and FENCI Consulting fenci.eu. 

The current COVID19 pandemic is crippling our economy; the economic effects of which will be felt in the months to come.

Whilst I appreciate that the immediate priority of the Government is to fight the disease and protect public health; the government needs to also think of the necessary economic measures to help our economy bounce back when the time comes.

To my mind the government has to go ‘big and fast’; immediately. This is the only way to save our economy; our country.

The state needs to help businesses ride the storm in the short term and cash flow is paramount. No business should be allowed to make people redundant during this pandemic and the Government can act as a guarantor for peoples’ wages/salaries until the health crisis stabilises.

If the government does this, businesses can withstand a 4-8 week lockdown and when eventually it comes to kick-starting the economy all business will be ready and waiting to hit the ground running.

We must do the same for our key industries, especially those which have been severely impacted since if we do not protect our key drivers of economic growth it will take months if not years to recover. The tourism industry is an obvious candidate but there are others.

Sure this would come at a temporary, huge, financial cost to the government but the money will be paid back (even with interest) over the medium to long term, as profits resume.

Given that our debt to GDP ratio was until recently circa 43% of GDP, there is plenty of room for manoeuvre for the state to borrow on behalf of all us and act as a guarantor and this in the name of stability and due to exceptional circumstances.

Failure to provide this sort of big and fast security, risks leaving an economy in tatters, confidence destroyed and recovery rates stretched to years instead of months.

The government therefore needs to be very bold in this precise moment. It needs to focus on the long term and see the big picture. This is no time to dither or penny-pinch.

This is the time for the state to act like a bridge between the current crisis and the eventually economic recovery. Only the state has this sort of muscle, to protect our economy; so it is the state that must step in. We are after all in the midst of one of the world’s worst ever crisis.

I realise that we don’t know what the impact or cost is going to be; since it is far too early to estimate. Yet this shouldn’t be an excuse to wait-and-see or wait-and-quantify.

If the government does that it will miss the opportunity to ensure the post-COVID19 economic recovery is swift and fast.

Therefore, the state must act big and fast. I can’t repeat these words enough! Let’s also not forget the human element here, we need to calm peoples’ fears; there is already enough anxiety with the COVID-19 virus, all we need is people being made redundant and losing their ability to earn a living! This would be a disaster, with not just economic hardships but also a breakdown in civic society.

Put another way, we will all be hit economically and financially in such a scenario. So there is no point waiting to quantify the cost or duration of this crisis.

The government needs to think of ensuring all industries are ready to hit the ground running when economic recovery is back on. Since as soon as cash flow is positive; revenues normalised and eventually profits return, the once in a lifetime ‘COVID19 financial guarantee’ can and will be paid off in the medium-to-long term.

I think there are three scenarios which can unfold: An economic slowdown followed by V-shaped recovery, a recession which we will come out of this year or a deep recession.

Whatever the outcome and whichever scenario unfolds, with the government providing an immediate blanket guarantee for the short-term, this will protect our capability to recover as fast as possible.

People live in hope no matter what the hardship but the government needs to give them something to hope for. The government has a unique chance to provide such hope, allay fears and install confidence for the future. By doing so, we will come through this crisis stronger and ready for better days.

The Government needs to go in big + fast in this crisis and every single worker needs to be protected for the ‘common good’ otherwise there will be a complete collapse of state and we have collectively over the generations worked far too hard to let our beloved country do this.