Coronavirus crisis is upon us. The corona-positive cases are now coming thick and fast. The situation threatens to turn into a major challenge that — needless to mention — is way beyond our capacity. Notwithstanding the direct threat that the virus poses to human life, the economic impact of the mushrooming infection is not going to be easy to swallow for a country that is stony broke already. The estimates by global financial institutions are scary. The Asian Development Bank says that in case of a major outbreak, Pakistan’s economy will take a $5 billion hit, with the private businesses affected the most; the growth rate will fall by 1.5%; and around 946,000 people will be deprived of their livelihood. The IMF is also reported to have forewarned our financial czars of the impact of the economic slowdown in China due to the virus.
In their response to the crisis though, the ministries responsible for economic management in the country were literally slumbering till the corona-infected cases tripled in a single day on Monday, in what does indicate an exponential growth. Consequently came a meeting between the PM and his economic team. The meeting, however, only turned out to be an occasion for stocktaking and making customary announcements. While the meeting was expected to announce a short-term policy relief for businesses and people, especially those belonging to the middle and lower-middle classes, it only culminated in the formation of an inter-ministerial committee, headed by Finance Adviser Hafeez Shaikh, tasked with keeping a constant vigil on the economy and advising steps to ward off the economic impact of the pandemic.
The de facto finance minister must focus on setting up a separate fund over coronavirus. He must not look towards absorbing the whole windfall from cut in global petrol prices into the budget, and go for as much fiscal injection as possible — especially now when the SBP has made only a symbolic cut, of 75 basis points, in its policy rate, and announced refinancing facilities for setting up new businesses and purchase of equipment to fight the virus. There is a dire need to ensure food security for people and supply of resources to medics to fight the outbreak, and minimise the impact on livelihood and businesses.
Published in The Express Tribune, March 18th, 2020.