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NDC Heartbeat: Economic stimulus or celebrated fluff?


In the wake of the Covid-19 pandemic, a 14-point stimulus package was unveiled in a national address.

The broad outlines and lack of detail in which the plan was unveiled, exposed that it was hastily constructed. The Grenada Development Bank and the National Insurance Scheme were mentioned leaving listeners with the impression that these entities would have been used as the vehicles through which government would have supplied funds for the package from the surplus it has boasted about since 2016.

In the address, collaboration between the labour movement and the business community was encouraged and financial institutions were also asked to defer loan payments for a limited period. This is good, but it is not enough because it does not require government to take any positive step. For instance, while banks and credit unions defer loan payments, government could have given tax breaks.

The stimulus plan is devoid of specifics as it seeks to give the impression that public funds will be used to bail out ordinary folks. Now we know that the bailout for ordinary folks would come not from the surplus boasted about, but from contributors’ money at the already cash strapped NIS.

For those who will not receive the paltry $330, there is no provision for any kind of relief, so that payroll support will not be available for those employed in bars, restaurants and hotels.

The stimulus package made no provision for taxi drivers, tourist vendors and the rest of our people who operate in the informal economy.

The conditions to be satisfied and convoluted forms to be completed to qualify for relief appear designed more as a turn off for those businesses wishing to apply than any kind of encouragement. In fact, some small business owners have said that when they learnt of all the conditions that must be met to qualify for the small relief, they concluded that it was not worth the bother. Was this deliberate?

There is no clear and equitable mechanism on how the $20 million promised to the tourist industry will be allocated. Hotel operators are asked to come up with ‘front pay’ for their employees and the income support will fill the deficit. The hotels are closed, so where will the money come from for the employers to make these payments? Besides, hotel workers’ wages are determined in part by service charge or gratuity. If there are no guests how will this be calculated?

While political opponents are accused of “playing politics”, the entire stimulus plan is premised on politics. It is touted as an emergency package yet ways and means for quick implementation is noticeably absent. Should people who are to benefit from this relief package “call the Prime Minister”? It has been some time now.

The measures which seek to assist the private sector to retain staff must be clear in intent and purpose. It must be tied to clear mechanisms that are transparent. These mechanisms must ensure that jobs are in fact saved. The private sector certainly needs more manoeuvring space to protect jobs. Meaningful tax amnesty can provide this.

With budget surpluses of $268 million between 2016 and 2018, according to the Estimates of Revenue and Expenditure, government ought to be well-positioned to provide unemployment relief to Grenadian workers without burdening the NIS, unless the claim of budget surpluses is a bogus one. During the first quarter of 2019, NIS officials traversed the length and breadth of Grenada convincing everyone that we must support the increased contributions or else the scheme will go burst by 2035. How then can government justify forcing NIS to pay unemployment benefit that government itself should be paying? Where is all the money from the sale of our passports under the CBI? Why discard prudence and upset stability of the fragile NIS?

Most of the other Caricom countries are providing income support to recently unemployed individuals and self-employed workers, at least twice the amount Grenadians are promised from NIS. And those countries did not claim to be the Caribbean’s fastest growing economies in the last 5 years. Who is fooling whom?

We welcome the resumption of public transportation, as it provides a critical service in getting economic activity going again. In addition to the announced protocols, government must pass on the benefit of the drastic drop in fuel prices globally, to bus operators. We are not enjoying the reduced fuel prices because of the exorbitant $5.50 petrol tax on every gallon of gas. Genuine collaboration with bus operators must include a reduction in this tax that can then be passed on to commuters. Instead, the bus owners have declared their intention to increase bus fares. Where is the stimulus in this?

If this stimulus package is to have any meaningful impact, government must go back to the drawing board and put some serious thought and analysis into mechanisms for transparency, equity and fair play. Support for agriculture must be given way more prominence in any genuine package that is intended to properly stimulate the economy post Covid-19.

Sweet talk backed by those who wish to justify every action of the government will not ease our immediate burdens.

NDC

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