WITH reference to our post-Covid challenge there are six main things to be done and these have to be done simultaneously, on different tracks. 1. Survival, 2. Restoration, 3. Recoup and retrieval, 4. Economic recovery, 5. Immediate action on restructuring and 6. Building a new economy, post Covid.
Survival means to manage the economic emergency in which we now find ourselves, with a largely shut down country and economy, in order to manage the public health risks. In this phase, the key issues here are food support, income support and support for business survival and continuity.
Restoration is the second requirement, as we phase in a return to commerce, business, jobs and work, over an agreed period. The conditions for business to restore itself, one company or entity at a time, under conditions of Covid-era protocols, must be facilitated by a supportive and conducive environment created by the Government.
Recoup and retrieval is the third requirement, as businesses seek to move beyond survival to recover and to become profitable again, having lived through a rough period of loss of earnings. Not all businesses will come through this phase successfully. How many will depends on the extent of government and bank support provided until they are able to open up again (and that itself depends on where categories of business are identified in the various phases) and how strongly they are able to get back on their feet and transform their individual operations to face a new reality.
This would be a time for individual businesses to address costs, to become lean, to boost productivity and improve competitiveness (not all businesses will be able to do this, because some businesses will collapse because additional loss of jobs will be a reality). This would also be a propitious time for businesses to reinvent themselves through technology, innovation and collaboration.
Economic recovery cannot come from the old, pre-Covid economy alone. It does not have the power.
First of all, not all businesses will reopen. Some that reopen will not survive. With collapsed businesses (a 90 per cent business survival rate will mean a loss of 2,600 businesses. A 15 per cent loss of jobs existing pre Covid will cause tens of thousands of people to lose their jobs.) That is likely to be the scenario as the old economy seeks to revive itself six months from now.
That would not be a good platform on which to leverage an economic recovery. In addition the prices of oil, natural gas and energy commodities will remain a domain of uncertainty for some time, more than likely continuing to trend downwards.
Meanwhile the foreign reserves at the Central Bank are just over US$6 billion and the Heritage and Stabilisation Fund (HSF) is just over US$5 billion with a US$1.5 billion drawdown pending and we are running up a bill of loans to address revenue shortfalls, and deficit and to manage the human, social and business consequences of the economic fallout from Covid.
Where will the foreign reserves and the HSF be in 12 months if we did nothing more than seek to recoup and retrieve the old economy? We will be in one unholy mess.
So what to do?
Immediate action on restructuring the Trinidad and Tobago economy is not just an urgent imperative. We must do it now or we will perish.
It’s not just the issue of diversification. Yes, we must boldly and frontally address that. But we will have to create labour intensive projects to boost the production side, because we need to produce more and absorb large numbers of unemployed.
In the pre-Covid economy, creating 50,000 jobs would have done the trick. In the adjustment period under the cloud of Covid, we will have to create three times more than that in jobs. The old economy cannot do that in a world and regional recession, under conditions of foreign exchange scarcity and severely reduced consumer spending.
So we will need labour intensive projects that support a diversification thrust with infrastructure development, and we will need to attract investment and facilitate entrepreneurship in a diverse range of import substitution and export-focused business initiatives which address food security, reduced import dependence, and export power. This is essentially an economic security approach at a time when the ability to earn foreign exchange is significantly reduced.
Moreover, a new economy has to be built. It cannot escape being ICT based and driven. This requires immediate public sector digitisation and transformation.
The new economy must embrace renewable energy and renewable industries.
It must respond to the realities of climate change as a small twin-island state, given the lessons we are learning from the response of Planet Earth to reduced industrial and human activity.
Any economic strategy to build a new economy must fully embrace environmental custodianship ideas and the essential principles of sustainable development.
And we cannot wisely seek to build a new economy in this round in the midst of this crisis which has flattened our economy, without embracing a strategic application of the possibilities of artificial intelligence.
These six things have to be done on separate but connected tracks and have to be done simultaneously, not sequentially, in a flawless execution strategy with the commensurate implementation capacity.
MP for Caroni Central