Restarting the economy

xx Al-Ahram Weekly Editorial
Wednesday 6 May 2020

Like other vulnerable countries whose economies have been buffeted by the coronavirus pandemic, getting the economy back up and rolling again presents a huge and perplexing challenge for Egypt. On the one hand, there is the need to continue to contain the spread of the novel virus. On the other, there is the need to curb the damage done to the poor and middle classes who have been hard hit by the economic turndown during the past two months of lockdown. It is a baffling dilemma that presents difficult choices. But it is clear that as economic activities resume, it will be vital to maintain stringent hygienic measures and social distancing precautions in the workplace, if the economic deterioration is to be reversed in a sustainable way. This will necessitate the highest levels of awareness at both the governmental and public levels. 

Experts believe that the coming months will be particularly challenging if the crisis persists. They foresee further decreases in demand for goods and products and an increase in customers unable to pay their bills, which means that manufacturers, retailers and credit lending companies will need to take appropriate precautions. 

They also fear possible shortages in liquidity and working capital in 2020. Businesspeople and entrepreneurs believe that, if the crisis continues, trouble will loom for their projects during the second half of this year and in 2021, forcing them to suspend some activities or expansion plans. Not all sectors will be affected evenly. For example, the prospects of projects in the health sector would be much better. Egypt should also step up its drive in the production of clean and renewable energy, in which it has already made considerable strides, as this will help boost economic growth, and further the realisation of its sustainable development goals despite the effects of COVID-19.

International donor agencies, which have a crucial role to play in supporting emerging economies, have affirmed their support for the Egyptian economy, among others. It, along with other economies harmed by this crisis, will need more technical and technological support at this critical stage, which demands concerted multiparty efforts to ensure that the necessary liquidity is available so that building can continue and both private and public sector companies can grow. It is worth noting here that the International Finance Corporation, a member of the World Bank Group and the largest global development institution, focuses exclusively on supporting and developing the private sector. Similarly, an important part of the activity of the European Investment Bank and the European Bank for Reconstruction and Development focusses on supporting the private sector. After the pandemic struck, these international institutions offered support in the form of credit lines to private sector companies so as to increase liquidity.

In their recent statements, these international institutions stressed how crucial it was for governments to consult with the private sector in order to attain sustainable economic growth. This applies, above all, in times of uncertainty over the economy when governments should promote private sector efforts to find innovative solutions to the many challenges posed by COVID-19 and help private sector firms turn these challenges into opportunities. 

In their recent statements, WHO officials stressed that the ease-up in lockdown measures should proceed in tandem with the ability of local health systems to absorb possible new increases in identified coronavirus cases and, simultaneously, with continued monitoring to ensure that social distancing and other precautionary measures are in place. Health experts believe that infection rates could climb again as people begin to report back to their workplaces, which is why it is essential to remain extremely vigilant in order to keep rates down and avert overwhelming the health system. 

WHO officials have also urged the development of a climate conducive to the hygienic obligations COVID-19 has brought. For example, governments should reduce crowding in public transport as much as possible, by increasing the numbers of vehicles, reducing peak transport times in metros and railways, and ensuring the availability of hygiene and sanitation equipment and materials. Also, lawmakers should pass legislation to protect public space and to avert exploitation of emergency needs, as exemplified by the soaring prices of disinfectants and medical supplies.

*A version of this article appears in print in the  7 May, 2020 edition of Al-Ahram Weekly 

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