Economic stimulus: Enough or not enough?

Last week Monday bus drivers of Portsmouth packed their buses and turned off their engines.

They were protesting the level of compensation that government is offering due to losses bus owners suffered because of COVID-19. Thus the issue of the inadequacy of government's stimulus package during the COVID-19 pandemic takes centre stage.

In an address to the nation on May 17, 2020 Prime Minister Roosevelt Skerrit revealed a long-anticipated package of measures to address the debilitating impact of COVID-19 on Dominica's economy.

About six weeks earlier, on 31st March 2020, Lennox Linton, the leader of the opposition, disseminated a paper that he entitled: "COVID-19 Dominica-Funding the National Response".

By comparison, the two responses to COVID-19, the most potent threat to the future of Dominica, are as far apart as Scott's Head is to Capuchin.

To illustrate the point, here are few snippets of the presentation to help you answer your own question: was the packages enough to stimulate the economy or will half the medicine cure the patient? Are bus drivers right to express their dissatisfaction?

On stimulating agriculture, the most crucial sector that will benefit the largest number of Dominicans in rural Dominica during this pandemic and in the foreseeable future, Skerrit announced: "We are also committing to spend an additional 10 million EC dollars under the Contingency Emergency Response Component (CERC), of the Emergency Agriculture Livelihoods Project.

"Support will be provided to crop and livestock farmers. This will include the provision of planting materials, essential inputs such as fertilizer, small farming implements and animal feed.

"To assist with meeting the cost of farm labour and other direct costs, cash grants have been approved to approximately 2,500 individual crop farmers. The amount of these grants is based on the size of the farmers holding. Farmers with small holdings will receive grants of EC$700, medium holdings EC$1,400 and large holdings EC$2,800. This intervention is valued at EC$3.5 million.

"We also have an ambitious seedlings program, as well as direct assistance to pork and poultry farmers".

As comparison here's what Linton suggested on page 4 of COVID-19 Dominica-Funding the National Response: "As the global supply chain becomes further disrupted, greater emphasis must be placed on national food security in the medium to long term. Direct farming assistance to registered farmers on a crop growing basis and spread according to catchment areas where farming is most productive. XCD 10K (EC$10,000) in the first instance with extension certification for follow on support; Free planting material for vegetables, root crops and fruit trees to facilitate backyard gardening as a means of reducing household food bills, the national food import bill and reliance on the global supply chain for essential foods; Renovation and reopening of fisheries complexes in Roseau and around the island with the enhancement of storage and distribution of fish products; Business Development grants of up to $50,000.00 for manufacturing operations in the processing of local root crops, vegetables, fruits, herbs, spices, fish and meats."

On the issue of support to vulnerable groups, the suggestion for assistance (Linton's) and the promise of assistance (Skerrit's) are miles apart:

Skerrit: "Elsewhere in the less formal private sector a number of persons are currently no longer engaged including domestic workers, persons employed at bars, barbershops, day care centres, and salons.

"Although some of their employers may not have been affected or have resumed operation, the future uncertainties and the need for social distancing have resulted in many remaining unemployed or underemployed.

"Heads of families and single persons who are currently no longer employed will receive income support in the amount of $600 and $400 respectively for the period April 2020 to June 2020 in the first instance.

"Funding in the amount of (EC$15.7 million) to the affected employees and self-employed will be provided by the Government of Dominica, but will be made available through the Dominica Social Security, given the administrative capacity that is already in place.

"Additionally, to assist micro and small businesses (including self-employed persons) such as manufacturers, bus drivers, barbers, hairdressers and persons in the tourism sector, to bridge the funding gap created as a result of the pandemic, Government will provide loans of up to $15,000 to micro and small enterprises at an interest rate of one percent.

"Access to these funds will be available from May 22, 2020. Payment of the first installment will be due six months after the receipt of the loan. This Loan Facility of $5.0 million, in the first instance, will be administered by the Aid Bank".

On the other hand, Linton's suggestion for support for vulnerable groups should include:

"Livelihood stabilization grants of at least $1,000.00 monthly for vulnerable groups for three months in the first instance, including but not limited to informal workers; the homeless and those at risk of homelessness; single-parent households; domestic workers; people living with disabilities; women and children in shelters and anyone at risk of domestic violence during social isolation; frontline health care workers.

▪ Increase minimum old age pensions from $300.00 to $500.00 monthly

And, finally, what about tourism, the sector that describes itself as everybody's business? During this pandemic, tourism has been hit hard by the closure of ports, by social distancing and the imposition of curfews. Tourism will need much assistance if it is to revive and survive.

Here's what the government offered to the tourism sector: "Government had taken the extraordinary step after Maria to make loan financing available at the AID Bank, to our farmers, hoteliers and the manufacturing sector at attractive rates of 2%, with a moratorium on payments of 6-12 months.

"Mindful of the extraordinary circumstances caused by the COVID-19 pandemic Government is providing further relief to beneficiaries of that special loan facility.

"This will include no payment on principal for a year and on interest payment for six months.

"This deferment of payment will allow borrowers in the tourism sector, the manufacturers and farmers to use whatever cash they receive during the next six months, to meet salary payments and continue their operations—without the added burden of loan repayments.

"We have been advised by the Dominica Hotel and Tourism Association that 2,082 employees have been released from the Tourism Sector.

"That figure does not include persons engaged with travel agents and rental companies and some of the other tourism ancillary services".

On the issue of the stimulation of the tourism sector, Linton proposed:

▪ Wage replacement or layoff protection grants equivalent to at least 90% of regular employment income or $1,000.0 whichever is greater, for all employees displaced by COVID-19 for three months in the first instance;

▪ Monthly income support grant of up to $1,500.00 for all self-employed persons who must suspend operations due to COVID-19 for the next 3 months;

▪ Direct supplementary income of up to $800.00 monthly for workers in the retail, tourism and other sectors, cruise bus, taxis operators and public transportation providers affected by COVID-19 prevention and mitigation strategies, for three months in the first instance;

▪ Deferral of payment for rent, and utilities for three months in the first instance;

▪ Financial support in the form of grant funding of up to $50,000 in the first instance for supply chain stabilization in small and medium enterprises;

▪ A government guarantee to ensure immediate settlement of all redundancy benefits due to displaced workers;

▪ Waiver of Penalties for non-filing of 2019 tax returns by March 31, 2020 and the extension of the filing deadline to June 30, 2020;

▪ A waiver of VAT on electricity to Domestic customers, hotels and guest houses for the period April to July 2020 in the first instance.