The economy was already declining but the new coronavirus is making it worst – Part 4
Freedom Speaks Column
In the current circumstances that we find ourselves as a country, I would love to be able to tell you that there is a quick and very efficacious solution to invigorating the economy! But I can't tell you that. But as we have said, the government's past mismanagement of the country has come back to haunt the people. The Skerrit-led regime did not save for rainy days – that would have made all the difference. They had that golden opportunity when receipts from the CBI were lucrative! Instead they misappropriated or mismanaged the funds. We all have to suffer as a result of the corrupt behaviour of the few, because life over the next two years is going to very difficult for most of us and it could even become chaotic!
The COVID-19 pandemic has brought the huckster trade to a halt with adverse implications for the ability of farmers to earn. Restarting the huckster trade will depend on the reopening of the borders to allow hucksters to travel. Moreover, local sales of agricultural produce will be affected by the lockdown. There needs to be a major effort to re-invigorate agriculture as one of the planks for resetting the economy in the aftermath of the pandemic.
The tourism Industry was already weak prior to the impact of COVID-19. There was, however, some hope that the two new hotels funded under the CBI programme and those that were under construction would have added some vibrancy to the industry. But the larger of the two hotels – Kempinski, was apparently already operating at very low occupancy levels. It seems as if that the real interest in developing the hotel was not really geared to benefit the people of Dominica, but rather for the benefit of all the persons that got their cuts in one way or another during the development phase. But certainly, the COVID-19 pandemic, will have a huge impact on visitor arrivals and that will mean that our hotels will not be able to retain staff for long if they are not adequately capitalized. But even if borders are re-opened, the impact on the Caribbean tourism industry will be more prolonged as a global recession caused by the COVID-19 pandemic may extend well beyond that point. Moreover, the completion of the hotels being financed under CBI will be impacted by the pandemic as sales of passports is bound to slow down as countries take measures to stop the spread of the new coronavirus. But the flow of CBI funds was already in decline before the global onset of COVID-19 and that had to do with the difficulties that Dominica was experiencing with its corresponding banking relationships. Much of the CBI funds have not been able to be transited through the banking system over the last six month or more. This has to do with concerns over Dominica's corrupt management of the programme. Thus, there was already a cloud of doubt over the completion of approved hotels projects under the investment option of the CBI programme. Cruise tourism demand will also be impacted by the global recession.
Two other significant areas drove economic activity in Dominica - funds from the CBI programme and remittances from Dominicans living abroad. CBI was a major sources of funding government activity in Dominica including for social programmes such as the NEP. This contributed significantly to sustaining economic activity on the island. A significant fall in revenue from the CBI programme will spell disaster for the government in an environment where it will not be easy to raise revenue from other sources. The truth is that our government is practically bankrupt and that will affect its ability to provide a stimulus package.
With regards to remittances to Dominica, we are likely to see a fall. Many Dominicans who work overseas will have reduced incomes and some will lose their jobs as the global recession deepens. They are therefore likely to adjust and send less to their families.
Moreover, the lockdown in Dominica and the resulting global recession caused by the COVID-19 pandemic is going to affect many local businesses. Depending on how long the situation continues, it will mean that some businesses will have to release workers, reduce their pay or reduce the hours they work. These will have second round impacts which will affect the earning of even those essential service establishments that remain open. This will also affect farmers as local demand could falls as incomes fall and as people seek to grow their own food. There could also be attempt by businesses in some cases to raise prices as they seek to remain viable.
Moreover, the government will struggle to pay civil servants given lower tax revenue and much reduced CBI flows. All of the above could also place great stress on our banks as business and individuals experience difficulties servicing their loans.
An economic disaster is certainly looming! We will continue discussion next week on avoiding chaos.
Kent Vital Political Leader Dominica Freedom Party