Clarke talks up positives of COVID-19 injection
FINANCE AND the Public Service Minister Dr Nigel Clarke is defending the adequacy of the Government’s $25-billion stimulus to blunt the fallout sparked by the COVID-19 pandemic.
Clarke said that the roll-out of initiatives was a historic and comprehensive response by a Jamaican administration aimed at mitigating an external shock to the economy.
“To my knowledge, Jamaica has never been able to respond with a fiscal stimulus package to a global economic shock, so the fact that we’ve been able to respond to the tune of $25 billion is something to recognise as a sign of the Jamaican State and its people growing and developing,” Clarke told last Friday’s Gleaner Editors’ Forum.
Even with a revelation by Bank of Jamaica Governor Richard Byles last week that the Jamaican economy was expected to contract by about three per cent, the minister said that reactions to the intervention have so far been positive.
Clarke said that the scale of the intervention was comparatively better than many other countries’ response mechanisms.
“Every country has to do what is within its capacity to do, and the fact that we have a capacity for a response is a dramatic improvement over where we’ve been before, especially when we consider that some countries have not had the capacity to respond,” Clarke said.
The finance minister pointed out that there was no system in place to administer the measures, noting that the Jamaican tax and other agencies were working overtime to make the necessary changes to accommodate the intervention.
“The fact that this infrastructure does not exist tells you that Jamaica has never been in a place for this kind of intervention,” Clarke said.
The finance minister said that COVID-19 had triggered a supply shock to the Jamaican economy, citing as an example empty hotel rooms that are not generating any revenue. He said there was also a demand shock triggered by job losses and the scaling down of business operations, causing reduced appetite for goods and services. Clarke also highlighted the effect of the fallout on the remittance and tourism sectors, the two biggest earners of foreign exchange for Jamaica.
Tourism Minister Edmund Bartlett had revealed that the Government had revised downwards projected tourism revenue for fiscal year 2020-2021 by $76 billion, but that figure is expected to balloon with the near-absolute shutdown of the travel industry globally.
Dip in transactions
Horace Hines, general manager of Jamaica National Money Services, told The Gleaner last Thursday that the company has already experienced an estimated 25 per cent reduction over the last two weeks as restrictions took effect in New York, the Cayman Islands, and the United Kingdom.
And Don Wehby, group chief executive officer of GraceKennedy, said that the company’s remittance services’ inbound transaction count has dipped by between five and 10 per cent. However, he said that the company’s digital transactions had increased by close to 20 per cent.
Remittances pulled in US$2.4 billion for the calendar year January to December 2019.
Clarke says that the Government has chosen to respond early by assisting businesses and displaced workers so that the economy can be kick-started early when the COVID- 19 crisis has passed. But with Jamaica said to be in the very early stages of its novel coronavirus outbreak, with community transmission expected to surge, the economic wounds may need a new salve in the short to medium term.
“What we want to do, by the nature of our response, is to ensure that what is certainly a temporary event does not cause permanent damage, and we can prevent this by supporting the employee base of the economy,” Clarke said.