Tackling Covid-19?

A crisis compels introspection. My hope is that the pandemic will force us to rethink the government's role in Pakistan, as an agent of change and progress. Immediately, we must find the most effective ways of beating the crisis. Later, we must look at the direction the country is headed. This is the time to lead and to think ahead.

Let’s take the immediate first. The task before us is to prevent further spread of the virus and protect the people from economic distress. We must also keep the economy going so that it recovers quickly once the pandemic is over. This won’t be easy. The virus has upended life’s ecosystem. Bringing it back to equilibrium is a huge challenge.

The likes of this crisis have not been seen in our lifetimes. How we respond will set the course of this country for the next few years. There are no good solutions, just less bad ones. We must proceed with thought and rigour.

My first point is that data and knowledge must guide decisions. It is critical that experts have more say in policy. A crisis creates myths and hopes for miracles. We must avoid the temptation of letting hope prevail over reality. With a fall in new cases of the virus, some EU nations have taken cautious steps towards lifting the lockdown. China did not allow cities to reopen until it was sure that there were no new cases for two weeks. This apparently extreme caution could be the reason why normal life is returning in China. Pakistan too has begun partial lifting. But it has done so even as the cases are on the rise. In Pakistan, where health services are weak, a lockdown could be key to preventing large-scale suffering.

The virus knows no boundaries. Everyone on the planet is at risk. That is why overcoming the pandemic has been an uphill task. Social distancing is the most effective way to deal with the virus. To compensate people on daily wages and micro businesses, welfare measures must accompany prevention.

Welfare does not just need funds. It calls for an effective delivery system. The disease is a test of our governing structure and the strength of our institutions. We must respond with whatever it takes.

A key focus should be to ensure smooth supplies of medicines, food, and other essentials. These must reach even those who cannot pay for them. Government may redirect funds from other heads. Already, the IMF, World Bank and the ADB have committed large sums in aid to meet the cost of the pandemic. China too is likely to lend $6 billion in aid.

Effective measures to take care of the health crisis is the surest way of focusing on early economic revival. If the health crisis continues, efforts to revive the economy would unravel. Our highest priority should be the health of the people of Pakistan and limiting human suffering as much as possible. There cannot be normal economic activity if the disease continues to spread.

In Pakistan, there is no general testing yet. Our capacity for tests has improved, but so far less than five percent of the population has been tested. The lockdown gave us time to build systems to test, trace, and isolate. We have moved slowly in this regard.

A few days ago, the prime minister said that the virus would likely peak in May. I am sure the government has done everything possible to put in place systems to deal with it. We need more hospital beds, better ICU capacity, and protective gear for health workers.

In its South Asia Economic Focus, the World Bank forecasts a sharp recession in Pakistan with a skyrocketing fiscal deficit. The country’s external account will be under severe stress because export and remittances are declining. Though the fall in oil price would help. There are still major debt servicing needs.

Soon as correction in the discount rate began, the ‘hot money’ started to go where it came from. The drop in rupee value furthered this trend. Also, during a recession, fund managers prefer cash or blue chip over emerging market opportunities. Many people, including my Institute, had cautioned about this possibility.

Despite our weak economic indicators, the World Bank counsels the government to make a determined effort to help the vulnerable and spend necessary amounts on the health sector. IFIs fear weak states may become even more unstable. The government’s help is critical, as falling per capita income could cause major social and economic pain.

There is a lot of discussion about a tradeoff between the goals of health and the economy. There is no tradeoff. I have been at pains to suggest that there can be no economic recovery without overcoming the health crisis.

The decision on whether or not to lift the lockdown cannot be taken on gut feel. We must rely on data. The country needs granular data about the spread of the disease based on testing and tracing. Lifting of the lockdown must be by specific areas and with specific protection protocols agreed between health experts and industry and civil society.

The real challenge for the coming weeks is to have the right institutional and organizational setup to meet our health and economic challenges.

To be continued

The writer is chair and CEOInstitute for Policy Reforms, and a former commerce minister.