Tricia Gloria Nabaye
The Covid-19 pandemic is thought to cause a worse financial crisis than that of 2008. Economists argue that it might take about mid year for countries to start seeing a semblance of stability in the economy.
According to the IMF, “Since the pandemic’s outbreak, prices of risk assets have fallen sharply. At the worst point of the recent selloff, risk assets suffered half or more of the declines they experienced in 2008 and 2009. For example, many equity markets—in economies large and small—have endured declines of 30 percent or more at the trough. Credit spreads have jumped, especially for lower-rated firms.”
As we gear into another financial year, we need to have our checks and balances in order to avoid receding into a grave financial burden. In this fast-moving environment, we need to think in scenarios, rather than pretending to know how the economy will evolve over the next 1 ½ years.
Export earnings have dropped by 4.1 trillion Uganda shillings in the past two months. Ugandan Minister of Finance Matia Kasaija told parliament that the east African country has suffered the effect of the pandemic, which forced the country to lower its economic growth projection for this financial year by 0.3 to 0.8 percentage point.
Kasaija said the projection was downgraded from the targeted 6 percent for the financial year 2019/2020, adding that in the worst scenario millions of Ugandans would be pushed into poverty.
The aftermath of the pandemic is an issue that we should handle with great importance as a continent and as a country.
While the African continent roars with few numbers of the Covid-19 pandemic, it is imperative to note that the numbers continue to soar on the continent and in the world.
As a Country, we have been commended on early response to the pandemic and early execution of the lock down in order to put in force complete social distancing.
In his presidential addresses, the president intimated that factories within Uganda were responding to the pandemic by providing material for use and also making reusable masks for doctors as the need continues to rise. In the end, supporting local businesses to stay afloat as we go through this health crisis.
In the presence of the Covid-19 pandemic, schools are set to reopen soon with the hope that the disease would be contained by then and movement will be restored to that effect.
While companies, government offices and all of the non-essential services are on hold for the moment, key concerns raise on the frailty of the Ugandan economy and how it will muscle back after the pandemic.
Therefore, as we progress through the lock down days, fiscal policies need to be adjusted to reflect the times in order to create shock absorbents for the Ugandan tax payers. fiscal policies will play a critical role in mitigating the negative impact of the pandemic on economic activities and challenges in the affected sectors, while monetary policies will help reduce the impact of the deterioration of the Balance of Payments
Policymakers and economists need to understand and prepare for the threat that the economic system is more likely to face and work collaboratively on appropriate strategies and policy measures to counteract the downturn.
It is clear by now that COVID-19 is going to have long-lasting negative consequences on the economy. Policymakers must apply their measures optimally to counteract the downturn. They must ensure that their decisions are well-informed and based on thoroughly conducted empirical evaluations.
The pandemic also brought to light the struggle and redirection needed in the financial budget for 2020/2021. It should be able to cater for the health sector in regard to provisions of hospital equipment, safety gear, remuneration and revamping of the whole sector. It is evidently clear that a viral infection has the ability of wiping a whole country off before a gun can.
In other words, while we allocate resources to military artillery, we should also invest heavily in the health sector in the next financial year.
Uganda after the Covid-19 pandemic needs rapid response in creating shock absorbents for Ugandans in order to avoid people running into debt or much less out of business. The strategy for survival should be reflect in the tax culture, in the prices of commodities and in the access to services after the pandemic.
Also key measures taken to stop the spread of the pandemic should not be turned into status quo in order for people to be able to move ahead and work back the lost time in business.
There is life after such a pandemic but the ability for us all to survive a financial death/ drowning is going to depend on the effort of government and it’s financial wing. The solution will lie in their ability to steer Uganda out of red zone poverty worse than before into a progressive standing, short of that, many Ugandans might not be able to thrive and survive the aftermath of such a pandemic.
Tricia Gloria Nabaye
Resident research associate
Great Lakes Institute for Strategic Studies
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Awesome article. Awesome writer.