Integrated approach key to mitigating Covid-19 impact

Experts call for revisiting country’s macroeconomic framework

ISLAMABAD: With the novel coronavirus (Covid-19) pandemic forcing the government to move towards imposing a curfew across the country, economic and policy experts on Wednesday stressed the need for adopting a coordinated policy approach mechanism between the federal and provincial governments and institutions to mitigate the impact of the virus, especially on the labour force.

The participants further agreed that implementations time for mitigation measures could have been greatly reduced had the local governments and local actors been engaged.

This was discussed during an online seminar on 'Mitigation action against Covid-19 and its impact on Pakistan's labour market'. The seminar had been organised by the Sustainable Development Policy Institute (SDPI) on Wednesday.

Dr Shamshad Akhtar, a former governor of the State Bank (SBP), said that the government needs to move forward aggressively to completely revisit its macroeconomic framework.

She emphasised the need for holding intensive discussions with the International Monetary Fund (IMF) and other international financial institutions. She also called for lowering the interest rate as it is more of a market-based solution than cash transfers.

Pointing to past examples of during the earthquake and floods, SDPI Executive Director Dr Abid Qaiyum Suleri said that in such a crisis situation, philanthropy at an individual and company level needs to be activated. Furthermore, he was of the view that organisations such as the National Disaster Management Authority (NDMA) and the Earthquake Reconstruction and Rehabilitation Authority (ERRA) taking the lead.

Furthermore, he said that the district administration such as the deputy commissioners can be used to make a list of the necessary items so that local philanthropists and charity organizations can provide tailored assistance. Moreover, he stated that tax should be made an incentive and relief linked with tax returns should be provided in liabilities such as utility bills.

Dr Muhammad Nasir from the Pakistan Institute of Development Economics (PIDE) explained the different stages of lockdown.

“We are moving closer to stage-3, which is the final stage or complete lockdown,” Dr Nasir said, adding that different provinces were implementing various stages of it as they were at different stages of impact from Covid-19.

He warned that the final stage of lockdown can result in millions being laid off, which is why Prime Minister Imran Khan was reluctant to adopt it.

The PIDE official further cautioned that estimates regarding daily wagers, street vendors, labourers and self-employed people are conservative and do not reflect ground realities.

Dr Mahmood Khalid, a senior economist at PIDE said that initial estimates on the magnitude of expected losses in the form of wages are around Rs2.187 trillion, which was in stark contrast to the coronavirus aid package offered by the premier.

He suggested scaling up the existing social safety nets such as the Benazir Income Support Programme (BISP) in the perspective of the lockdown.

The economist was of the view that a central policy, including all networks and organizations such as the BISP, the NDMA, the National Rural Support Programme (NRSP), and others will have to play a role in both identifying and delivering to beneficiaries.

He further recommended that the food security and livelihood component of these social safety nets should be given the utmost priority.

Shahrukh Wani, from the International Growth Centre, said that at this stage they can only guess what will happen to the labour market.

“We need to make sure that larger firms do not capture resources due to their lobbying power and the more vulnerable segment of society does not lose out in this process,” he cautioned, recommending that the health response requires a substantive plan that goes hand in hand with the economic response to this challenge.

Furthermore, he said, firms need to be subsidized in order to avoid layoffs especially in the manufacturing sector with the more vulnerable segments’ daily wage losses included in the relief package.

BISP Implementation Specialist Waqar Sherazi explained that the programme uses a targeted approach, which is considered amongst the most sophisticated in the world.

BISP, he said, covers around 93% of households of Pakistan with a special focus on the lower two quintiles, which fall in severe poverty.

To address the ongoing crisis, he said that BISP has created a system which will allow local governments to identify 2-3 million more people who can be added to the list of beneficiaries from the government’s economic package.

To include even more people, he said they can raise their cut-off score from 16.17% to 32% while all necessary arrangements regarding queries and co-operation with telecom service providers can be made so that aid is disbursed within 15 days.  

Published in The Express Tribune, March 26^th, 2020.