EDITORIAL: Growth and investment needed
AS this country moves forward from the lockdown which was required to protect against the spread of COVID-19, the attention of this country must now transition to sustainable growth in the economy.
COVID-19 has had a devastating impact on the structure of this economy with businesses being forced to close as they were required to comply with the issued directive to close down all activity.
That closure meant that economic activity came to a stop as commercial activity was curtailed by regulations which prevented any real human-to-human contact. That meant that in some cases, payments had to be made online in terms of monthly commitments which individuals may have. Those included car payments, utilities and other bills.
This in turn was compromised by the lack of regular income from workers across the island. Some faced layoffs, while others were faced with reduced salaries. Government’s revenue streams were impacted as declines in collections from the gasoline tax were cut as people obeyed the directive which limited movement, except in special cases.
A decline in Government’s revenues means that government services will be under pressure. Commitments made to provide various services are under the microscope. A Garbage and Sewerage Tax tied to monthly water bills, and a portion of which goes to fund the functions of the Sanitation Service Authority (SSA) means that any prolonged reduction in funding could impact the functions of that entity.
Thankfully, this has not come to fruition, but it is something to be watched. Gasoline prices have declined, which will impact the tax that has been attached to them. It is something which deserves discussion from Government to the public on the critical challenges which face the economy.
To that end, Government needs growth to push its way out, not only out of the recession which the island has been in since August 2018, but the added pressures caused by the impacts of COVID-19.
COVID-19 has shut down the tourism sector. No visitors and no passenger flights into the island mean that the revenues generated from a departure tax and a room rate levy have to be replaced from somewhere. Ask where the revenues from these taxes were geared towards and the answers as to the difficulties currently being faced will manifest themselves.
Hotels are closed, and staff have been laid off. That means no income after unemployment runs out. The question becomes, what will happen to tourism in a COVID-19 era or reality?
So the issue of investment is critical going forward. Foreign Direct Investment is more than just numbers on a graph, but it allows for critical sectors to continue to survive. That includes construction, goods and services, but also acts as a beacon to the world that the island is an attractive place to invest.
This must go hand in hand with a growth plan which is sustainable. Cutting expenditure and controlling spending only goes so far, but this island has to find sustainable ways of earning its way in this new world.