The COVID-19 pandemic has flared like wildfire crossing borders worldwide. The contagion continues taking toll of human lives as well as affecting the orderly pursuit of social and economic activities, not only of the affected countries but even of the lesser numbers that are still spared of the visit of COVID-19. The disruptions caused are everywhere hitting children, adults, the elderly and the senior citizens irrespective of colour, creed and gender. The sad sequel of this outrageous virus is the force and speed with which it is catching us all unaware and unprepared: the poorer sections of the population as well as larger segments of the middleclass, our child and school populations are all indiscriminately suffering.

Business and the economy are going to pieces with growing layoffs and hence adding fuel to fire of an already worrying level of unemployment, to deteriorating macroeconomic fundamentals, potential deflationary pressures, shattering family budgets, causing  severe damages and daunting challenges to basic human rights to food, health, housing, formal and informal education. These are also real threats to social harmony, law and order and they will need to be urgently addressed.

Meanwhile, human rapport and behaviours are going through drastic changes as new phenomena emerge in the form of social distancing, the use of health masks and changes in the classical work place occupational arrangements. Beyond intrinsically affecting people health wise, the pandemic inevitably has led also to unparalleled disruptions in global supply chains, logistics and distribution systems including in the retail sector and, hence, on efficiency and productivity. On top of that, uncertainties and risks of the virus resurging loom large in the absence of a solid cure and appropriate vaccines. 

To come back to family levels, the planned and sound development of children could be jeopardized. At this time of their life, children need to grow happily and in an orderly manner. Total lockdown has more than traumatised them as well as their parents who are reeling under the forced ordeals of the pandemic. Parents have had to suffer huge discomforts and pains in coping with additional child care, increased household chores and tight family budgets. The situation has been untenable for large numbers especially among the self-employed families and those who depend for a living on the informal or SME sectors.

Above all, COVID-19 has come to disrupt age old beliefs and wisdoms. For example, until quite recently, it was the duty of parents and grandparents to work and save for the future of their children and grandchildren. But since the pandemic is affecting largely parents and grandparents, the financial burden of caring for the elderly and seniors has curiously come to rest on the shoulders of our children and the younger generations, including those born under COVID-19 regime and in whose "names" the much needed finances are being raised even for excessive requirements for economic recovery and for infrastructural outlays. 

Coming to health and economic recovery measures, there has been a lot of dialectic and contradictions. In a dynamic and democratic country, such a situation is welcome as long as recovery aims at attaining consensus for holistic family welfare, safeguarding fundamental human rights as mentioned earlier and the overarching considerations of achieving national economic and social development.

Recovery is not about the obsessive leapfrogging for a place in the rank of high-income countries. It is about social justice, national security, health and safety. It is all about sustainable economic development and growth the fruits of which are inclusive and equitably distributed. It is against the above backdrop that post-COVID-19 turnaround and recovery have to be engineered. In this sense it is only a non-partisan approach that will bode well for the country.

Our own indigenous history of development and growth was marked, in its early stages, by the scary prospects of the sequels of the Malthusian spectre. The country, its people and its leaders took it as a blessing in disguise; it indeed came to be the biggest ever wakeup call Mauritius has had. A combination of exogenous and fortuitous international events, along with commendable national efforts and hard work of the post-Independence generations ushered in for us our own unique edition of renaissance. For several years, we received international accolades and, even now, this achievement is recognized as what has been known as the Mauritian economic miracle.

Then came a period of turbulence and slow growth for which, once again, it was a combination of international events and, unfortunately, a "bit of our own making". In between, we have lived with a sense of growing resilience and coped as well as we could despite repetitive damages caused by natural catastrophes and, probably, also by some amount of complacency on our part when the going seemed good. 

Our international trade now needs import of everything from as little as a needle to big ticket items like the metro. Food imports are crucial for a small island economy like ours. But it is frustrating when we think how we have ourselves made our food security status sweet and sour by throwing caution to the winds with our curious import policies, for example, of salt and sugar? On the work front for years now, we are having tens of thousands of frictional unemployment; yet we continue to import even as much of low technology labour.

After death tolls and multitude of miseries during the confinement mode, we are faced with several questions about how we set ourselves to the task of prodding forward in post lockdown mode. What is the clarion call of this devastating visitor, which COVID-19 has been, in its new post-lockdown mode? The private sector spokespersons have called for massive financial support for re-igniting the production system and employment market. Workers and trade unions are in the face of destabilising results and prospects about employment in practically all sectors of the economy and they are also worried about worker's rights and living conditions in strategic sectors of the economy.

Among dialectical issues there is a widespread reference to the manner in which the recovery or re-ignition of the economy machinery should be financed. The Bank of Mauritius is coming with an important contribution and has, in a rather unorthodox manner, put in place mechanisms for financing the recovery. It has also established its own implementation mechanisms. In one instance, the Bank has entrusted the Chairmanship in the hands of well-known economist, Lord Meghnad Desai. This appointment is one of the most laudable actions of the central bank in as much as it infuses a high degree of credibility and certainty for ensuring clarity, transparency, fairness and efficiency in investment management of BoM’s FX reserve.

Unconventional monetary policies will be required to fix the current crisis and the BoM has already started to go into that direction. The implementation of above measures and mechanisms will be very important in dealing with acute problems facing the strategic sectors of the economy including the informal and SME sectors.

The developed-market central banks ECB, Fed, Bank of England, Swiss National Bank (SNB), Bank of Japan (BoJ) are known to have more experience in implementing unconventional monetary policies such as quantitative easing. Their capital markets are very developed, and market participants include very sophisticated institutional investors and global financial institutions. As part of their quantitative easing program, these central banks can buy large amounts of agencies/government/corporate bonds and commercial papers. The BoJ has had 2 decades of experience in QE and has included Equities ETF (Exchange Traded Funds) in their asset purchase program. These central banks have the firepower to provide unlimited amounts of credit and money printing in global markets. 

Emerging Market countries like Chile, South Africa and Turkey have also started to experiment quantitative easing programmes, in response to the COVID-19 crisis. Governments and central banks have learnt from the GCF 2008 crisis and have been very quick at implementing these unconventional policies and fiscal stimulus to fight against the COVID-19 shock. 

The dialectics, referred to earlier, have revealed that the war chest of the BoM for the fight against COVID-19 is not in itself an issue. Of greater concern is the issue of burden-sharing of this huge requirement of recovery funding. In essence, the fact remains that the funds brought by the central bank are ultimately public money whether this comes in the form of debt money or newly printed money. According to contributors of this dialectics, using public money of such magnitude in this regard is not an equitable and fair burden-sharing ploy. 

The main argument against BoM's funding mechanism stems from the fact that business and industry in Mauritius should on their own be able to garner such funds from their own kitties. In defence of their argument business and industry contend that the central banks in USA, Japan, Germany, UK, and other countries have indeed come to the rescue of business and industry in these countries. While it is true that this is actually happening abroad, it is important to recognise that it is not possible to make total comparison with what the central banks in these countries do on this specific count: the resources, logistics, institutional set up and facilities as well as the operational conditions are far more elaborate and advanced. The economic and financial landscape of Mauritius stand no comparison; hence the impossibility to fully replicate these practices in Mauritius. 

Besides, the strongest arguments and hesitations against the large exposure of the central bank are that no possible comparison can be made between business and industry in these countries and those in Mauritius. First, the fiscal policy of these countries is based on the principle of progressive taxation. In some of these countries, tax can be charged at 42% and in others, it is even higher, whereas in Mauritius the tax is charged at a flat rate of 15%. Secondly, there is a worrying increase of the Gini coefficient in Mauritius, which speaks for itself in respect of the growing divide between the haves and the have-nots in Mauritius.

COVID-19 has caused havoc in the country as elsewhere also. Every country is resorting to extraordinary fiscal and monetary policies to provide rapid responses for a successful recovery process. The Minister has reiterated in his Budget Speech that recognising the need to address such redistribution issues he has provided necessary measures taking into consideration what is realistic and possible at this juncture when there are critical imperatives for rapid responses for ushering in recovery.

BoM has publicly unveiled the major axes and broad contours of its extraordinary monetary policies. How does this new – so far untested in Mauritius – process fare and what outcomes they bring are difficult to predict at this stage when the roads ahead are still bumpy. How much room for manoeuvre is there for BoM in moving forward? Difficult to say but all in all BoM has a herculean task ahead as there are more apprehensions than expectations If only it had the same firepower as central banks of G7 countries! 

A glimpse of how tough it will be to navigate in these rough seas tossing the COVID-19 boat of Mauritius can be had if we consider under what conditions the central banks and governments in Germany and Switzerland proceeded in addressing the recovery work. Both these countries had budget surpluses before the COVID 19 crisis. Besides, as AAA sovereigns, they have the capacity to borrow at very cheap or negative rates in capital markets. They both are currently borrowing at negative 0.4% for 10 years. 

During market turbulence, the government bonds of Switzerland and Germany are safe haven assets. Given their combined balance sheets of over USD 6tri, the ECB and SNB have the firepower to print large amounts of money and provide credit, in response to the current COVID 19 crisis. These two countries have also better social safety nets to protect the vulnerable and the job seekers. Their healthcare systems are very efficient, especially in Germany. 

In contrast, Mauritius may not have the same flexibility to borrow money, because of a potential sovereign debt downgrade. Policy makers, businesses and stakeholders in Mauritius will have to think outside the box to overcome the COVID-19 crisis. COVID-19 crisis could create a lifetime opportunity for Mauritius to modernize its economy. There is need for solidarity and burden-sharing and a firm commitment to harness our collective potentials within the framework of a new social contract.