The great lockdown debate

16 Apr 2020


The writer is a member of staff.
The writer is a member of staff.

LET me start by saying that I completely understand where the federal government, and especially the prime minister, are coming from when they argue that lockdowns must be eased in order for them to continue. I use the word lockdown in the plural because each province, each city, seems to have its own version happening, with important differences.

It is important to remember that pressure against the lockdowns is global, not only in Pakistan. The past few days have seen a string of announcements from global bodies that say the current economic crisis created by the spread of the virus and the resultant lockdowns is far more dire than the Great Financial Crisis of 2008.

For example, the IMF said that in 2009, total output per capita of the global economy actually contracted by 1.9 per cent. Normally, total output of any economy grows from one year to the next, and a low growth rate is considered bad news. In 2009 it actually contracted, a rate occurrence. But this year, the same analysis suggests, total output per capita of the global economy is set to contract by 4.2pc, meaning things are more than twice as bad already. And we are nowhere near the end, not even past the midway point, of the crisis. In fact we can reliably say things are just getting going.

A few days earlier, the World Bank released a regional assessment of South Asia’s economic impact under Covid-19, and their finding for Pakistan was that the economic output of the country could contract by almost 2.2pc this fiscal year, before growing marginally to 0.9pc next year. Meaning the situation will be just as dire here at home, and will persist well into the next year as well.

No elected ruler can withstand the ire of the hungry masses and the business and industrial classes for very long.

It is natural to expect that those who cannot afford to stay at home indefinitely because they are too poor, or are too many living cramped inside a small space, will not only find it difficult to lock themselves down, but will have a hard time understanding why they are being asked to do so in the first place. It is equally natural to expect owners of businesses, large and small, worry about why they are being asked to shut their operation down altogether when they can easily, if given the chance and the training, keep everything running while also maintaining social distancing. These owners of business enterprises have fixed costs to pay, debts to service and they are being told they must continue to run their payrolls through the lockdowns.

Likewise no elected ruler can withstand the ire of the hungry masses and the business and industrial classes for very long. It is not surprising that powerful pressures are building worldwide against the lockdowns, even if it is easy to see that without the lockdowns we are more vulnerable to infection. Even as we acknowledge the necessity of the lockdown and strict social distancing as the best means to protect ourselves from infection, it is important to also acknowledge that this is a terribly hot potato, an extremely difficult situation, to sustain.

I look at the calm and ease with which Narendra Modi in India announced the lockdown in his country, and then extended it, and I see the enormous difficulties it has created for tens of millions, if not hundreds of millions, of migrant workers across India, and I must say I pray to God that we never get a ruler like that over here. I want my prime minister to make the right decisions for the welfare of his people, but I also want him to know, understand and share in the pain of these same people. Modi’s casual disregard for the suffering of his own people is the stuff of horror.

To those of us who follow the economy closely and remain in touch with key agents and stakeholders in the economy on a day-to-day basis, it was clear from the beginning that this lockdown will be difficult to sustain. Not only that, it was easy to see how the wrangling will rise with each passing day, how demands for bailouts from various industries will come pouring in, how the state will be swamped with demands while starved of resources because tax collection will plummet as the economy contracts. Wait till you see the revenue collection figure for the month of April, which will come out on the last day of the month, and you’ll understand what I’m talking about.

Today, individual business owners are clamouring for debt relief, as are governments of poor countries. Pakistan may well have earned some debt relief at the G20 meeting that was under way as this piece was being written, and has formally asked the Chinese government for help in easing the repayment terms of the power projects signed under CPEC, as an exclusive report in this newspaper revealed a few days ago. The government is also trying to renegotiate capacity payments to private power producers that may not strictly count as debt servicing, but carry sovereign guarantees and are a massive drain on the federal exchequer nonetheless.

The government’s dilemma is a serious one and more minds need to be brought into play to help them navigate the enormous challenges before them. The lockdowns are not sustainable but even a partial easing risks setting the infection on an uncontrollable path. Already reports are coming in that suggest people are dying in far larger numbers than what the official data says.

In Wuhan and Iran, as the infection peaked in those countries, videos surfaced that showed people falling over dead or unconscious in the streets. That is where we are headed if we don’t manage the lockdowns. The government is having a hard time performing the balancing act it has to, despite all that has been achieved. Somebody has to help them out now before their decisions take us to a point where we too start to see people falling dead or unconscious in the streets.

The writer is a member of staff.

Twitter: @khurramhusain

Published in Dawn, April 16th, 2020