State can help people and businesses hit by Covid-19 as long as it manages to contain the infection, economic experts sayTourism industry is the only sector that needs the government’s support so far.
At a time when the government is struggling to meet its revenue target, its liability is only likely to grow if it is required to bail out the industries hit hard by the impact of Covid-19 pandemic.
According to the Finance Ministry, it could raise revenue around just Rs570 billion as of mid-March against the target of Rs683 billion, a substantial gap between target and achievement.
Economic experts say while the government will find it harder to raise more revenue in the coming months due to slowed economic activities, should the necessity arises to rescue businesses as a result of Covid-19’s economic fallout, it will further strain the government’s financial position.
The Federation of Nepalese Chambers of Commerce and Industry has already requested the government to come up with a rescue package for the tourism industry, which has borne the most brunt from the pandemic. The federation has also sought rescheduling of loan repayment and tax.
As long as the country can avoid new infections, experts say the government can support the sectors affected by the global crisis.
So far, Nepal has recorded two cases of Covid-19. While one of the patients has already recovered the second is undergoing treatment at the Sukraraj Tropical and Infectious Disease Hospital in Teku, Kathmandu.
Globally, the highly contagious virus as of Monday afternoon had infected more than 349,000 people and caused more than 15,000 deaths.
“Obviously, the cost for the government will grow but it is time to help the people and the businesses affected by the Covid-19 pandemic,” said Poshraj Pandey, an economist. “This is not the time to evaluate how much revenue was raised. The government has the fund that it has not been able to spend. That fund can be utilised to help the people and businesses hit by the pandemic.”
Pandey also suggested that the Prime Minister Employment Programme should support the daily wage earners who are losing their jobs due to slowed economic activities.
“For struggling businesses, the government can provide interest subsidy on the bank loans,” said Pandey.
Former Finance Secretary Rameshore Khanal does not see the need to roll out bailout package at the moment.
“Except for tourism, other businesses have not been hit hard. The government could support the tourism sector—hotels, restaurants, airlines and travel and trekking agencies, among others by providing interest subsidy in bank loans and rescheduling tax payment deadline without charging additional fees and interest,” Khanal said.
As for daily wage earners, particularly those in Kathmandu Valley, Khanal suggested that the government could support them with cash handouts for food and lodging.
If the pandemic takes over Nepal like many other countries like China, the US and the EU states, experts have warned that the cost of supporting the country’s economy would be much higher.
“The government will have to spend a huge amount in the health sector constraining government ability to spend in other sectors,” Shankar Sharma, former vice-chairman of National Planning Commission, had told the Post last week.
The government said that it has been studying the impact of the Covid-19 pandemic by forming a task force led by a joint secretary.
“The task force is studying economic indicator in each sector on a daily basis,” said a joint secretary at the Finance Ministry.
Nepal Rastra Bank has also announced through the mid-term review of the monetary policy that it could provide refinance facility, restructuring and rescheduling of loans provided by banks to the businesses affected by the crisis.
Frequently asked questions about the coronavirus outbreak
UPDATED as of March 31, 2020
What is Covid-19?
Covid-19, short for coronavirus disease, is an illness caused by the coronavirus SARS-CoV-2, short for severe acute respiratory syndrome coronavirus 2. Common symptoms of the disease include fever, dry cough, fatigue, shortness of breath and breathing difficulties. In severe cases, the infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death.
How contagious is Covid-19?
Covid-19 can spread easily from person to person, especially in enclosed spaces. The virus can travel through the air in respiratory droplets produced when a sick person breathes, talks, coughs or sneezes. As the virus can also survive on plastic and steel surfaces for up to 72 hours and on cardboard for up to 24 hours, any contact with such surfaces can also spread the virus. Symptoms take between two to 14 days to appear, during which time the carrier is believed to be contagious.
Where did the virus come from?
The virus was first identified in Wuhan, China in late December. The coronavirus is a large family of viruses that is responsible for everything from the common cold to Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). After an initial outbreak in Wuhan that spread across Hubei province, eventually infecting over 80,000 and killing more than 3,000, new infection rates in mainland China have dropped. However, the disease has since spread across the world at an alarming rate.
What is the current status of Covid-19?
The World Health Organisation has called the ongoing outbreak a “pandemic” and urged countries across the world to take precautionary measures. As of Wednesday, Covid-19 had spread to 199 countries and infected more than 8,07,705 people with 39,456 deaths. In South Asia, Pakistan has reported the highest number of infections at 1,865 with 25 deaths. While India has reported 1,251 confirmed cases with 32 deaths. Nepal has so far reported five cases, in which one patient recovered.
How dangerous is the disease?
The mortality rate for Covid-19 is estimated to be 3.6 percent, but new studies have put the rate slightly higher at 5.7 percent. Although Covid-19 is not too dangerous to young healthy people, older individuals and those with immune-compromised systems are at greater risk of death. People with chronic medical conditions like heart disease, diabetes and lung disease, or those who’ve recently undergone serious medical procedures, are also at risk.
How do I keep myself safe?
The WHO advises that the most important thing you can do is wash your hands frequently with soap and water for at least 20 seconds or use hand sanitizers with at least 60 percent alcohol content. Avoid touching your eyes, nose and mouth with unclean hands. Clean and disinfect frequently used surfaces like your computers and phones. Avoid large crowds of people. Seek medical attention if symptoms persist for longer than a few days.
Is it time to panic?
No. The government has imposed a lockdown to limit the spread of the virus. There is no need to begin stockpiling food, cooking gas or hand sanitizers. However, it is always prudent to take sensible precautions like the ones identified above.