The Crisis is Not Over, Keep Spending (Wisely)

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -
The pandemic-induced economic crisis is set to leave deep scars. Human capital erosion from prolonged high unemployment and school closures, value destruction from bankruptcies, and constraints on future fiscal policy from elevated public debt top the list. Groups that were already poor and vulnerable are set to see the largest setbacks.

Swift and unprecedented action by policymakers, including among the Group of Twenty (G20) advanced and emerging market economies, helped avert an even worse economic crisis in the wake of COVID-19 than what has been witnessed. The G20 has provided around US$11 trillion in necessary support to individuals, businesses, and the health care sector since the start of the pandemic.

The Crisis is Not Over, Keep Spending (Wisely)
The Crisis is Not Over, Keep Spending (Wisely)

However, much of the financial support is now gradually winding down, and many benefits such as cash transfers to households, deferred tax payments, or temporary loans to businesses have expired or are set to expire by the end of this year.

The analysis in our G20 Report on Strong, Sustainable, Balanced, and Inclusive Growth illustrates how fiscal deficits in almost all G20 economies are projected to shrink next year, based on announced budgets and current policies.

- Advertisement -

In economies where deficits widened sharply this year, fiscal balances are now expected to narrow by more than 5 percent of GDP in 2021. While part of this reflects that growth is projected to strengthen, the largest contributor to improving fiscal balances is a sharp withdrawal of “discretionary” support—relief measures that had been introduced to counter the effects of the crisis.

The Crisis is Not Over, Keep Spending (Wisely)
The Crisis is Not Over, Keep Spending (Wisely)

This withdrawal of support is occurring at a time when employment losses from the crisis are still projected to be sizable, as evidenced by massive shortfalls in projected employment relative to pre-pandemic trends.

Read Also:  Petrol Price Remains Above Fixed Upper Price Limit

So, what is to be done?

First, support should be maintained throughout the crisis. A premature withdrawal of support would impose further harm on livelihoods and heighten the likelihood of widespread bankruptcies, which in turn could jeopardize the recovery. In such a scenario, the scars from the crisis would likely become much deeper.

- Advertisement -

Where possible, economies should therefore resist tightening fiscal policy too early and instead ensure continued support for healthcare, individuals, and firms. In economies constrained in their ability to spend, a reprioritization of spending may be warranted to protect the most vulnerable.

Read Also:  Made in Africa: Rules of Origin Key to Success of African Continental Free Trade Area

Second, as we begin to gradually understand what’s in store in the post-pandemic world, policies will need to be geared toward the new reality and build resilience. For instance, policies that promote investment and hiring in expanding sectors and provide reskilling and training opportunities to the unemployed will strengthen the recovery and make it more sustainable. Investments to promote decarbonization can not only lift employment in the near term but also increase resilience down the road.

The road to strong, sustainable, balanced and inclusive growth will be long and difficult. Now is the time to spend wisely and work together to build a better future.

Written by: By Oya Celasun, Lone Christiansen, and Margaux MacDonald

Oya Celasun heads the Multilateral Surveillance Division in the IMF’s Research Department.

- Advertisement -

Lone Christiansen is a Deputy Division Chief of the Multilateral Surveillance Division in the IMF’s Research Department.

Margaux MacDonald is an Economist in the Multilateral Surveillance Division of the IMF’s Research Department.

- Advertisement -
The Crisis is Not Over, Keep Spending (Wisely) - Brand SpurThe Crisis is Not Over, Keep Spending (Wisely) - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Crisis is Not Over, Keep Spending (Wisely) - Brand SpurThe Crisis is Not Over, Keep Spending (Wisely) - Brand Spur

Latest News

Court Convicts Unity Bank Plc Vault Room Manager

The Maiduguri Zonal Office of the Economic and Financial Crimes Commission, EFCC, has secured the conviction Adam kaka Adam,...

Here’s What You Need to Know About Local Digital Marketing for Franchises

As a franchisee, you get a lot more support in running your business than you would if your location was an independent brand, but...

Why businesses should ensure data privacy in vendor relationships – Andrew Bourne

Whether we realize it or not, we are being tracked everywhere we go on the Internet. In fact, Internet surveillance is so widely used...

Local Bourse Kick-Start December on a Positive Note, Gain 0.30% to Sustain Uptrend

The local bourse today (Tuesday) began the month of December on a positive note, as the market performance index, the ASI, gained 0.30% to...

Google launches People Cards to help Africans who want to be found on Google Search

1 December 2020 - Google today introduced a new mobile-only feature that makes people more discoverable on Google Search. People Cards allow people to...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -The Crisis is Not Over, Keep Spending (Wisely) - Brand SpurThe Crisis is Not Over, Keep Spending (Wisely) - Brand Spur