Safeguarding both health and economy is possible, and doable

Recent experience suggests that it is perfectly possible – and indeed, doable – to maintain our success against COVID-19, while also strengthening the economy. But it all depends on adopting, and maintaining, the best policies

As of today, the Malta International Airport will resume flights to and from 12 destinations: offering a much-needed respite for the local tourism industry, and effectively lifting the last remaining restrictions imposed by the Covid-19 pandemic in March.

This comes at a time when active cases amount to just 22; and no new cases have been registered over four consecutive days of testing.

It is tempting, therefore, to believe that the worst of the crisis is behind us; and that Malta has been spared the devastation of a pandemic that has so far infected more than 10 million people worldwide, and killed over 500,000.

But as health officials have consistently warned, this hope may yet prove to be premature. On Monday, the World Health Organization (WHO) warned that the worst could be still to come: in part because of the early decision, by so many governments, to lift restrictions early.

"For weeks I have spoken about the risk of a resurgence as countries adjust to measures. In several countries across Europe, this risk has now become a reality — 30 countries have seen increases in new cumulative cases of the past two weeks," Dr Hans Henri P. Kluge, WHO regional director for Europe, said in a statement last week.

Nonetheless, there seems to be consensus locally – even among the medical community – that, having won the first battle, Malta now needs to concentrate on repairing the economic damage caused by the pandemic.

When deciding on 1 July as a target date to re-open the airport, Tourism Minister Julia Farrugia Portelli had insisted that the decision was taken in conjunction with the health authorities.

Even the Medical Association of Malta – which had questioned the government’s policy, at the time – has now acknowledged the necessity for the airport to open its doors again, in order to safeguard as much as possible what small tourism business could be coming Malta's way, to ensure the retention of jobs and incomes.

From the outset, however, the economic forecast is not very encouraging. The Malta Tourism Authority (MTA) has predicted around 700,000 visitors to Malta between July and December 2020. Together with the 352,843 visitors between January and March, this would mean a total of around 1,052,843 visitors for 2020: only 38.4 per cent of 2019 figures.

Yet there are also reasons to be optimistic. While the figures do not bode an easy recovery for tourism, Malta's economy has so far been resilient in other sectors.

The economy still grew by 0.5% between January and March: remaining in positive territory, even though at a much-reduced level than previous quarters. (In the last quarter of 2019, the economy had grown by 4.8%; and before that, by 3.7%.)

Over the same period, the country also registered a whopping deficit of more than €600 million. This was €463 million more than the same period last year: resulting from a combination of lower revenue and higher public expenditure on account of the COVID-19 situation.

Nonetheless, the economic success of the past seven years has given Malta room to manoeuvre, which means government can afford to resort to debt to finance its recovery plan.

Over the past few years, Malta reduced its debt-to-GDP ratio from over 70% to just over 40%, well below the Maastricht criteria of 60%. This gave the country a breathing space that could be used in this time of crisis.

What is more crucial, however, is that the financing of the recent economic package comes from the country’s own resources, through bonds that Maltese people and institutions will invest in.

Discipline and vigilance will of course remain important as we go forward, to ensure the virus remains under control.

Here, too, our success on the public health front has left us in an advantageous position. Our health system has already proven robust enough to avoid any worst-case scenarios; and the experience leaves us not only with our health service intact and unburdened; but it has also taught us valuable lessons regarding how a second wave could be dealt with in practice.

But now is also time to get the economic wheel turning so that jobs are protected, people can earn a decent living, and the country can return to a state of normality.

Naturally, this does not mean that we should throw all caution to the wind; but it does suggest that economic and health concerns are not necessarily as incompatible as they may have previously seemed.

Recent experience suggests that it is perfectly possible – and indeed, doable – to maintain our success against COVID-19, while also strengthening the economy.

But it all depends on adopting, and maintaining, the best policies.

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